House Democrats released a $57.9 billion fiscal year 2025 budget Wednesday that is slightly smaller than what Gov. Maura Healey proposed earlier this year, a sign of Massachusetts’ changing fiscal fortunes over the past year that have created headaches on Beacon Hill.
Budgets often grow in size as they move through the legislative process, and filing a spending plan with a marginally lower bottom line breaks an oft-followed trend on Beacon Hill. House leaders said the move is borne out of slower post-pandemic revenue growth and dismal tax revenues, all of which has put more scrutiny on state spending.
The budget representatives will begin debating April 24 is about $150 million less than what Healey put forward in January but still 3.3% more than the fiscal year 2024 budget.
House Speaker Ron Mariano said his branch is dealing with the “reality” of fiscal challenges impacting the state, including the exorbitant cost of running emergency shelters housing local families and migrants, he said.
“The result of these issues is simple. This fiscal year is not going to be like the last few and there will be an even greater demand for fiscal responsibility throughout this budget cycle,” the Quincy Democrat said. “However, despite the revenue challenges that we now face, it is still our responsibility to balance these challenges with the need to allocate funding where it is most needed.”
A copy of the House budget proposal was not immediately available after top lawmakers detailed it Wednesday morning. But House budget chief Rep. Aaron Michlewitz said the document did reduce spending in several areas over the governor’s budget.
Unrestricted local aid is $25 million less than what Healey pitched, growing at 1% compared to 3%, and “snow and ice removal” is funded at only 50% of the governor’s proposal, Michlewitz said.
The House also “did some saving” on temporary staff funding for a range of departments that Michlewtz said could bring a “large cost savings” and be replenished with supplemental spending bills down the road.
Michlewitz did not say if there were year-over-year spending cuts.
“I don’t want to get into each line item directly but overall, 3.3% growth,” he said. “There was a lot of growth across the board.”
The House budget proposal largely banks on one-time revenues leftover from the pandemic to cover an expected $915 million tab for emergency shelters in fiscal year 2025. The House budget level funds the system at $325 million, the same number Healey included in her proposal.
But Michlewtiz said the House also wants to make available in the branch’s budget an extra $175 million in one-time revenues leftover from the pandemic for state-funded shelters.
That decision could conflict with negotiations on a separate spending plan where the Senate looks to hand Healey the authority to spend nearly all of the available pandemic-era surplus revenues over fiscal years 2024 and 2025.
“This thing is a fluid discussion because if you go back nine months ago, it was a different discussion than it is today,” Michlewitz said. “We think that the number that we’re… putting on the table for discussion within the House is one that we think gets us far enough along that we can see where we are going forward down the road.”
Mariano, who earlier this month warned of budget cuts in fiscal year 2026 if shelter spending does not recede from historically high levels, said the House decided to level-fund the system because “being an internal optimist, things could change.”
“Things could change next year and we want to maintain as much control over this process as we can,” he said. “As we deal with the ebb and flow, we’re never quite sure what the numbers are going to be so to anticipate the end number, I think it’s a bit premature.”
Cash for the emergency assistance shelter system program is expected to run out in about a week, with some officials circling April 15 as the run-out date. The Healey administration has said there are backup plans in place to cover costs until the Legislature hands over more money.
Senate budget chief Michael Rodrigues said negotiations over shelter spending in both the fiscal year 2025 budget and separate spending bill are a “work in progress.”
“The whole (emergency assistance) shelter system funding going forward is still a work in progress,” he told the Herald at the State House. “We are going to do our best to have a plan in five days.”
This year’s budget cycle represents the second where lawmakers have access to more than $1 billion in revenues generated by a 4% surtax on incomes over $1 million, a measure often referred to as the “Fair Share Amendment” or “Millionaires Tax.”
House budget writers took a different approach to doling out the money compared to Healey, opting to direct $695 million to education initiatives and $605 million to transportation proposals. Healey put $750 million towards education and $550 million to transportation.
The House budget proposal shuttles a total of $555 million to the MBTA, a number Democrats in the branch touted earlier this week as a “record” investment into the aging transportation system.
Mariano said new leadership at the MBTA under General Manager Phillip Eng is “promising” and one that House lawmakers have “confidence in.”
“The last couple of folks that have run the team came out of the philosophical think tanks, of the Pioneer Institute and a number of other places,” Mariano said in a pointed barb that seemed to reference former MBTA General Manager Steve Poftak, who worked at the Pioneer Institute before taking over the transit agency.
Eng is a “train man,” Mariano said.
“We have a train man, a man who can walk the tracks and not electrocute himself. So it’s a gentleman that we feel is going to make an impact and we’re excited to work with him as he makes changes,” Mariano said.