BOSTON — Legalizing online lottery sales and giving expected wagering revenue to child care providers, significant spending on environmental agencies, and major new investments in education and transportation headline the $56.2 billion state budget bill House Democrats rolled out Wednesday.

The House Ways and Means Committee unanimously advanced its fiscal 2024 spending plan (H 3900), opening the floodgates for hundreds of proposed amendments ahead of debate during the week of April 24.

Top House leaders are pursuing significant spending increases, fueled in part by newly available surtax revenue, while they move simultaneously to phase in permanent tax relief changes gradually in the face of shifting economic currents.

“Much like our proposal for tax relief, our FY24 budget proposal focuses on fiscal responsibility by balancing the current strength of revenue with the uncertain economic future brought on by inflation and external financial issues,” said House Speaker Ron Mariano. “The one thing I want to stress is we’ve tried to be consistent in the legacy of fiscally responsible leadership to show that we want to keep a balanced and competitive state and our economy strong.”

Mariano and House Ways and Means Committee Chair Rep. Aaron Michlewitz called their budget a $56.18 billion spending plan, which would be an increase of about $3.73 billion or 7.1 percent over the$52.44 billion fiscal year 2023 budget originally enacted last summer.

Like Healey, House leaders in their budget move to spend $1 billion in revenue from a new surtax on high earners, though they called for an even 50-50 split between education and transportation investments rather than the 51-49 division in the governor’s plan.

On the transportation side, the House budget would steer $250 million in surtax money toward MBTA capital investments and $65 million toward a T workforce and safety reserve while also deploying $5 million toward the rollout of means-tested fares.

Both bills would segregate surtax revenues into an Education and Transportation Fund, and Michlewitz said his panel’s budget proposal would deploy that money “100 percent on top of existing appropriations” rather than use it to replace other spending levels.

House officials say 1.25 percent of their budget would go toward state environmental agencies, a new spending milestone in the wake of several major climate and clean energy bills that have won approval on Beacon Hill in recent years.

The chamber’s top Democrats were cool to Healey’s push to implement what the administration called a “tuition or fee lock” for in-state UMass and state university undergraduates. Healey’s budget would require those campuses to charge students the same rate for all four years they attend, providing more certainty up front for families.

House leaders instead sought new investments in other higher education initiatives, including $50 million of surtax money to expand the High Demand Scholarship program to offer assistance to students pursuing “in-demand” professions. The bill also mirrors Healey’s proposal to put $20 million toward a new MassReconnect program that would cover unfilled community college costs for adults older than 25 without a degree.

Other House budget highlights include a push to revive and make permanent a pandemic-era renter protection measure known as Chapter 257, which required eviction cases to be paused while a tenant has an application pending for rental aid, and the latest effort to provide free no-cost communication between inmates and their families.

Unlike Healey’s budget, which would limit the amount of free calls to 1,000 minutes per person per month and offer them only to Department of Correction inmates in state prisons, the House bill would not impose a cap and would apply the requirements to both DOC and sheriffs who run county jails.

Beacon Hill budget-writers cannot seem to agree on the numbers in play. House officials said their plan is about $160 million more than Gov. Maura Healey’s budget proposal, while Healey herself pegged her spending plan at $55.5 billion, nearly $700 million less than the House’s. Meanwhile, analysis from the Massachusetts Taxpayers Foundation estimated Healey’s budget contains $55.28 billion in line-item spending compared to $55.32 billion in the House budget.

Michlewitz attributed some of the increased spending in the House’s budget compared to differing approaches to tax relief. While the House’s $1.1 billion tax relief plan due for a vote Thursday (H 3770) carries a larger annual impact than Healey’s $986 million proposal, it would be felt less next year due to a multiyear phase-in of some of the reforms.

Mariano said Wednesday that implementing tax code changes more slowly will give legislative leaders “flexibility” to adjust their plan if the state loses its financial footing.

“One of the precautions we took against the headwinds was the rolling in of the changes. Those are protections that give us flexibility if things really take a turn for the worse,” Mariano told the News Service, adding that House leaders are “very comfortable” with the spending proposed in their budget.

House leaders matched Healey’s plan to provide about $26.6 million in funding for the office of Auditor Diana DiZoglio, whose bid to audit the Legislature has been met with resistance. They did not, however, include language recommended by Healey changing the amount of time DiZoglio’s team has to complete audits from three years to four years.

“We kept it at the three years,” Michlewitz said. “We felt the budget was not the place to potentially settle political scores.”

Online Lotto push linked to early ed focus

The House budget bill would spend $100 million on rate increases for child care providers and authorize $490 million in Commonwealth Cares for Children (C3) grants, both aimed at stabilizing the early education industry whose struggles fuel high costs and restricted access for families.

Another year of those pandemic-era C3 grants would be funded from a trio of sources: $250 million from the state’s general fund, $40 million in revenue from the new surtax on high earners, and, in a major policy push House leaders will make in their budget, $200 million in revenue from proposed legalization of online Massachusetts Lottery games.

Top Democrats said Wednesday they believe expanding gambling onto another front will place the Lottery on equal footing with in-person and online sports betting, a nascent industry that has quickly blanketed airwaves with advertisements and attracted a steady stream of players.

The House approved online Lottery sales in an economic development bill last year, but it did not survive in the final version negotiated with the Senate.

“We thought it was the time last year. I think we feel it’s been the time for a little while now,” Michlewitz said. “C3 being a new initiative, we figured find a new revenue source to help offset that new initiative, help pay for that new initiative. Also, in the world now with mobile sports betting being so popular, we feel that it’s time for our lottery system to also have a competitive advantage or an equal playing field.”

Treasurer Deborah Goldberg has been pressing for years for authorization to offer Lottery games digitally, and declared in 2019 that “if sports betting is available online, the Lottery must be available online also.”

Under the House bill, after distribution of award winnings, 15 percent of the online Lottery revenue would go toward expenses at the Lottery Commission and the rest would be steered into an Early Education and Care Operational Grant Fund.

Mariano and Michlewitz said they expect “iLottery” to make $200 million available for C3 grants.

Their budget would also order the state Department of Early Education and Care to produce a report by Oct. 15, 2023 summarizing the current formula for distributing those grant dollars and recommending ways to ensure the money makes the most impact on communities with the greatest needs.

Another major children and families focus in the budget is permanent funding for a universal school meals program.

Lawmakers deployed Massachusetts dollars to keep providing free meals in schools on a temporary basis after the pandemic-era federal program expired. The House budget would keep it in place long-term, making Massachusetts the fifth state to do so, and use $161 million in surtax revenue to cover the costs.

More than 80,000 Bay State students have eaten lunch daily in schools since the program’s launch, and it has saved families as much as $1,200 per child per year, House leaders said.

“Having spent 12 years in a classroom, I can’t stress how important this is, to know that every student in Massachusetts will not go to school hungry or spend a school day without anything to eat has to ease the mind of all the teachers out there who have to face these kids who can’t focus because they left the house without breakfast,” Mariano, a former teacher, said. “I don’t think we can stress that enough.”

Healey sought to fund the universal school meals program for another year, but not permanently, in a standalone spending plan before the Legislature.

Local aid increases, decreases

Although Michlewitz touted “historic funding for local aid,” the budget from House leadership is a bit of a mixed bag for cities and towns compared to Healey’s proposal.

House Democrats proposed about $6.58 billion in Chapter 70 aid for schools, which they said would fully fund the third year of the K-12 funding reform law known as the Student Opportunity Act. That’s about as much in Chapter 70 funding as Healey sought, though the House bill also features an additional $7.86 million supplement to provide a minimum aid increase of $60 per pupil.

The House bill funds charter school reimbursements at $230 million ($13 million less than Healey’s budget), regional school transportation at $107 million ($10 million more) and the special education circuit breaker at $506 million ($3 million more).

When it comes to unrestricted general government aid for cities and towns, often referred to as UGGA, House Democrats proposed $1.25 billion or a 1.6 percent increase over the current fiscal year, mirroring the projected growth in state tax revenues next year.

Municipal leaders have been pushing for the state to expand UGGA beyond that tax revenue baseline, arguing that inflation and surging tax collections in recent years have left cities and towns behind.

Massachusetts Municipal Association Executive Director Geoff Beckwith asked lawmakers last month to approve $1.3 billion in UGGA, a 6.13 percent increase. He called Healey’s proposal to increase unrestricted local aid by $24.6 million or 2 percent – slightly more than the House would offer — “too low.”

Last year, former Gov. Charlie Baker and the House proposed identical local aid increases of 2.7 percent, and the Senate called for doubling the UGGA growth. That larger figure survived in the final budget that Baker signed.

The largest chunk of the budget, MassHealth, would be funded at $19.8 billion, which is $1.9 billion or about 8.8 percent less than in the FY23 budget. Like the Healey administration, House Democrats are expecting the process of redetermining MassHealth eligibility for the first time since COVID-19 began to significantly reduce enrollment in the state’s Medicaid and Children’s Health Insurance Program.

Policymakers agree the process will lead to hundreds of thousands of Bay Staters losing coverage from the state-run health insurance program, but they appear to be struggling to nail down how many will be affected.

The Healey administration initially estimated MassHealth membership would drop from more than 2.3 million to 1.9 million due to redetermination, a decrease of about 400,000, and a few weeks later projected the number would be around 300,000.

Michlewitz said during a Wednesday budget briefing that “around 800,000 current MassHealth members may lose eligibility during the redetermination process.”

When a reporter asked if the House was projecting twice as many people will lose coverage as the administration expects, Michlewitz said the 800,000 figure he used refers to the number of people sent blue envelopes indicating MassHealth needs more information to determine their status.

“We don’t know what the exact number is going to be at the end of the day. We’re going to play it safe and say that’s the potential, up to that amount,” Michlewitz said. “Up to 800 [thousand] is being redetermined. Exactly how many will lose [coverage], I think, will play out during the process, and we don’t know those numbers yet until they go through the process.”

The House’s budget bill matches the $19.8 billion in funding for MassHealth in Healey’s budget, a figure that Michlewitz said “we may have to revisit” during the fiscal year once the dust settles on redeterminations.

With an eye toward the disruption, House Democrats in their budget proposed launching a two-year pilot program expanding eligibility for ConnectorCare to residents earning up to 500 percent of the federal poverty level, which in 2023 is $30,000 for a family of four. They estimate that change could swell enrollment in ConnectorCare to between 47,000 and 70,000 people, combining both new and existing members.

In a separate interview alongside Mariano and Revenue Committee Co-chair Rep. Mark Cusack later on Wednesday, Michlewitz said that pilot program is “one initiative that will help alleviate some of those challenges for folks that may be taken off of MassHealth.”

“The whole purpose of the Connector is to help people in transition provide a cost point where they can purchase insurance to protect themselves,” Mariano said. “That’s the whole purpose for the Connector when it was created. We have to use it. It’s an entity in place that we expand with what he did in the budget today that will take care of anyone.”

“We know that this is a fluid process in terms of what may be needed. We’ll work with the administration and [Executive Office of] Health and Human Services in terms of making those determinations going forward if we need to,” Michlewitz added. “This is a large number to be potentially redetermining, so I think we’ve got to be flexible in terms of how we can handle that.”

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