BOSTON – Having watched another week go by without finalizing budget work left over from fiscal year 2019, the House and Senate now stand to forfeit more than $1 million in interest that the state could have earned had lawmakers completed their work on time.
The Legislature’s inability to agree on a bill closing the books on the fiscal year that ended in June is keeping Comptroller Andrew Maylor from filing an annual report, which he was statutorily due to file by Oct. 31. And with the branches at loggerheads over the supplemental budget, hundreds of millions of dollars in fiscal 2019 surplus funds are sitting in the general fund waiting to be transferred to the stabilization fund.
In late October, Maylor told the Legislature that if he was able to file his report by Friday, Nov. 15, the state will have lost out on more than $500,000 in interest and would lose out on at least $30,000 more each day after the 15th until he is able to file the report and make the transfer.
But it will take Maylor’s office about 14 days — or $420,000 in foregone interest — from the time Gov. Charlie Baker eventually signs the supplemental budget bill to be ready to file his report, he said. So if the Legislature enacts the bill at the next chance it has, Monday, and the governor signs it immediately, Massachusetts will have lost out on $1.01 million in interest payments by the time all is said and done.
“I realize that in the context of the state government spending that this amount may not seem important, but as a taxpayer and someone who spent more than 25 years in local government, that sum is meaningful,” the comptroller wrote to the governor and Legislature in late October, when the estimate of forfeited interest was only $500,000.
The money is still earning interest in the general fund, Maylor’s office told the News Service, but the state is losing out on the additional interest that money could be making because a portion of the stabilization fund is invested in CDs at local banks, which earn higher yields than the general fund.
Maylor’s office said it plans to provide a more precise estimate of the interest the state has forgone once the supplemental budget bill is enacted and the transfer is completed.
Among the spending being held up in the supplemental budget is a $50 million outlay to accelerate MBTA improvements, an additional $17 million in local scholarships, nearly $2 million for special education circuit breaker costs, $2.4 million for regional school transit and $2 million more for transportation costs for homeless students.
With the books still open on fiscal 2019 the Department of Revenue on Friday will make its annual distribution of matching funds to cities and towns that raise revenue through the Community Preservation Act but the extra $20 million that the Legislature directed to the CPA Trust Fund won’t be part of the payout because it is tied up in the budget bill. The same goes for $10 million that the Legislature directed to the Massachusetts Life Sciences Investment Fund. That money will only become available once fiscal 2019 is officially closed out.
The impasse raises questions about relations between House Speaker Robert DeLeo and Senate President Karen Spilka, whose first-time budget chiefs, Rep. Aaron Michlewitz and Sen. Michael Rodrigues, were the last in the nation to agree on an annual state budget this summer. In addition to disagreements over the content of the bills, the two sides have been sniping over a procedural issue delaying the already late-arriving bill.
“We’re waiting for them to deal with it. But the urgency is there,” Rodrigues said two weeks ago. He later added, “Right now, we sent to the House our version of the supp budget. So we’re waiting for them to figure out what they want to do with it.”
While both branches adopted a version of the supplemental budget bill, the Senate used a somewhat rare, but not unprecedented, procedure of advancing the legislation in a new bill rather than as a strike-and-replace amendment to the House’s existing version. Having two vehicles (H 4132/S 2386) for the supplemental budget means one of the branches would have to bring it back to the floor for a second vote.
“I know that they have their thing, they’ve added some, you know, almost like a new bill,” House Second Assistant Majority Leader Paul Donato said of the Senate two weeks ago. “We have ours. So I’m not sure how we’re going to straighten it out.”
Lawmakers have appeared unfazed by the inability to wrap up the fiscal year that ended 138 days ago, although the protracted process is cutting into the amount of time legislative leaders have to focus on other issues. The Legislature often procrastinates, leaving many important decisions to be made in a frenzy every other July.