We’ve all been there: That big bill you’ve been dreading has just come due. Maybe it’s soccer or hockey for the kids. Or it’s that eye-watering invoice from the gas company you just weren’t expecting as the weather turns colder.
And when you check your bank balance, the cash just isn’t there. So maybe you put some stuff up for sale on Facebook Marketplace. Maybe you cash in that stash of coins at the supermarket. Or, in the nightmare scenario, you grit your teeth and go for the high-interest cash advance on your credit card.
They’re all short-term fixes that get you where you need to be. And they solve the immediate problem. But it’s not exactly the way you want to keep covering expenses over the long haul.
It’s also as good a way as any to think about the one-time revenue sources that Democratic Gov. Maura Healey included in the $58 billion budget plan unveiled earlier this week that includes tens of millions of dollars in new spending for schools, social services, and other programs.
The Democratic administration’s spending blueprint for the new fiscal year that starts July 1 calls for, among other things, pulling $75 million from a one-shot tax amnesty program; $375 million from next year’s excess capital gains collections, and $265 million from another account to shore up the bottom line, according to an analysis by administration Budget Czar Matthew Gorzkowicz’s office.
The administration also has proposed draining $700 million state escrow account to help cover the ballooning cost of the state’s emergency shelter system, which is expected to hit $1 billion a year over the next two years, MassLive previously reported.
If there’s a silver lining — pardon the pun — it’s that Healey’s spending document doesn’t call for tapping Massachusetts’ more than $8 billion “Rainy Day Fund” emergency savings account.
But as is the case with everything in life, the fine print is worth reading as well.
As the politics newsletter MASSterList reported Thursday, the administration’s plan would reduce the percentage of excess capital gains tax money that’s diverted into the fund from the current 90% to 70%, in part to help pay for a new disaster resiliency fund.
Here’s the caveat: Much of the new spending will be underwritten by the state’s so-called “Millionaire’s Tax,” the additional, 4% income tax paid by commonwealth residents who earn more than $1 million a year.
Healey’s plan calls for splitting $1.3 billion gleaned from the tax on spending for schools and transportation projects.
On Wednesday, the administration tried to argue that the spending from the “Millionaire’s Tax” revenue, coupled with a $682 million appropriation for the Medical Assistance Trust Fund, wasn’t officially a part of the bottom line of its budget blueprint.
During Wednesday’s news conference, in fact, Healey swiftly corrected a reporter who used the $58 billion figure, saying “$56 billion,” or the total before those line items are added.
Such budgetary gymnastics, however, carry both an economic and political risk — and could hold up final legislative authorization of the budget, which is supposed to happen this summer.
In the state Senate, the chamber’s Ways & Means Committee chairperson, Sen. Michael J. Rodriques, D-1st Bristol/Plymouth has said he’s “very protective” of the reserve accounts that the state has spent years building up, the Boston Herald reported.
In a statement, Senate Minority Leader Bruce E. Tarr, R-1st Essex/Middlesex, similarly warned against plundering reserve accounts to underwrite ongoing spending, that also is “supported by revenues that are being collected at a declining rate.”
“Taken together, these pieces could spell jeopardy for state finances in the days ahead,” Tarr said, adding that, “it is crucial to strike a balance between immediate needs and the long-term sustainability of critical programs.”
In a statement, Senate President Karen Spilka’s, D-Middlesex/Norfolk, said her office, along with the chamber’s Democratic majority “will review what the governor filed as the budget process moves forward.”
Speaking to reporters after Healey’s State of the Commonwealth address, Spilka underlined the state’s still vigorous economy, and said the “best way to increase our state revenue is to continue creating jobs and helping our businesses not only thrive, but grow as well.”
On the other side of the State House, a spokesperson for House Speaker Ron Mariano, D-3rd Norfolk, referred MassLive to a statement issued in the wake of Healey’s State of the Commonwealth address earlier this month that redefined terse.
“The House will review the governor’s bill,” Mariano said through a spokesperson.
Elsewhere on Beacon Hill, the professional numbers-crunchers and policy wonks who follow the budget debate also were keeping their eyes trained on the spending plan.
In a statement, Paul D. Craney, a spokesperson for the business-friendly Massachusetts Fiscal Alliance, said the administration was showing “fiscal irresponsibility” by redirecting the capital gains tax money that otherwise would have gone into the Rainy Day Fund.
Healey “describes this budget as fiscally responsible, but this budget reflects a state that is fiscally crumbling from the top down,” Craney said.
But as Healey and others noted this week, there are still months to go before lawmakers and the Democratic administration agree to a final spending plan. And that means the conversation can, and likely still will, change.
