Massachusetts's budget is projected to grow 50 percent from just seven years ago. How did that happen?

Boston Globe

18-02-2025

Healthcare costs have shot up, often outpacing inflation. The state, while
new
for some programs initially covered by federal COVID-era dollars, adding hundreds of millions of dollars in costs. It remains to be seen to what degree the state can, or will, shoulder an even larger fiscal burden
should President Trump's
The pandemic also remixed state finances in previously
unseen ways, swelling state tax collections, which, in turn, helped to
drive additional spending. In this way, Massachusetts was part of a national trend:
Between 2019 and the current fiscal year, state tax collections nationwide ballooned by 40 percent, including multiple
years of double-digit growth, according to the National Association of State Budget Officers, a nonpartisan trade group.
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'That level of revenue growth was unprecedented,' said Brian Sigritz, the group's director of state fiscal studies.
Massachusetts' spending has matched, and ultimately could even exceed, that rate. Should lawmakers pass a budget at the $62 billion spending level that Healey proposed, the state budget will have grown by 48 percent from the $42 billion plan the state adopted in 2019, the last fiscal year untouched by the effects of the pandemic.
In comparison, the state's spending plan grew by about 37 percent in the seven-year stretch proceeding the pandemic. Taken together, should lawmakers adopt Healey's proposed budget,
state spending would effectively double from fiscal year 2012, when then-Governor Deval Patrick signed a $30.6 billion budget.
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Last month, Healey proposed a 7.4 percent increase over the budget she
on MassHealth — the state's Medicaid program — alone would jump by more than $2.5 billion under Healey's plan, or 13 percent, from the current budget, at a time when healthcare costs are rising faster than inflation.
'It's not sustainable growth‚' state Senator Michael Rodrigues, a Westport Democrat who chairs the Senate's budget committee, said of the overall 7 percent spending increase represented in Healey's budget plan. 'We have to be very careful about how we expand the bottom line.'
The Massachusetts Senate and the House won't release their own budget plans until the spring, and both Rodrigues and his House counterpart, state Representative Aaron Michlewitz, emphasized it's not yet clear what spending level the Legislature will embrace.
'Our task,' said Michlewitz, a North End Democrat, 'is to make sure we're putting forth a responsible budget that doesn't put us into circumstances that we can't get out of.'
How Massachusetts got to this point, even during an unprecedented time, offers some guidance. During the pandemic, Massachusetts and other states were awash in cash, thanks to a mix of federal aid and skyrocketing tax revenues that bucked the
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That flood of money flowed in various directions. Policymakers plowed billions into the state's emergency savings account, which is designed to backstop the budget in case of an economic downturn and now stands at
But a lot also dropped directly into the budget, which grew by 9 percent and 7 percent, respectively, in 2023 and 2024.
'The economy was really weird, and we were keeping up with that,' said Evan Horowitz, executive director of Tuft University's Center for State Policy Analysis. 'But even after you adjust for that, the budget is still growing.'
Lawmakers and Healey have helped spur some of that spending growth by opting to pay for programs after federal aid dried up, arguing the initiatives
were crucial for
state residents.
That included paying
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'Yes, the budget has increased, but so has poverty and inequity,' said Viviana Abreu-Hernández, president of the left-leaning Massachusetts Budget and Policy Center. 'The state has invested more money into supporting communities that have been historically more vulnerable and that the pandemic showed how vulnerable they were.'
Revenue from the millionaires tax, which voters approved in 2022, also helped fund a slew of new programs, including
Healey is also seeking to use some of that new surtax to cover the costs of school aid increases, which the state committed to under a 2019 funding overhaul. But even with hundreds of millions of more dollars dedicated each year, the new formula did not
Spending on MassHealth, the largest single piece of the state budget, and for health and social services personnel are also putting increasing pressure on state coffers.
More than 2 million people relied on MassHealth for health insurance as of last year, or roughly 260,000 more than before the pandemic — and more than state officials expected. The services the state is covering are also simply costing more, particularly for long-term care, where costs have shot up by 11 percent alone, said Matt Gorzkowicz, Healey's budget chief.
Costs for the state's emergency shelter system have climbed over $1 billion a year, but even if Healey and lawmakers are able to drive down costs with
a larger drag on the annual budget, given the state has repeatedly turned to an account seeded with surplus money from past years to fill the gap.
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'When the music stops, it will become a budget issue,' said Doug Howgate, president of the Massachusetts Taxpayers Foundation, a business-backed budget watchdog.
'We had a base budget that got a little ahead of ourselves during the pandemic,' he added, noting the goal generally is to 'get back' to limiting spending growth to 3 percent each year. 'If we don't do that in the long term, the state is not going to have budgets it can support.'
Others warn the state is in for a reckoning, particularly should Trump and Congress slash federal aid to states. (His administration has
paying the millionaires tax, by leaving the state or by devising other tax strategies to avoid the payments,
it will become less reliable and threaten the new programs built upon its revenue.
'It's going to be a crash,' Craney said. 'It's very predictable.'
Matt Stout can be reached at