Healey launches budget cycle with $63.4 billion plan

STATE HOUSE, BOSTON — Gov. Maura Healey filed her reelection year budget plan Wednesday, sending the Legislature a $63.36 billion proposal that would increase spending by 3.8% compared to the budget she signed last summer while tax revenues are projected to grow just 2.9%.

Healey’s fourth budget plan (H 2) comes amid a challenging atmosphere of eroding federal supports, sluggish growth in general purpose tax revenues and a taxpaying public that is battling daily cost-of-living concerns.

The governor centered affordability in her State of the Commonwealth address last week and appears poised to make affordability a main talking point around her budget plan: her administration announced it as a document that “invests in key programs that residents rely on to make their lives easier and more affordable.”

“This budget is about making life easier and more affordable for Massachusetts residents and businesses,” Healey said in a statement. “At a time when budgets across the country are tight, this proposal maximizes our resources to deliver on what matters most while controlling spending, protecting taxpayer dollars and driving economic growth.”

Lawmakers will now unpack details of her spending plan and check to see if it achieves her stated goals.

Healey was set to unveil her budget in an early afternoon press conference at the State House. Aides to her office and the various Executive Branch secretariats packed the pressroom, where windows were opened to let cold outdoor air in. The governor was expected to be joined by her Cabinet for the budget announcement.

The $63.36 billion bottom line includes $60.114 billion in line item spending, $2.7 billion in spending supported by the state’s income surtax, and a nearly $550 million transfer to the Medical Assistance Trust Fund. Compared to the budget Healey signed last year, it represents an increase of about $2.32 billion or 3.8%.

Administration and Finance Secretary Matthew Gorzkowicz said the administration’s goal in development of the budget was to limit the growth of accounts and seek efficiencies rather than have to eliminate programs. He said he expects health care costs to be the greatest challenge in managing the budget through fiscal 2027.

The governor’s budget was built on an estimate that Massachusetts will collect $44.9 billion in tax revenue, 2.9% more than is expected to come in this year, in fiscal 2027. Excluding surtax revenue, the agreement foresees $42.2 billion in tax revenue for fiscal 2027, an increase of 2.4% over the fiscal 2026 benchmark.

But Healey’s team went beyond the tax revenue estimate agreed to with lawmakers and her budget assumes that the Legislature will adopt a bill she filed this month to delay implementation of some of federal tax law changes that could help taxpayers but hamper the state’s tax collections.

And for 2.9% tax revenue growth to get the state to its $44.9 billion consensus target, fiscal 2026 collections would have to come in at least equal to expectations. A year ago, budget officials agreed on an overall fiscal 2026 consensus revenue estimate that anticipated a 4.8% increase above fiscal year 2025. Midway through fiscal 2026, tax revenues were up by about 1.9%.

Anticipating that fiscal 2027 would be a tight budget year, Gorzkowicz and lawmakers took steps that freed up significant sums of cash to be put into general purpose use in this budget.

The secretary and Ways and Means Committee chairmen agreed to assume $2.7 billion in surtax revenue will come in during fiscal 2027 and to spend the same amount. In past years, they have agreed to spend less than they expected to come in, but this year’s approach makes $300 million more in surtax revenue available for spending compared to the current budget.

And when Gorzkowicz filed the new three-year pension funding schedule that was due earlier this month, he put forward a plan that downshifts the pace at which the state funds its pension liability and frees up $277 million to spend in fiscal 2027 in the process.

The House and Senate will redraft Healey’s spending blueprint and debate their own versions, typically in April and May. Fiscal year 2027 begins July 1, but Massachusetts usually misses the annual budget deadline and is often one of the last state’s to have a full-year budget in place.

The administration on Wednesday also filed a bill to spend $1.153 billion of surplus surtax revenues from previous fiscal years, including $784.7 million for transportation and $358.3 million for education causes. While midyear spending might be more closely monitored as budget conditions tighten, a fiscal 2026 supplemental budget expected in the coming days will total $415 million, including $300 million for the Group Insurance Commission.

This is a developing story. Check back for updates as more information becomes available.

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