Resources & Glossary

State Budget Resources

MassBudget's website: www.massbudget.org. This website includes all of the Budget Briefs and Budget Monitors that MassBudget writes on every step of the budget process. To get a listing of all Budget Monitors listed by fiscal year, please click on Budget Monitor located under “MassBudget Reports by Topic.”

Governor's Budget website: This website provides information, including descriptions of spending accounts and links to agencies that oversee spending for each account. It also provides a breakdown of spending within each account.

Massachusetts State Legislature's Homepage: This website contains a section on the budget recommendations for the upcoming fiscal year as well as the text of previous fiscal year budgets. The House budget website provides the text of the original House Ways and Means budget, texts of amendments and the final House Budget. The Senate’s budget website provides the Senate Ways and Means budget, text of amendments and the final Senate Budget. The website also has the final Conference Committee budget.

General Appropriations Acts for Previous Fiscal Years: Use these links to find text and earmarks in specific line-items:

Information on the American Recovery and Reinvestments Act (Federal Stimulus Bill) for Massachusetts: The American Recovery and Reinvestment Act was signed into law on February 17, 2009. Massachusetts’ ARRA website explains how federal stimulus money is being spent in Massachusetts and outlines the government’s future plans for economic recovery.

Federal Information on the American Recovery and Reinvestment Act: Provides information on federal implementation of ARRA.

Massachusetts Department of State Revenue: Information on state revenue.

Local Aid Information (Cherry Sheets): This site provides information on local aide and lists the amount of aide each community in Massachusetts receives from the state.

Overview of the State Budget Process

Every year the Governor proposes a new budget for the next fiscal year. This is followed by budgets proposed, debated, and then voted on by the House and Senate. The state budget is not final until signed into law by the Governor. Unlike the federal budget which can run a deficit, Massachusetts must keep its budget in balance. Revenues that Massachusetts collects to pay for programs in the budget include money raised through taxes such as the income tax, sales tax and corporate taxes; fees and fines levied by state agencies; and federal revenues that are targeted for specific programs, such as Medicaid (for health care) and Title I for public schools.

The budget process begins in the fall when state agencies submit their budget requests to the Governor’s Executive Office of Administration and Finance (A&F). Usually in January, the Governor drafts his or her spending plan and submits it to the Legislature. The House Ways and Means Committee usually proposes its budget recommendations in April, which are then debated and amended by the full House of Representatives. The Senate Ways and Means Committee drafts its budget, which is usually debated and amended during late May by the full Senate. In early June, the House and Senate each appoint three members who become the conference committee and have to reconcile the differences between the two budgets. The final document is passed by the House and Senate and is sent to the Governor. Often in June the Governor signs the budget, usually accompanied by a “veto message” in which he/she strikes certain parts of the budget. The Legislature then has the opportunity to override individual vetoes by a two-thirds vote in each branch. The final budget, called the General Appropriations Act (GAA), goes into effect on July 1, the beginning of the state’s fiscal year.

Budget Glossary

American Recovery and Reinvestment Act (ARRA) : The $787 billion federal recovery act, signed by President Obama in February 2009 in response to the economic crisis that began in 2007, makes targeted investments in federal, state and local governments, as well as non-governmental organizations and individuals, through direct appropriations, competitive grants, and tax adjustments. ARRA provides funding for infrastructure investments; state and local budgetary relief for education, health care, public safety and other programs; support for counter-cyclical programs such as unemployment insurance, food stamps and workforce training; tax benefits; investments in green energy; and other areas.

Budget Deficit : A budget deficit occurs when the state spends more money than it takes in.

Chapter 70 : The Chapter 70 line item funds unrestricted state aid for public K-12 education. It is distributed by formula to local and regional school districts across the Commonwealth. For more information, please see the MassBudget Chapter 70 Fact Sheet.

“Conference Committee” budget : Refers to the joint budget proposal put forth by the House and Senate branches of the legislature. The Conference Committee works to reconcile differences in the budget proposals independently approved by both the House and the Senate, offering a single, combined “Conference Budget”. This “Conference Budget” then must be approved separately by both the House and Senate before going to the Governor’s desk for final approval (and/or line-item veto alterations).

Consensus Tax Revenue Estimate : Prior to the beginning of the budget process in January of each year, the governor and Legislature usually agree on how much tax revenue they believe that the state will raise in the upcoming fiscal year. The Governor’s, House and Senate budgets then use this revenue estimate to build their respective budget proposals.

Current (budget) : MassBudget uses the term “current” to refer to a budget in the midst of the current fiscal year. “Current” budget figures incorporate any changes to funding levels that may have occurred after the budget was enacted. This would include all 9C cuts (see definition above), supplemental budgets (see definition below) and all other changes which may occur mid budget cycle. As such, it is the most up-to-date budget data available during the “current” fiscal year. Only one “current” budget is displayed in the Browser for the most recent enacted budget (e.g., FY11 Current). A budget is considered “Current” until it is finalized after the end of the fiscal year when all accounts are reconciled, at which time it is designated as “Final” (see definition below).

Deficiency Budget : See “Supplemental Budget.”

Earmark : Earmarks may appear in the language which accompanies an appropriation and direct a specified amount of money to a particular purpose or programs.

FMAP : The federal reimbursement rate paid to states to offset their Medicaid spending (Federal Medicaid Assistance Percentage, or “FMAP”). This rate varies from state to state as determined by each state’s per capita income, with lower income states receiving a higher reimbursement rate. Rates range from 50 percent reimbursement to 75 percent. Massachusetts has a 50 percent reimbursement rate. As a result of the current economic downturn, the federal ARRA law (see definition above) temporarily increased FMAP reimbursement rates in order to provide states with additional budgetary relief. This temporary increase was referred to as “enhanced FMAP.” This enhanced FMAP rate increased Massachusetts’ federal reimbursement for its Medicaid related spending to 65 percent.

Final (budget) : The Browser displays final budget numbers (“Final”) for each fiscal year that has officially come to an end. The final budget figures include all funding changes that may have occurred during the fiscal year, such as 9C cuts (see definition above) or supplemental budgets (see definition below).

Fiscal Year : Period that the Massachusetts state budget covers: July 1 through June 30. The fiscal year is always named for the second calendar year covered. For instance, Fiscal Year 2009 lasts from July 1, 2008 to June 30, 2009.

General Appropriations Act (GAA) : The GAA is the fiscal year budget as passed by the Legislature and signed into law by the Governor.

General Fund : Most of the revenue raised by the state is deposited into the General Fund and is used to pay for programs funded in the state budget.

“HWM” budget : Refers to the House Ways and Means budget proposal.

Inflation-adjusted dollars : Inflation-adjusted dollars take into account the decrease in the purchasing power of money within an economy over time (e.g., one can purchase less with $1 dollar today than one could purchase with $1 dollar 30 years ago). To read more about how MassBudget adjusts for inflation, click here.

Line Item : Unit by which the Legislature appropriates money. Line items consist of an account number, language that outlines how the money may be spent, a dollar amount, and the fund designation.

9C Cut : Refers to Section 9C of Chapter 29 of the Massachusetts General Laws. Section 9C requires the Governor to act when projected revenues fall below authorized spending, as may occur when revenue collections during the course of a fiscal year are lower than expected. These 9C cuts ensure that the budget is brought back into balance by either making immediate adjustments in spending accounts or recommending increases in revenue. Any revenue increases must be approved by the Legislature.

Nominal dollars : These are dollars that are not adjusted for inflation.

“Off-budget” spending : This term is used informally to describe funding that is not easily identified during the budget process. Some people use the term “off-budget” to refer to pre-budget transfers or operating transfers. This term is also sometimes used when specified fees or assessments go directly to fund specified programs or services, without going through the budgetary process.

For example: Before FY09, certain county sheriff’s departments retained a portion of the fees they assessed, in order to fund a portion of their operations. These fees were not deposited in the General Fund, but were kept for use by the counties. During FY10, these sheriff’s departments began remitting those fees to the General Fund, and then received additional funding in line item appropriations. Before FY09, these sheriff’s departments were funded “off-budget”. In FY10, these sheriff departments came “on budget”.

Operating Transfer : An operating transfer is a line item that moves funds from the General Fund to trust funds that support specific programs. Examples of operating transfers include: the MBTA operating transfer (1595-6370) and the Regional Transit Authorities operating transfer (1595-6369). Starting in FY11, operating transfers are identified in Section 2E of the GAA with line item numbers starting with “1595-”. In previous fiscal years, these operating transfers were identified in language in outside sections of the budget (see definition below).

Outside Section : Outside sections, are the sections of the GAA after the appropriations listings. Beginning with Section 3, these sections may contain specific provisions of law which affect appropriations contained in the budget, make other special laws that usually apply for only one fiscal year, or amend the General Laws to implement permanent changes. Prior to FY11, outside sections of the budget often included language identifying operating transfers.

Pre-Budget Transfers : Pre-budget transfer is a term used to describe certain taxes and fees that are statutorily deducted from state revenue to fund specific items in the budget prior to the appropriation process. These amounts reduce the total funding available to the Legislature for appropriation. (For example, a specified portion of sales tax revenue is automatically directed to fund the MBTA). MassBudget includes these pre-budget transfers as part of the budget and are reflected in budget figures which display on the Browser.

“Rainy Day” Fund : See “Stabilization Fund.”

Reserve Accounts : Line items that start with the numbers “1599-“ are usually considered reserve accounts. These line items are often one-time holding accounts, and the funding may be incorporated into other line items in subsequent years. Reserve accounts are frequently used to fund personnel costs associated with collective bargaining agreements.

Retained Revenue : Retained revenue accounts specify how much of the revenues (usually fees, charges or reimbursements) that a department or program raises may be kept or “retained “to help pay for services offered by that department or program. Retained revenue accounts are appropriated through line items in the state budget. Oftentimes, line item language attached to a retained revenue account specifies the activities or programs for which retained revenue funds should be allocated. Any revenues raised above that amount must be returned to the General Fund.

Supplemental Budget : A supplemental budget for the current fiscal year can be proposed and passed by the Legislature to provide additional funding to programs with a funding shortfall (also known as a Deficiency Budget) or as needed to accomplish a new or expanded purpose. In most fiscal years, the Legislature approves several supplemental budgets in order to address program cost changes and/or changes in revenue collections.

Stabilization Fund : Also known as the “rainy day” fund, any end-of-year budget surplus is deposited into this fund. The state can use this money to fund programs if there is a budget deficit. Please note: This is different from the “State Fiscal Stabilization Fund” associated with ARRA (see definitions above) .

State Fiscal Stabilization Fund : The American Recovery and Reinvestment Act (ARRA) (see definition above) created a “State Fiscal Stabilization Fund” (SFSF), which is comprised of three components: an education block grant, a flexible block grant, and a state innovation fund. Generally, these funds have been used to supplement state budgets and help state and local governments avoid some budget cuts amid the growing state fiscal crisis brought on by the 2007 recession, particularly in education and public safety. SFSF allocations are included in the Budget Browser.

“SWM” budget : Refers to the Senate Ways and Means budget proposal.

Veto : Action taken by the Governor, authorized by the Constitution, to disapprove a legislative bill. For state budgets, the Governor may disapprove individual line items, or portions of line items, and outside sections. Vetoes may be overridden by a two-thirds vote of both the House and the Senate.

For more budget glossary terms, please visit the Governor's budget web site.