Date: 01/22/2025
  • Maura T. Healey, Governor
  • Kimberley Driscoll, Lieutenant Governor

To the people of Massachusetts,

From the first day we took the oath of office as your Governor and Lieutenant Governor, our administration has been focused on making Massachusetts a more affordable, competitive, and equitable state. That remains true today.

We continue to be humbled by the responsibility you have entrusted us with and proud of the accomplishments we have made over the past two years. These are accomplishments we have made together, along with our partners in the Legislature, because we know that we are at our best when everyone can find a good paying job, access quality and affordable health care, afford to rent or buy a home, receive an education, and travel on safe, reliable roads and public transit.

Just this past year, we signed into law the Affordable Homes Act, a more than $5 billion bond bill that will enable us to tackle the housing shortage by building and preserving more units of housing, and lowering cost in the process. The newly enacted Mass Leads Act will guarantee that we continue to foster our world-class life sciences industry and grow the next generation of clean energy and climatetech jobs.

We said we would aggressively pursue every federal dollar available to us, and we have. More than $9 billion for roads, bridges, solar power and high-speed internet has come back to Massachusetts through grants that will make a real difference in our communities.

We have made community college free, increased financial aid at four-year colleges, and signed health care legislation that will cap co-pays for many residents struggling with certain chronic conditions. And when residents file their taxes this spring, they will be able to take advantage of the full $440 child and family tax credit, part of our historic 2023 tax cut package that is being fully phased in after two years.

Now it's time to continue to push forward.

Today, we submit our administration's budget recommendations for Fiscal Year 2026.

Our budget is a balanced, fiscally responsible blueprint that shows we can invest in our people and our institutions while also being good stewards of our residents' tax dollars. We understand that the cost of everything from food to energy continues to strain household budgets, and just like the residents of Massachusetts, the state must live within its means.

While our economy is strong and employment high, our tax revenue growth -- which supports the programs and services that people depend on -- has returned to levels more in line with historic trends. Our revenue estimate, agreed to with the Legislature, predicts modest 2.2 percent growth, not counting revenue collected from the Fair Share surtax. That means we must find ways to be more efficient with the dollars we have, right-sizing programs that grew dramatically during the COVID-19 pandemic when more resources were available, while controlling growth in programs like MassHealth that are outpacing our tax revenues.

Given these challenges, we are proposing a $61.5 billion budget proposal for Fiscal Year 2026, including $1.95 billion in surtax spending. Non-surtax spending totals $59.577 billion, a 2.6 percent increase over current Fiscal Year 2025 spending estimate, which is consistent with the rate of inflation. It is focused on preserving key investments made over the past two years as we put the state's budget on a more fiscally sustainable path into the future. We once again are not proposing any broad-based tax increases and are preserving the historic balance of the Stabilization Fund, while continuing to make deposits.

We are proud that this budget fully funds the fifth-year phase-in of the Student Opportunity Act. The $7.303 billion in this budget for Chapter 70 education represents a 6 percent increase over Fiscal Year 2025 budgeted spending and guarantees a minimum per pupil aid rate of $75. We are also growing Unrestricted General Government Aid by 2.2 percent, consistent with the state's estimated rate of revenue growth.

Fair Share, the voter-approved surtax on high-income earners, also presents a tremendous opportunity to invest in our public transportation and education systems, and we are determined to maximize the impact of these resources.

In Fiscal Year 2024, the state collected $2.46 billion in surtax, far exceeding expectations and surpassing the $1 billion budgeted for that fiscal year. We expect similar collections in Fiscal Year 2025 and Fiscal Year 2026, though we continue to be prudent with this relatively new revenue source, agreeing to use just $1.95 billion in Fiscal Year 2026.

That means that in addition to our House 1 budget proposal, the administration will be filing a

supplemental budget with a plan for spending the $1.3 billion in surplus surtax funds available from Fiscal Year 2024.

This FY26 budget proposes to maximize surtax dollars by directing $765 million to the Commonwealth Transportation Fund (CTF), doubling down on an innovative strategy we first deployed this year to leverage the borrowing power of the CTF. This investment will yield $5 billion over the next 10 years that can go directly toward immediately stabilizing the finances of the MBTA and investing in state and municipal transportation infrastructure and regional transit across Massachusetts.

Once combined with the $857 million in surplus surtax we propose to use for transportation along with some additional resources, our administration is making a commitment of $8 billion over the next 10 years for transportation that will dramatically improve our roads, bridges, culverts and rail. When taken together, our FY26 and supplemental Fair Share plan also will bring a more equitable 50-50 balance to surtax spending between education and transportation.

In recent days, our administration has filed a new Higher Education Bond Bill to begin to address the backlog of deferred maintenance and capital needs on our public higher education campuses. Similar to our strategy on transportation, this bond bill is only possible through the leveraging of $125 million in Fair Share resources against which we will borrow to finance the capital plan.

Also in education, we maintain our commitment to free community college, financial aid at public universities and colleges, and universal school meals, as well as the $475 million for Commonwealth Cares for Children (C3) grants. C3 has been instrumental in stabilizing the state's child care system, enabling early education programs to remain open, and is supporting system-wide growth through investments in workforce, quality, and affordability.

This budget also proposes an expansion to the Commonwealth Preschool Partnership Initiative (CPPI) with $67.7 million, helping grantees move from the planning stages to implementation of high-quality Pre-K, expand the number of Pe-K classrooms in existing programs and bringing new communities into the pipeline.

Finally, our budget continues to support the development of a strong clean energy workforce, clean transportation and decarbonization efforts, food security and an all-of-government commitment to environmental justice.

While this budget may have been challenging given the demand for limited resources, we are confident that our administration is putting forward a plan that makes life more affordable for people, protects our most vulnerable citizens, supports our employers and our economy, and smartly balances those needs against the imperative of fiscal discipline and sustainability. We are excited to once again partner with our friends and colleagues in Legislature to enact a budget that reflects our shared goals and ambitions.

Lieutenant Governor