House leaders roll out cautious budget in nod to volatility

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For one day at least, the whole world really was beneath the golden dome of the State House.

A giant inflatable Earth was installed in Nurses Hall for the Senate's environmental bond bill debate Wednesday, which felt appropriate given the center-of-the-universe energy Massachusetts and its elected officials try to project.

But the other inflatable on hand that day -- Calvin, a 42-foot right whale that took shape on the sidewalk in front of the building -- turned out to be the more apt metaphor for a week that highlighted the many whale-sized problems confronting Beacon Hill.

The depth and breadth of the concern was highlighted most directly in the $63.3 billion fiscal year 2027 budget that House leaders rolled out as Calvin was getting pumped up. House Speaker Ronald Mariano called it a spending roadmap "for a very, very difficult fiscal year in a truly, truly challenging economic environment."

What he meant, and what Ways and Means Committee Chair Aaron Michlewitz also acknowledged, was that the budget the House passes the week after next will merely be a starting point for a year expected to be colored by volatility, one in which actions well outside Beacon Hill's control could necessitate a major change in direction.

"Predictability is critical in creating a budget that is sustainable," Michlewitz said, raising concerns about federal Medicaid changes, economic volatility, and a pair of ballot questions that could reshape the state's revenue structure. "And these two pieces, combined with the chaos in Washington, leaves us with many unanswered questions moving forward."

The one piece of certainty Michlewitz and the House have is the knowledge that "every household budget within the commonwealth" has been affected by the state's chronic housing and cost-of-living crises. That both ups the demand for state services and programs, and limits lawmakers' realistic options for pulling in new sources of revenue.

20 years ago, MA mandated residents to buy health insurance or pay a tax penalty. Unaffordable healthcare inflation followed along with new mandates, rising premiums, fewer choices & increased provider payments without real transparency or efficiency standards. Taxpayer costs soared; working family income growth suffered. Small businesses & their workforces have consistently faced annual double digit premium increases. Healthcare cost reforms are long overdue.

"The commonwealth's budget is also not immune to this affordability crisis, as many of the services our constituents rely upon continue to grow in cost. Despite all this, and contrary to what many of the naysayers are saying, our economy continues to grow and our revenues continue to outperform the initial benchmarks," Michlewitz said. "We continue to make strong investments in our constituents, and this budget will make the commonwealth stronger overall, without having to raise any taxes and without having to dip into into our rainy day fund."

The House budget chief's jab at economic pessimists brought back to mind his February comment that "some folks are almost wishing us into some type of recession for political gain."

That remark from the start of the budget hearing process takes on fresh significance now that Michlewitz seems to be on the verge of negotiations to try to scuttle the proposed ballot initiative that would reduce the state income tax from 5% to 4% over three years. House leaders say that idea could blow an immediate hole in their carefully balanced budget plan and want to discuss alternatives with its proponents, business-backed groups concerned about the state's competitive edge and tax climate. 

Michlewitz said this week that "it's a fluid process of what is actually going to be on the ballot."

Complicating House leadership's bid to avoid having the income tax cut question go before tax-weary voters is the "staunch opposition to any negotiated deal" that key labor unions signaled this week. 

Leaders of the Massachusetts AFL-CIO, SEIU Massachusetts State Council, AFSCME Council 93, Massachusetts Building Trades Unions, Mass. Teachers Association and others warned the governor, House and Senate this week against making "any deal to cut taxes or otherwise provide givebacks to the very wealthy and multinational corporations."

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The unions, which have many ties to the Raise Up Massachusetts coalition that successfully pushed the surtax on high-earning households at the 2022 ballot and acceded to a compromise that took its minimum wage increase question off the ballot in 2018, are worried the Legislature could agree to a suite of corporate-friendly tax changes to appease the ballot question's backers and shift the costs of diminished public services onto everyone else.

A spokesman for the Taxpayers for an Affordable Massachusetts ballot committee said the question's backers were open to talking with House leaders "with the expectation that any alternative delivers tangible progress on the cost and affordability pressures impacting employers, taxpayers, talent retention, and long-term growth."

Affordability pressures were front and center as the Senate dove into its environmental bond bill, which goes beyond billions in borrowing with a ban on retailer providing single-use plastic bags and the creation of a 10-cent fee on paper bags at check-out.

"Folks are going to say, 'Don't I already pay the highest electricity costs, property taxes, highest health care costs as well as other fees and taxes that threaten our competitiveness in the U.S.? And you have to come at me for the bag I bring home food to eat?'" Senate Minority Leader Bruce Tarr said before his attempt to remove that fee was shot down.

It was at least the third time that the Senate has voted to restrict plastics, but the House does not appear to have the same interest. Senate President Karen Spilka said she was inspired to call for a decrease in plastic use after seeing the "devastating impact on marine animals." 

That begs the question, what kind of eco-friendly material is Calvin the whale made out of?

Colin A. Young is the deputy editor of the State House News Service. Reach him at [email protected].

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KELLER AT LARGE: 8:30 a.m., WBZ-TV. Political analyst Jon Keller's guest is Mitt Romney, the former Massachusetts governor and U.S. senator for Utah. They discuss the 20th anniversary of the state health care access law known as “Romneycare,” his experiences in Washington and the future of the Republican Party.

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ON THE RECORD: 11 a.m., WCVB. The guest is Jordan Maynard, chair of the Massachusetts Gaming Commission.

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