Top Budget Writer Open To Ideas During “Incredibly Turbulent” Time
BOSTON, FEB. 27, 2025…..The Senate budget chief knocked the possibility of dipping into the state’s more than $8 billion rainy day fund Thursday to address financial woes, but also warned that federal policymaking and looming cuts could cripple Massachusetts’s economic wellbeing.
“Our state’s economic and fiscal health is very much at risk of being upended,” Senate Ways and Means Chair Michael Rodrigues said during public “Commonwealth Conversations” remarks hosted by Associated Industries of Massachusetts at Peabody Nixon’s law offices in downtown Boston.
While shifting priorities and the withdrawal of federal funding supports in Washington could have widespread effects on people, jobs and budgets here, Beacon Hill appears to be waiting for more detailed indicators from Washington on the extent of the upheaval.
The Westport Democrat urged business and labor communities to find common ground with the state to safeguard the economy “in the face of intensifying economic headwinds and geopolitical turbulence.”
“Whether it’s in education, health care, infrastructure, workforce development, tax policy or unemployment insurance, it is imperative that we all work together to ensure that Massachusetts remains strategically positioned to weather the storms ahead,” Rodrigues told dozens of business leaders.
He continued: “The federal-state partnership is very much in jeopardy, posing an existential threat to our state. In fact, the recent proposal to cut NIH funds represents an assault on Massachusetts’s economy, since the commonwealth is the largest recipient of NIH funds per capita. This action not only stifles innovation, but it would jeopardize medical research, blunt future scientific discoveries, and lead to the eventual loss of jobs in the eds and meds sector of our economy, whose overarching mission is to compete, is to improve health outcomes and save lives.”
Healey this week has ramped up her administration’s criticism about the Trump administration’s cuts to National Institutes of Health funding, saying the loss of money will jeopardize the state’s life sciences ecosystem and harm people undergoing stalled clinical trials. Even with Attorney General Andrea Campbell’s lawsuit against the abrupt cuts, which led to a judge issuing a temporary restraining order against NIH, Healey told reporters Wednesday the money is still not flowing to Massachusetts.
U.S. House Republicans approved a budget blueprint Tuesday that could result in $880 billion cuts to Medicaid, a plan that Healey says could cause 2 million Bay Staters to lose their health insurance coverage. To Rodrigues, that blueprint — which still must be ironed out in committees and in negotiations with the Senate — signals “clearly that this vital source of revenue support is very much at risk of being cut significantly.”
“This action alone would be destabilizing for states like ours that rely on this assistance to support our Medicaid populations, those folks who are most vulnerable, disabled and medically complex,” Rodrigues said. “It would also be devastating for our fiscally constrained hospitals and community health centers who are doing what they can do to deliver critical services populations need.”
Rodrigues noted MassHealth is the largest line item in the state budget at nearly $20 billion. Medicaid cuts would affect nearly all families in Massachusetts, including those with loved ones in nursing homes or long-term care facilities, he said.
“I’m just going to live day by day — that sooner or later, it will implode,” Rodrigues said. “We get federal reimbursement of about 50%, not quite, but about 50%. Any adjustment to that is a killer to us.”
U.S. House Republicans have not detailed cuts, but say their approach is intended to tamp down on “unsustainable” Medicaid spending. Healey’s fiscal 2026 budget included more than $16 billion in federal funding, with the majority linked to Medicaid.
As Beacon Hill lawmakers wait for more detail, Rodrigues stressed the importance of “exercising fiscal constraint and remaining vigilant during this incredibly turbulent and uncertain time.”
“We must forego any immediate temptation that may hurt our state’s long-term economic health, while carefully identifying and assessing areas of concerns where we, as a commonwealth, may need to shoulder the burden in the absence of federal support,” Rodrigues said, without offering specific details.
Fearful about the loss of federal funding and Healey’s budget cuts, the Raise Up Massachusetts coalition, labor unions and health care advocates have recently called on Beacon Hill to draw from the state’s rainy day fund to close potential budget holes.
Rodrigues shot down the prospects of using the bulging reserve account, as he fielded questions from Stephanie Swanson, a former Beacon Hill staffer and AIM’s executive vice president of government affairs.
“There’s no talk of using the rainy day fund,” Rodrigues told Swanson, who asked if the account could be used to fill potential gaps from NIH or other federal funding. “It’s going to be hard-pressed when we are experiencing revenue growth.”
Budget writers have predicted a 2.2% increase in state tax revenue, and Rodrigues said the “appropriate time” to use the rainy day fund is when revenues are declining. Rodrigues pointed out the state’s bond rating increased in 2023 for the first time in almost a decade, as he credited the Legislature’s “fiscal discipline.”
Pressed about the availability of other state resources or options to help Bay Staters who may lose MassHealth coverage, Rodrigues noted Massachusetts has drained another savings account over the migrant crisis inundating state-funded shelters.
“Massachusetts state budget can only spend Massachusetts state revenue. So we are looking very closely at our projected revenue growth, and it’s got to come from somewhere,” Rodrigues told the News Service.
“And I always say, you can only spend a dollar once,” he continued. “So, we’ve taken a lot of money out of savings over the last year to deal with the emergency assistance program. That money is not available to spend on anything else, so it’s going to be a challenge. I don’t have an answer. We don’t know where it’s going to come from yet.”
Rodrigues, fielding questions from Swanson, would not say whether his branch’s fiscal 2026 budget would include new tax provisions. But he said his team is reviewing Healey’s proposed tax code changes, including subjecting candy to the sales tax and imposing a new tax on prescription drugs.
“We’ll look at every one of her proposals. Our mantra, as you know, has been to reduce taxes — reduce tax burden,” Rodrigues said, as he invoked last session’s tax relief package.
“I mean collectively, we’ll have discussions in the Senate to see if any of her tax proposals — none of them are major, none of them are broad-based — they’re all very targeted, whether it’s prescription drugs, pharmaceuticals, candy,” he added. “We’ll collectively make a decision, so it’s too soon to say whether or not we’re going to adopt them. Any that we don’t adopt means we just build a hole in the budget, deeper and deeper.”
Rodrigues, asked whether his branch is considering any tax increases or policy changes beyond Healey’s recommendations, told the News Service, “Not as of yet.”
“But if somebody — we don’t discount or dismiss any proposal,” Rodrigues said. “So if someone were to come to us with a proposed tax policy, which no one has, but if somebody would, we’d look at it. We’re looking at the governor’s tax proposals because they reflect real dollars. It’s still too early to know whether or not what we will accept or what we will reject.”
The Massachusetts economy could also be hamstrung by President Donald Trump’s stalled tariffs on Canada and Mexico, Rodrigues indicated.
The cranberry industry, for instance, is “just recovering” from tariffs imposed during the first Trump administration, Rodrigues said. Asia, which Rodrigues described as a large importer of cranberries, ended up buying the produce from Canada during Trump’s initial tenure.
“So Quebec and Canada now is the No. 1 producer of cranberries in the world. Massachusetts has slipped, but we’re beginning to recover from that,” he said. “So who knows what’s going to happen again this time.”
