
Gov. Maura Healey fields questions from reporters about her fiscal year 2026 budget proposal on Jan. 22, 2025. Photo by Chris Lisinski | State House News Service
Gov. Maura Healey proposed increasing state spending to more than $62 billion next fiscal year, relying on burgeoning income tax collections from the state’s wealthiest and a slew of other budget-balancing strategies in a spending plan unveiled Wednesday.
Healey filed a fiscal year 2026 budget that would continue popular but pricey programs such as universal school meals, begin to implement a major overhaul of transportation financing, pursue new policies such as traffic violation enforcement cameras, and much more.
The plan relies on about $1 billion in one-time revenues, though administration officials plan to mitigate that by replenishing some trust funds and reserves over the course of the year. The governor’s plan would newly apply the sales tax to candy sales but otherwise does not call for new or higher broad-based taxes or any draws on the state’s “rainy day” savings account, whose balance is set to surpass $9 billion.
Under Healey’s proposal, the state would stash less money in the rainy day fund in fiscal 2026 than is required under current law, and instead redirect money that might be bound for savings to pay down a greater share of pension and retiree benefit liabilities.
Healey’s budget would fund another year of K-12 school aid increases under the Student Opportunity Act, for the first time tapping into surtax dollars to pay for part of the growth, while continuing to cover free school meals, C3 grants to early education providers and a ConnectorCare pilot expanding public insurance eligibility.
MBTA Gets Temporary Funding Fix
It also seeks to execute much of her transportation funding plan, including $687 million in direct support for the cash-strapped MBTA, and launch a similar approach to modernize higher education infrastructure.
The spending bill would increase unrestricted general government aid to cities and towns by 2.2 percent, which officials said is about in line with the growth in non-surtax revenues that budget-writers expect.
Including use of a larger surtax pool and hundreds of millions of dollars for the Medical Assistance Trust Fund, the bill would increase state spending about 7.4 percent over the fiscal 2025 budget that Healey signed in July. Beacon Hill regularly adds hundreds of millions of dollars more in appropriations via mid-year bills.
Much of the proposed annual growth is fueled by the surtax on higher earners. Administration and legislative budget-writers agreed to spend $620 million more from that pool in fiscal 2026 than they did in fiscal 2025, whose budget was built on a more conservative estimate of how much money the levy would generate.
Areas outside the surtax-funded transportation and education worlds are due for smaller growth or, in some cases, trimming. Excluding surtax and MATF dollars from both bills, Healey’s fiscal 2026 budget proposes about 6.8 percent more spending than the budget she signed in the summer.
Healey’s team sought to portray the budget as proposing 2.6 percent more spending than all of what the state will spend in fiscal 2025, including supplemental spending, calling that rate lower than inflation.
The governor and her deputies plan to roll out their budget bill at a press conference Wednesday afternoon.
Healey also has related legislation in the works: a $1.3 billion supplemental budget that uses surplus surtax revenues collected in fiscal 2025; a borrowing bill targeting capital improvements on college and university campuses; a bond bill to fund local road and bridge work; and a new version of her Municipal Empowerment Act, which did not receive a vote in either chamber after Healey first rolled it out in the 2023-2024 term.
Healey Pitches Tax Changes, Traffic Cameras
Healey’s budget also includes two prominent policy items.
The governor recommended capping how much taxpayers could claim under a charitable deduction that went into effect in 2023, a change that officials say is worth up to $164 million.
There is currently no limit on how much taxpayers can claim from the charitable deduction that was implemented in 2023, after over two decades of delay. Voters approved the tax relief in 2000, but lawmakers suspended the law in 2002 and it was dormant for 21 years. Now that it’s in effect, Healey is recommending the state cap the deduction at $10,000 for a couple and $5,000 for an individual.
In addition to tax changes, Healey is also sponsoring a new plan to deploy camera enforcement of traffic violations through the budget.
Lawmakers have been cool to the idea in the past — though it has support among some circles of legislators.
Former Gov. Charlie Baker filed a bill during the 2021-2022 session to allow red-light cameras in any interested city or town, which ultimately failed in the Legislature. The next session, a more narrow version filed by Rep. Steven Owens also failed. It would have launched a pilot program allowing up to 10 municipalities to install a limited number of cameras to monitor for certain traffic violations.
Healey’s recommendation is to allow municipalities to opt in to the camera enforcement program which would be administered by the Massachusetts Department of Transportation. Fines would be assessed on the registered owner of the vehicle for violations – not necessarily the driver, in order to protect drivers’ identities, according to an A&F official.
They are also recommending that images taken by the traffic cameras be exempted from public records law. Eighteen other states use cameras to impose fines for traffic violations, the A&F official said.
State House News Service staff writer Sam Drysdale contributed to this report.