Executive Summary Executive Summary

INVESTING IN THE FUTURE OF MASSACHUSETTS

Since taking office, Governor Healey has prioritized a capital investment strategy centered on smart, fiscally responsible investments that tackle Massachusetts’ most pressing challenges. Through capital investments, the administration has lowered housing costs by increasing production, fixed roads, bridges, and public transit systems, improved government services, and created jobs by growing the state’s economy. The administration’s recently published Capital Impact Report, “Building Massachusetts,” highlights how our investments have made Massachusetts stronger, by, for example:

• Unlocking the potential for 49,000 new homes across the state
• Creating over 140,000 jobs through economic development grant programs
• Repairing, replacing, or reconstructing 650 bridges and 420 miles of roadways
• Preserving 21,000 acres of land
• And making it easier for Massachusetts residents to access modern, reliable state services

Looking ahead, the administration is continuing to make capital investments that make life better for Massachusetts residents and visitors. Our Capital Investment Plan (CIP) for Fiscal Year 2027 (FY27) supports critical construction projects, invests in key industries and creates jobs, and provides grants to municipalities and other organizations for infrastructure improvements.

Last year, the administration published a two-year Capital Investment Plan (CIP) for Fiscal Years 2026 and 2027, which allocated $110 million in growth for a total of $3.337 billion in FY27 spending. That approach gave agencies greater certainty and allowed us to make larger, more strategic investments across the Commonwealth. Because FY27 funding was already allocated through last year’s plan, this year’s update does not include significant new funding decisions. Instead, it makes a limited number of net-neutral adjustments to align spending with current project schedules and program demand. These updates allow us to move funding to where it can have the greatest impact now—accelerating priority projects, responding to strong demand in key programs, and ensuring resources are aligned with current project needs.

Key priorities and initiatives funded through the updated FY27 CIP include:

• Housing Production and Preservation: Governor Healey has increased capital funding for housing by 71 percent since taking office, unlocking capacity for new units, making homeownership more accessible for Massachusetts residents, and helping municipalities build critical infrastructure that supports housing development. The FY27 capital plan continues making investments in housing programs that accelerate the implementation of the Affordable Homes Act and advances the Administration's ambitious housing goals.
• Climate and Environment: This capital plan supports ongoing investments in sustainability, climate technology, land preservation, resilient infrastructure, and decarbonization of state assets across Massachusetts. Our updated FY27 CIP increases funding for resiliency and climate programs, including the Municipal Vulnerability Preparedness program, to support high grant demand.
• Economic Development: Through this capital plan, the Administration continues to invest in strengthening Massachusetts’s economic competitiveness and sustaining our innovative, mission-driven, and high-growth economy. The FY27 CIP supports community development and infrastructure improvements in cities and towns across the state, and ramps up investments in emerging technology sectors such as alternative proteins.
• Transportation: The updated FY27 CIP continues making long overdue investments in Massachusetts' transportation infrastructure, ensuring that residents in every region of the state have access to safe and efficient transit. In FY27, the administration invests in Massachusetts’ highways and bridges, advances safety and congestion projects, and accelerates West-East Rail projects to add corridor capacity and an additional platform necessary for expansion of Berkshire Flyer, Lakeshore Ltd, and Boston-Albany.
• State Assets: Well-maintained and modern state infrastructure, from public safety and public health facilities to courthouses, make it possible for residents to access state services. To support state infrastructure, the FY27 CIP funds upgrades to core state technology infrastructure systems and continues investing in critical major projects, including rehabilitation of the Massachusetts Veterans Homes at Chelsea and Holyoke and renovation of the Lemuel Shattuck Hospital.

DEBT AFFORDABILITY

The FY27 CIP’s primary source of funding is General Obligation (G.O.) bonds that are issued to investors who are repaid over time via the state’s operating budget. The amount of bonds Massachusetts can issue in a year is subject to statutory and policy limits. The total amount of G.O. bond proceeds budgeted in any given year is commonly referred to as the “bond cap.”

Last year, to support agencies’ ability to better plan for the future, the FY27 bond cap budget was programmed at $3.337 billion, which represented a 3 percent increase over the FY26 bond cap budget. This projection was in line with modeling and analysis completed by the Debt Affordability Committee (DAC) that projected this modest increase was affordable and would adhere to all established debt parameters.

In addition to general obligation bonded indebtedness, the capital plan leverages other funding sources. This approach allows the state to make strategic funding decisions that maximize all available revenues.

FUNDING SOURCES

Funding for the Commonwealth’s overall CIP is sourced from a combination of funds totaling $6.849 billion in FY27. An overview of FY27 funding sources is provided below.

General Obligation Bonds ($3.337 billion): General Obligation (G.O.) Bonds backed by the full faith and credit of the Commonwealth represent the largest and most flexible funding source for the capital plan.

Federal Funds ($1.614 billion): Various federal programs support aspects of the capital plan, including collaborations with the Army Corps of Engineers, U.S. Department of Veterans Affairs, reimbursement for spending on qualified highways, support for the Clean Water Trust, and reimbursement for IT projects that support MassHealth and other human services agencies.

Special Obligation Bonds ($1.205 billion): Special Obligation Bonds backed by dedicated transportation revenues – primarily gas excise tax and Registry fees – as well as revenues from the Fair Share surtax fund the Rail Enhancement Program (REP) along with new programs including the Rail Reliability and Modernization Program (RRAMP), the Parkway Resilience Improvement and Safety Modernization (PRISM) Program, transportation investments to unlock housing production, enhanced Chapter 90 local aid, and other MassDOT programs to improve bridges, culverts, and pavement statewide on an accelerated schedule.

Other Sources ($263 million): Includes funding from partners such as municipalities, private sector contributors, higher education campuses, and other public authorities.

Pay-as-you-go or PAYGO ($383 million): Current year revenues may be used to fund capital projects, avoiding the need to issue debt. This is largely related to transportation investments funded with toll and other MassDOT revenues.

Project Revenue / Self-Funded ($48 million): Certain projects generate savings or revenue to cover the debt service on project capital costs, including the Clean Energy Investment Program, which uses energy savings to repay the Commonwealth for debt service associated with efficiency investments, and revenue-generating assets, such as the Lottery technology system.

CAPITAL PLAN SUMMARY

Bond Cap Spending by Agency or Secretariat

* Includes vehicles and equipment; does not include public safety facilities, which are funded by the Commonwealth through DCAMM.

** Does not include higher education facilities projects, which are funded by the Commonwealth through DCAMM.