What entities and activities does the legislature budget for annually?

In the annual budget of the Commonwealth, the legislature provides for the primary governmental activities of the Commonwealth, the legislative, executive and judiciary branches. 

These activities are accounted for principally through the General Fund and the Highway Fund.  In 2007, expenditures of $26.5 billion flowed through the General Fund and $1.1 billion through the Highway fund, accounting together for 99% of the Commonwealth’s budgeted expenditures.  A few small special purpose funds account for the other 1% of budgeted expenditures.

Also included in budgeted expenditures, are various contributions from the General Fund to the operations of the following entities.  However, the legislature does not budget for their entire operations:

  • University of Massachusetts
  • State and Community Colleges
  • Cities and Towns
  • Regional School Districts
  • Universal Health Care Funds (see below)

 Allocations and contributions to the following independent authorities are subtracted from projected tax revenues prior to budgeting.  The legislature has the authority to amend these non-budgeted allocations and contributions, but does not generally do so as part of annual budgeting:

  • School Building Trust (sales tax allocation)
  • MBTA (sales tax allocation)
  • Pension Reserves Investment Trust  (contribution per schedule set by Administration and Finance every three years subject to legislative approval)

 Even within the legislative, executive and judicial branches, certain additional revenues and expenditures flow through Non-budgeted Special Revenue Funds.  The major funds in this category each have quite different flows:

  • Federal Grants Fund, $2.0 billion in FY2007 in spending and transfers (See Single Audit report at www.mass.gov/osc for breakdowns by program)
    •         Accounts for special purpose federal grants received and spent through various executive agencies
      • Housing and education pass throughs to municipalities and private parties are significant
      • Excludes Medicaid, other general fund federal aid, and federal highway construction funds
      • Although not budgeted, some expenditures are appropriated in Section 2D of the General Appropriations Act        
  • Lotteries Funds, gross revenues (before prizes and expenses) of $4.7 billion in FY2007 — distributed $921 million to cities and town in 2007, leaving a deficit balance of $119 million; also distributed $78 million for the arts.
  • Universal Health Care Funds (five distinct funds); received transfers of $1.1 billiion from the General Fund through outside sections of the budget in FY2007. Pursuant to Ch. 29, s. 2ooo, these funds can be expended without further appropriation.Note:  These funds are not accounted for in the revenue balancing in Section 1A of the GAA; the Health Security Trust Fund is a sixth fund which consolidates other funds health care related funds.
  • Miscellaneous much smaller special purpose funds with special revenue sources

Long term debt service is paid primarily from the Highway and General funds.  However bond proceeds are deposited in capital project funds.  Expenditures from these funds are limited to the purposes specified in the bond authorization legislation, but the funds are not made available in the fund until the Governor elects to request that the Treasurer issue the bonds.  Bond authorizations come through for different purposes every three to five years.

Other Commonwealth funds and independent agencies and authorities comprising or related to the Commonwealth do not materially affect (and are not materially affected by) the annual legislative budgeting process.  Notably, the fiduciary Unemployment Insurance Trust Fund is financed by unemployment taxes and isolated from the other financial operations of the state.  Several much smaller fiduciary funds allow for expenditures as directed by certain gifts and grants.

See generally, the Commonwealth’s Statutory Basis Financial Report, which is designed to measure compliance of operations with the legislature’s appropriations and other rules, available at www.mass.gov/osc.

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.