STATEHOUSE, BOSTON, JULY 21, 2019 (STATEHOUSE NEWS SERVICE) – Three weeks after the start of the new fiscal year, Democratic leaders finalized a fiscal 2020 budget agreement over the weekend to end a weeks-long stalemate and authorize $43.1 billion in state government spending over the next year.
The deal, which is expected to be voted on Monday by both the House and Senate, puts the state in position to potentially have a budget in place in time for the Legislature to avoid having to approve another stopgap spending measure. If Gov. Charlie Baker signs it within 10 days, Massachusetts may also avert being the last state in the country without a signed full-year budget, as it was last year.
After negotiations that began in early June, House and Senate leaders chose not to include new taxes on opioid manufacturers or e-cigarettes and vaping products. Both tax plans were initially proposed by Republican Gov. Charlie Baker and backed by the Senate, but the House felt they should go through the committee process.
The budget also dropped the Senate’s proposed freeze on tuition at the University of Massachusetts next year, and did not increase funding for the five-campus system beyond the $558 million recommended by the governor and both branches, making a tuition hike for students next year likely.
The bill (H 4000) does include a plan to control pharmaceutical drug costs that closely resembles the one that passed the House after intense lobbying by the life sciences and biopharmaceutical industries.
“There were some complex issues, particularly on the outside sections of this budget that took some time to negotiate and some of these policy pieces take a long time to get done, but we’re happy to finally come to an agreement on some of these important issues that we face in the commonwealth and get this budget to the governor’s desk,” said Rep. Aaron Michlewitz, the chair of the House Ways and Means Committee.
The drug pricing compromise authorizes the Executive of Health and Human Services to negotiate supplemental rebates for MassHealth on the most expensive drugs, but would not force drug companies to testify before the Health Policy Commission at a public hearing if a price agreement can’t be reached, according to officials.
The bill does not include a process for the HPC to refer drug companies to the attorney general for possible prosecution under the consumer protection laws, and leaves it up to the Baker administration if it wants to publish a recommended price for certain drugs.
House officials said they thought the AG referral was “redundant,” and chief Senate budget negotiator Michael Rodrigues said the attorney general’s office made clear they do not need a referral to bring a consumer protection case against a drug company for unfair pricing.
Drug companies would face financial penalties, however, if they fail to confidentially share pricing data with the Health Policy Commission, and Rodrigues said he thought it would “say a lot” if manufacturers refused to appear at a hearing and answer questions.
Michlewitz said that drug pricing was one of the policies in the budget that took longer to resolve, and Rodrigues called it “the most complicated piece.”
The final budget’s bottom line, according to legislative officials, was boosted by optimism tied to surging tax collections that allowed negotiators to increase collection expectations for the coming year by nearly $600 million.
Some of the money went into priorities like a fund to help struggling nursing homes, which will receive $50 million – the combined recommendation of both the House and Senate. The budget also sets up a task force to be led by Health and Human Services Secretary Marylou Sudders to study the nursing home industry’s challenges and report back early next year.
The conference committee also adopted the Senate’s higher recommendation for nearly $5.18 billion in Chapter 70 public school aide, an increase of $269 million from last year.
“It took a while but in the middle of trying to put all the pieces together we had this significant and very much welcome news that revenues were just pouring in quicker than we thought and we wanted to see if we could accommodate,” said Rodrigues, who also highlighted investments in community colleges, public universities, substance abuse treatment and mental health.
The revised tax estimates also led budget negotiators to increase the assumed deposit into the “rainy day” fund from capital gains at the end of fiscal 2020 by $230 million, which would put the balance of that reserve fund above $3 billion. And the School Building Authority and the MBTA also automatically receive an additional $23 million each based on the revised revenue assumptions.
The budget bill was filed late Sunday afternoon, days after the chief negotiators – Michlewitz and Rodrigues – signaled Friday in a statement that they planned to wrap up work this weekend.
Both branches planned formal sessions for Monday in anticipation of the deal. The Legislature is the last in the country with a fiscal year start date of July 1 to finalize a budget accord, though the governors in three other states – New Hampshire, North Carolina and Oregon – have still not signed a budget for fiscal 2020.
Michlewitz and Rodrigues, both new to their roles, said they worked well with one another despite the length of time it took to strike a deal.
“We had some disagreements on certain policies, but that’s the nature of things,” Michlewitz said. “We both had chambers to represent in the room and in the discussions but it never became anything more than the typical back and forth needed to come to common ground.”
Baker will have 10 days to review the budget from whenever it reaches his desk, and he will be in Colorado until Wednesday where he is attending the annual meetings of the Republican Governors Association.
The other conferees – Reps. Denise Garlick and Todd Smola and Sens. Cindy Friedman and Viriato deMacedo – all signed the agreement.
Rodrigues said the only “new revenues” in the budget come from enhanced enforcement of online sales taxes and increases in registry of deeds filing fees to support the Community Preservation Act.
The conferees also included a provision that would allow the Baker administration to lift for one year an offshore wind energy price cap that restricts the price of power from new procurements to no higher than in the previous contract.
And beginning next year, UMass officials would be required to meet with the Ways and Means and Higher Education Committees in January to review their financial plans to potentially avoid the kind of public back-and-forth over funding that occurred this year.
“It will begin the process of having better communication between the Legislature and UMass,” Rodrigues said.