BOSTON (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.

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.

Written by Chris Lisinski/SHNS

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