Last Wednesday, Governor Charlie Baker signed a $43.3 billion FY2020 state budget, and did not issue a single spending veto. The final budget increases spending 3.3% over FY2019 estimates and is based upon $30.1 billion in tax revenue and a 1.4% growth in tax collections. The budget assumes an income tax rate reduction from 5.05% to 5% on January 1, 2020 – more than 20 years after voters approved a ballot question calling for a 5% income tax rate. The budget uses only $33.5 million in one-time revenues and deposits an additional $476 million into the state’s rainy day fund – bringing the balance of the fund to almost $3.3 billion by the end of FY2020. By signing the budget, the governor endorsed the legislature’s proposal to revise revenue projections by $600 million over and above the consensus revenue projections put forward in January.
Governor Baker did return six budget amendments to the legislature with revised language. Among the revisions was MHA-endorsed language to protect the benefits of the federal 340B pharmaceutical discount program for safety net hospitals and the commonwealth. Under the provisions approved by the legislature, MassHealth would have to provide hospitals and the legislature with notice 270 days prior to implementing any restrictions that might interfere with a hospital’s access to discounted 340B pharmaceuticals. Under the governor’s revisions, MassHealth would instead have to provide notice 180 days prior to implementing any restrictions. The amendment is now incorporated into HB4017 and needs to be acted upon by the legislature when it returns in September. He also revised provisions in an outside section of the budget that require the Health Connector Board to provide 60 days’ notice to the legislature’s Health Care Financing and Ways & Means committees before it applies for any waiver under the Affordable Care Act. The governor recommended revising the language to provide a 30-day notice.