|Analyzing the Governor’s Budget for FY 2016
In releasing his state budget proposal (House 1) on Wednesday the Governor identified important priorities: "creating better communities, better schools, and better jobs for all of Massachusetts." House 1 does not, however, propose the types of significant investments in these areas that could make a meaningful difference in the lives of working people across the state.
With the budget, the Governor filed a tax reform proposal that would significantly help lower-wage working people across the state: a doubling of the state earned income tax credit. This is a tax credit that increases the after tax wages of people with incomes under about $52,000 a year. The largest benefits go to low wage workers with children. It helps these families to make ends meet and be able to pay for basic necessities like food, clothing and rent. The Governor proposes paying for the increase in the earned income tax credit by eliminating the state’s tax subsidies for movie producers.
Our Budget Monitor describes the spending proposals in each major section of the budget. One of the most notable features overall is how heavily this budget proposal relies on temporary revenue and savings and on proposals that may prove to provide only temporary savings. As the chart below describes, the budget relies on over $600 million in temporary solutions that will help to balance the budget this year but will leave in place a longer term structural gap.
In addition, the budget counts on $178 million in savings from an early retirement program. This savings estimate assumes that most of the positions of people who retire would not be filled. It is not clear, for reasons we describe in the Monitor, that doing so would be possible, or in the best interests of the Commonwealth.
Te read our full Budget Monitor, please click HERE.