Press Release: 2/5/2026

What Governor Healey’s FY27 Budget Means for Taxpayers

Governor Maura Healey released her proposed fiscal year 2027 budget, and once again it reflects broken priorities on Beacon Hill that leave taxpayers and local communities falling further behind.



The $63.3 billion proposal is an increase of 3.8 percent over last year’s FY26 budget, even as revenue growth is projected at just 2.4 to 2.9 percent. To paper over that gap, the administration relies more heavily on one-time revenues, volatile sources of income like surtax dollars, and accounting maneuvers that weaken the long-term stability of the state budget. The result is a projected structural budget gap of roughly $3.4 billion.



Worth noting is a potential ballot question that would reduce the state income tax rate from 5 percent to 4 percent. If approved by the voters, this new tax cut law would return about $2 billion to the taxpayers, which also means there would be $2B less for Beacon Hill to spend in subsequent budgets unless a new revenue source is created. An average taxpayer would expect to save about $1,300. The potential for such a budget impact seems to be completely disregarded in this record-breaking budget riddled with fixes that degrade structural integrity.



Why Governor Healey has decided to kick the can down the road rather than address a growing problem makes you wonder what kind of conversations are happening at the State House.



Despite this record spending in the Governor’s budget, cities and towns are again being shortchanged. Unrestricted General Government Aid, the funding municipalities depend on for core services like police, fire, and public works, would increase by only 2.5 percent. That barely keeps pace with inflation and falls far short of what local officials say is needed to avoid property tax overrides and service cuts. In real terms, local aid has declined 25 percent since 2010, while the budget itself has more than doubled.



Instead of looking for ways to tighten the belt, the budget repurposes money that would normally go into the state’s rainy-day fund and pension stabilization. The proposal raises the capital gains threshold so that an estimated $470 million more can be spent in the operating budget rather than saved or put towards pension and retirement stabilization. It also increases reliance on surtax revenue to fund ongoing expenses, even though that revenue was intended for one-time uses and is highly volatile.



The administration also proposes slowing required pension fund contributions by capping annual increases at 4 percent for the next three years in order to use funds elsewhere. This change pushes back the date the state’s pension system is set to be fully funded from 2036 to 2038, cutting it awfully close to the statutory deadline of 2040. This also continues a pattern of accounting maneuvers that weaken the structural integrity of the state’s budget and projected financial footing.



One of the clearest examples of cost-shifting in this budget can be seen in housing and shelter spending. The HomeBASE program sees a staggering 44 percent increase, rising to more than $82 million. HomeBASE is the primary state government run housing program where many people are funneled once out of the emergency shelter system. Rather than addressing the root causes of the shelter crisis or reining-in costs, the budget simply shifts expenses from one program to another, allowing the administration to claim progress while taxpayers continue footing the bill.



While local aid and fiscal stability take a back seat, the budget includes notable spending increases and new programs. Some examples are a 43 percent increase in free community college funding, new housing initiatives, and policy changes that sacrifice cost controls and accountability in the name of speed or flexibility. The proposal also grants agencies broader discretion over welfare and housing voucher eligibility, reducing current guardrails.



The takeaway is clear: Massachusetts does not have a revenue problem. It has a spending problem. Beacon Hill continues to celebrate record budgets while financial pressure increases on homeowners, renters, business owners, and local governments.



Just as troubling, the proposal does nothing to address the growing loss of businesses, residents, and investment capital that are exiting Massachusetts. At a time when employers are leaving, jobs are disappearing, and families are voting with their feet, this budget ignores the Commonwealth’s declining economic competitiveness and doubles down on policies that make Massachusetts more expensive and less attractive to live, work, and invest.



MassFiscal will be closely tracking this budget as it moves through the Legislature and will continue to fight for the taxpayers. We will continue to advocate for fiscal discipline, fully funded local aid, and tax cuts that restore economic competitiveness and keep opportunity in Massachusetts.



Thank you for standing with us as we hold Beacon Hill accountable.



Sincerely,

 

Laurie Belsito

Policy Director

Massachusetts Fiscal Alliance