The next major step in the FY 2024 budget development process began today with the release of the House Committee on Ways and Mean’s (HWM) budget proposal. Coming just six weeks after Governor Healey filed her administration’s inaugural budget, the $54.8 billion HWM spending plan makes significant investments in education, transportation, and the state’s workforce pipeline.

In January, budget-writers upgraded the Fiscal Year (FY) 2023 tax revenue benchmark by just over $150 million, from $39.618 billion to $39.768 billion. Tax collections for the month of March (announced on April 5th) are the first collections to be compared to the new, upgraded, FY 2023 benchmarks. This brief explains how the revenue benchmarks were upgraded and contextualizes the March collections.

Authored by: Meaghan Callahan

Since December of 2021, the state has appropriated close to $8 billion in combined federal Fiscal Recovery Funds (FRF) and Fiscal Year (FY) 2021 and 2022 surplus resources to support a range of COVID recovery and economic development initiatives. Significant resources still remain, but tracking the amount and type of funds that are still available is a challenge for policymakers and the public.

This Brief outlines the recent history of FRF and surplus spending and summarizes the current status of remaining funds.

The Healey-Driscoll administration has released its inaugural budget, 8 weeks after being sworn into office. The $54.8 billion spending plan builds in ongoing tax relief, while making major new investments in several critical areas, and continues to build long-term reserves. It includes $1 billion in spending supported by income surtax revenues.

Governor Healey’s Capital Authorization Bills

On Thursday, January 19th, Governor Maura Healey filed the first capital bond bills of her Administration, totaling $1.4 billion. The first bill focuses on what the Administration identifies as the “immediate needs” of municipalities, and includes $987 million for investments in housing, public infrastructure, and economic development. The second bill includes a two-year, $400 million reauthorization of the state’s Chapter 90 program to fund improvements to local roads and bridges.

Chapter 62F of the Massachusetts General Laws establishes a limit on annual state tax revenue collections. The law, passed by an initiative petition in 1986, created a process by which actual tax collections are compared to an allowable tax revenue threshold, adjusted annually on the basis of wage and salary growth in the Commonwealth. If actual collections exceed the allowable threshold, the excess revenue is returned to eligible income tax filers in amounts proportionate to filers’ income taxes paid in the most recent tax year.

Budget leaders from the House, Senate, and Administration have agreed on a $40.410 billion consensus tax revenue figure for the fiscal year 2024 budget. Budget makers expect tax revenues to grow by $642 million (1.6 percent) over estimated FY 2023 collections of $39.768 billion. Notably, the consensus tax revenue agreement caps the use of income surtax revenues at $1 billion in the FY 2024 budget. That revenue is not included in the figures noted above. The FY 2023 tax revenue figure has also been revised upward by $151 million over the current benchmark of $39.618 billion.