Every year, Massachusetts Budget and Policy Center (MassBudget) issues an analysis of the House of Representatives’ budget proposal. While we acknowledge that the budget is a complex and exhaustive document encompassing nearly all the state’s revenue and expenditures for a specific year, we are focusing on the areas where MassBudget has expertise and that address economic and racial justice.
In the following analysis, you will find an assessment of Fiscal Year (FY) 2026 projected revenue, tax credits, and the House’s expenditure proposals in early childhood and care, education, transportation, and housing. This analysis is supported by data-driven reports, including several previously published by MassBudget. The purpose of this analysis is to provide advocates, policymakers, and other interested parties with information about the proposed state budget and its possible impact on Massachusetts’s populations.
The House budget proposal for FY 2026, released on April 30, outlines $61.5 billion in spending (before accounting for pre-budget spending and adjustments). This total notably includes $1.95 billion in Fair Share surtax spending and $81 million in amendments. The House proposal totals $485 million less than the Governor’s proposed budget.
Revenue from Fair Share, the voter-approved 4 percent surtax on the portion of income above $1 million, continues to support important education and transportation investments. The Fair Share spending cap for FY 2026 was set by lawmakers at $1.95 billion, $650 million above last year’s spending cap.
The House’s proposal for FY 2026 Fair Share investments include a $765 million investment in transportation and $1.19 billion in education. In addition to the Fair Share funds budgeted in the House’s FY 2026 proposal, there is also an FY 2025 supplemental budget bill allocating overage Fair Share revenues for one-time expenses. The supplemental budget invests $857 million in transportation and $463 million in education. It was most recently passed in the House and is now in the Senate Ways and Means Committee.
The House’s supplemental budget would use the overage of Fair Share revenue to:
- replenish the transit authority’s budget reserve ($300 million),
- fix the safety problems and workforce gaps previously identified by the Federal Transit Authority ($400 million),
- support future low-income fares ($20 million),
- and reimburse the MBTA for providing free service to commuters during the Sumner Tunnel closure last summer ($13 million).
The House proposed additional funding for Regional Transit Authorities (RTAs) through the supplemental budget: a $25 million reserve for RTA workforce training and development that could, for example, help with bus drivers obtaining their necessary commercial drivers licenses. Likewise, the supplemental budget would provide $10 million in Fair Share revenue to MassDOT for programs focused on repairing, maintaining, and improving unpaved roads.
On the education side, the supplemental budget includes $50 million for vocational school capital improvements, $55.5 million for early child care workforce supports, $15 million for regional school transportation, and $190 million for special education and transportation. For a full list of programs funded by Fair Share revenues in the FY 2025 House supplemental budget proposal and FY 2026 House budget proposal, please see the table below.
| Fair Share - FY 2026 House Budget Proposal | |
|---|---|
| Operating Transfer to Massachusetts Transportation Trust Fund | 155M |
| Regional Transit Authorities | 110M |
| Transfer to Commonwealth Transportation Fund | 500M |
| Transportation Total | 765M |
| Childcare Grants to Providers | 360M |
| Income Eligible Waitlist | 15M |
| Financial Aid Expansion | 80M |
| MassReconnect | 24M |
| School Meals | 190M |
| Targeted In-Demand Scholarships | 10M |
| Green Schoolworks | 20M |
| Literacy Launch Initiative | 15M |
| Minimum Aid and Chapter 70 Supplement | 240M |
| SUCCESS for State Universities | 14M |
| Free Community College | 94M |
| State University Funding Formula Supplement | 11M |
| Community College Funding Formula Supplement | 10M |
| School Transportation Reimbursements | 50M |
| Child Care Supports | 53M |
| Education Total | 1.19B |
| Total Fair Share FY 2026 House Budget | 1.95B |
| Fair Share - FY 2025 House Supplemental Budget | |
|---|---|
| MBTA Capital Investments | 60M |
| MBTA Means Tested Fares | 20M |
| MBTA Workforce/Safety Reserve | 400M |
| Operating Transfer to MBTA | 300M |
| Operating Transfer to Massachusetts Transportation Trust Fund: Regional Transit | 25M |
| Operating Transfer to Massachusetts Transportation Trust Fund: Road Repairs | 10M |
| Local One-Time Transportation Costs | 29M |
| MBTA Sumner Tunnel Closure Expenses | 13M |
| Transportation Total | 857M |
| DHE Endowment Match | 10M |
| UMass Endowment Match | 10M |
| School Meals* | 10M |
| Green Schoolworks* | 10M |
| Special Education Circuit Breaker* | 58M |
| Career-Vocational-Tech School Capital Improvements | 50M |
| One-Time Education Projects | 14M |
| Regional School Transportation Costs | 15M |
| Early Child Care Workforce Supports | 56M |
| Adult English Language Learners Waitlist | 9M |
| High Dosage Early Literacy | 25M |
| Special Education Circuit Breaker Reserve | 190M |
| Encourage to be Public School Educators | 2M |
| Boston Holocaust Museum | 5M |
| Education Total | 463M |
| Total Fair Share FY 2025 House Supplemental Budget | 1.32B |
In previous years, the Fair Share surtax exceeded anticipated amounts. This previously unbudgeted revenue is available in the FY 2025 supplemental budget to significantly advance transportation and education improvements through one-time capital investments, directed through the Education and Transportation Innovation and Capital Fund.
Looking to the future, however, less of these funds are likely to be available. Budget writers have gained more confidence in Fair Share revenue collection and, over time, increased their revenue projections with each subsequent year from $1 billion in FY 2024 to $2.4 billion in FY 2026. Of that latter sum, $450 million is projected to be certified as Fair Share funds available for spending in future years, which is much less than the $1.32 billion in the current supplemental budget.
The FY 2026 budget year is likely to be unique because there are both robust forward-looking FY 2026 Fair Share revenue projections and a high overage resulting from the cautious projections from earlier years. Assuming current Fair Share revenue projections hold, the amount of overage available for one-time capital investments will be less in FY 2027 (and even less in FY 2028) compared to FY 2026. In subsequent years, robust Fair Share revenue will be used for operational expenses, directed through the Education and Transportation Fund.
The Commonwealth’s 15 regional transit authorities (RTAs) that operate outside the MBTA’s core area would receive funds to continue enhancements initiated last year. The FY 2025 budget provided $94 million in RTA operating support, plus $110 million in additional support using Fair Share revenue. The FY 2026 House budget proposal does not include a specific earmark to ensure funding is directed to fare-free programs that have been very successful at increasing ridership and improving services. While the intention, as articulated in Outside Section 71, seems to be to continue funding this service at the same funding levels ($30 million in FY 2025), it would be better to include this specific earmark in the line-item language. The House’s proposal would continue level funding from the same sources, with the Fair Share funds directed through the Commonwealth Transportation Fund.The House proposal misses the opportunity to address the challenges of ongoing inflation and the ridership growth for the RTAs. For instance, two of the RTAs have not yet adopted fare-free policies and reportedly not all the fare-free RTAs started the program at the start of the fiscal year. With more riders, more months, and potentially more fare-free RTAs, the same number of inflation-eroded dollars are likely insufficient.
Fair Share funding for transportation would supplement other budget revenue to address a variety of important transportation needs. Most notably, without the additional Fair Share funds, the MBTA had been projecting an approximately $700 million operating deficit in FY 2026. This injection of funds from the House FY 2026 proposal and House FY 2025 supplemental budget proposals will help the MBTA close the deficit.
The House budget proposes to permanently transfer $500 million of Fair Share revenues to the Commonwealth Transportation Fund, an increase over the $250 million transferred in FY 2025. This proposal is $265 million less than the permanent transfer proposed in the Governor’s FY 2026 budget. The $500 million would be used to support MBTA operations, a program for low-income discounted fares, a workforce training academy, and improved ferry service. Overall, the MBTA operating transfer more than doubled from $314 million in FY 2025 to $687 million in FY 2026.
The House budget also proposes increases for transportation funding focused on maintaining and building roads and bridges. The Massachusetts Transportation Trust Fund, which serves a variety of purposes connected to the Massachusetts Department of Transportation (MassDOT), would receive $577.8 million, a $39 million increase over FY 2025. Fair Share funds are providing nearly $155 million to support MassDOT operations.
The House proposes over $1.6 billion for early education and care, slightly less than the Governor’s proposal, which came in at just over $1.7 billion for early education. Both proposals increase early education and care spending compared to FY 2025, which currently totals over $1.5 billion. Of note, the Governor filed a supplemental budget in early April that would increase appropriations for line items related to child care subsidies. Passage of this supplemental budget would increase overall early education and care spending by about $190 million.
The House funds the Commonwealth Cares for Children (C3) program at $475 million, which represents level funding compared to the FY 2025 budget. The House proposal matches the Governor’s in terms of overall C3 spending, but the House relies even more heavily on Fair Share revenue to support this program. The C3 program has been an incredible success in its nearly four years of operation, contributing significantly to wage growth for educators, supporting programs in keeping their doors open, and often giving educators the flexibility to alleviate the financial burden placed on families.
Considering current revenue constraints and relatively few proposals for increasing revenue, level funding for C3 is significant. However, in recent years, operational costs for providers have increased faster than inflation and programs’ purchasing power will decrease at this funding level. This means that child care program administrators will likely struggle to increase or even maintain current educator wages and program capacity.
The House proposal seeks to address the rapidly rising costs of the Commonwealth’s Child Care Financial Assistance (CCFA) program, although it appears unlikely that the proposal would significantly increase access to subsidized child care. The House budget includes $1.03 billion for CCFA, which represents about a 15% increase in CCFA spending compared to the FY 2025 budget. The House’s Fair Share supplemental budget also includes, at minimum, an additional $28 million for CCFA, specifically for reimbursement rate increases and personal child care for early educators. The overwhelming majority of this CCFA spending would support the current capacity of the CCFA system.
Due to recent reimbursement rate increases and increases to overall CCFA caseload, the state needs to increase spending significantly in order to continue serving children through FY 2026. In addition, there are currently over 30,000 children in low-income families on the child care waitlist and the Department of Early Education and Care (EEC) has not been able to issue new child care vouchers since early 2024. The House includes $15 million for EEC to presumably fund new contract seats in FY 2026, which could support around 1,000 additional kids with affordable child care
Compared to the Governor’s proposal, the House budget includes $30 million less for CCFA. This discrepancy appears to be based on differing caseload projections between the administration and the House, although the exact programmatic impact of this difference is unclear.
The FY 2026 House budget proposal meets the obligations of the fifth year of the Student Opportunity Act (SOA) by adding $460M in statewide K-12 formula aid over current levels.
Even with this significant progress, over the past year, many school districts have struggled to adjust to a barrage of difficult budgetary pressures. This includes historically high levels of inflation, cuts or phase-outs of federal funding, as well as constraints on local resources able to make up the difference for K-12 school budgets. These challenges have manifested in several communities facing budget cuts, school closures, and difficult local property tax votes.
To help alleviate the pressure, the FY 2026 House budget proposal, like the Governor’s, contains several initiatives to increase K-12 funding to school districts across the Commonwealth. Neither plan contains large structural changes to K-12 funding, such as beginning to find the up-to $465 million dollars needed to fully adjust for the high inflation of the past several years. A budget amendment to create a working group to study key structural factors in the Chapter 70 funding formula was not included in the final proposal.
In the short term, the FY 2026 House proposal, along with a related supplemental budget using surplus Fair Share revenue, would provide significant aid to help school districts quickly address some of the gaps and challenges.
In total, the version of this supplemental budget passed by the House (H. 4010) as well as the FY 2026 budget proposal provides over $145M more for K-12 schools than the Governor’s approach (see table below). This is largely due to a $40M increase to Chapter 70 aid, as well as additional funding for special education reimbursements and school meals.
| K-12 Education Line Items Addressing Cost Growth: House Budget Over Gov. Plans | |||
|---|---|---|---|
| Line Item Name | FY 2026 House Increase Over FY 2026 Gov. | FY 2025 House Fair Share Supp. Above Gov. Plans | FY 2026 House and Fair Share Supp. Above Gov. Plans |
| Chapter 70 Line Items | 39,800,281 | 0 | 39,800,281 |
| Charter School Reimbursement | 19,898,807 | 0 | 19,898,807 |
| Circuit Breaker SPED Line Items | -47,314,360 | 98,000,000 | 50,685,640 |
| School Building Line Items | 20,000,000 | -15,000,000 | 5,000,000 |
| School Meals | 20,000,000 | 10,000,000 | 30,000,000 |
| School Transportation Line Items | -15,000,000 | 15,000,000 | 0 |
| TOTAL | 37,384,728 | 108,000,000 | 145,384,728 |
In contrast to the Governor’s FY 2026 proposal, the House’s does not include $125M in dedicated funds for higher education buildings and capital improvements. This omission would make it much harder to achieve the Governor’s proposed ten-year effort to invest $2.5 billion in higher education. However, the House proposal does provide $20M in additional formula funds to state universities and community colleges.
Other key Fair Share higher education programs, such as free community college, financial aid increases and advising and support services through the State University SUCCESS program, are funded roughly at current levels and in line with the Governor’s budget proposal.
Compared to the Governor’s proposal, the House budget proposal would decrease housing investments by approximately $38 million. The largest cut would come from the Emergency Assistance (EA) shelter system, where the House proposed reducing the appropriation by $49.7 million, or more than 15 percent, compared to the Governor’s proposal. The House proposal does provide more than the Governor’s to other housing safety net programs, including Residential Assistance for Families in Transition (RAFT), shelters for homeless individuals, and the Massachusetts Rental Voucher Program (MRVP). However, these increases are smaller than the significant reduction in EA shelter funding. Additionally, HomeBASE remains level-funded, representing a cut to the program when accounting for inflation.
Over the past year, the Commonwealth has made it significantly more challenging to access the EA shelter system after a sharp increase in caseload levels. These include limiting shelter stays to a maximum of six months and in many cases, 30 days; an overall cap on the number of families who can receive shelter; restrictions based on immigration status; and restrictions based on Massachusetts residency.
It is important to note that while these new restrictions might reduce the system’s caseload, they do not reduce need. Before time limits on shelter stays were enacted, the average length of stay in EA shelter was more than 12 months. Similarly, a cap on the number of families may allow for reducing a budget appropriation but does not reduce homelessness. These new restrictions, combined with only slight increases to other safety net programs and an effective cut to HomeBASE, raise questions about how the Commonwealth will prevent its homelessness crisis from worsening.
The House proposes a $5 million increase for RAFT, the state’s emergency housing assistance program, compared to the Governor’s proposal. This is a positive step. However, because rents have risen faster than inflation across the Commonwealth, the purchasing power of RAFT assistance has decreased.
It is common for RAFT to receive additional funding in supplemental budgets, so it will be important to monitor those for both the remainder of FY 2025, and over the course of FY 2026. As of the release of this analysis, the legislature is considering a proposed supplemental budget that would allocate an additional $43 million for RAFT in FY 2025. This would increase FY 2025 appropriations for RAFT to approximately $240 million, which recognizes the growing housing needs of the population.
The Governor proposed giving the Executive Office of Housing and Livable Communities the authority to adjust benefit limits under RAFT without legislative approval. The House proposal rejects this change, maintaining a benefit limit of $7,000 per 12-month period. As noted in our preliminary analysis, this step by the House protects the current benefit limit. Additionally, while an amendment to increase the limit was not adopted by the House, policymakers should consider doing so in the future as housing costs continue to rise.
The House proposes further increases to MRVP, the state’s rental voucher program, adding $4.8 million to the Governor’s proposed increases. This additional funding will support the existing voucher caseload, and allow the Commonwealth to add 130 new project-based vouchers attached to specific units. Both versions of the FY 2026 proposed budget contain significant funding increases for vouchers compared to FY 2025 (14.5 percent in the House proposal). However, according to the most recent state data the cost of a MRVP voucher rose by approximately 18 percent between 2024 and 2025. As a result, a significant amount of the additional MRVP funding in FY 2026 will go to supporting existing vouchers. With housing assistance at-risk at the federal level, it will be important for the Commonwealth to build on these important investments while continuing to work with urgency to address the housing affordability crisis.
Finally, the House budget proposal retains language from the Ways and Means Committee proposal that would partially restrict the practice of requiring tenants to pay real estate broker fees when the broker is hired by a landlord. As noted in our preliminary analysis, the House language is significantly weaker than the language proposed by the Governor, because it would still allow mandatory broker fees whenever a prospective tenant responds to a listing. Given how common it is to find an apartment by responding to a listing, this language is likely to exclude a large number of tenants from this important protection.
Despite prioritizing tax credit increases last year, the FY 2026 House budget proposal misses key opportunities to further support tax credits for workers and families.
The proposal provides level funding for Volunteer Income Tax Assistance (VITA) sites at $820,000. VITA funding decreased by $680,000 from $1.5 million in FY 2025, despite the sites serving as a critical partner in ensuring maximum impact of the newly created state Child and Family Tax Credit (CFTC) and the recently expanded state Earned Income Tax Credit (EITC). The 80 VITA sites serve some 30,000 low-income taxpayers by helping them access free tax preparation, claim refundable tax credits, connect to other services like WIC and Head Start, and potentially save hundreds of dollars on tax preparation.
Additionally, the House proposal does not expand access to the state EITC for Individual Taxpayer Identification Number (ITIN) holders, an expansion that would create equity for workers in Massachusetts. Currently, workers who pay taxes in Massachusetts but file with an ITIN, instead of a Social Security Number, are ineligible for the state EITC, a key antipoverty tool. Expanding access to ITIN holders would support 21,000-26,000 households, two-thirds of which include U.S. citizens.
The FY 2026 House budget proposal fails to include any significant revenue raisers, in contrast to the Governor’s budget proposal released earlier this year, which included tax initiatives that would generate roughly $400 million annually. Like the Governor, however, the House redirects a substantial share ($533 million) of anticipated above-threshold capital gains tax collections toward state pension and post-retiree benefit obligations, thus freeing up dollars for FY 2026 budgetary purposes, dollars which otherwise would be needed to fund these state obligations. Both the House and Governor would deposit $133 million of above-threshold capital gains tax collections into the state’s rainy day fund. Given the size of the state’s rainy day fund, forgoing much – or even all – of the FY 2026 automatic deposit to the fund is good policy, making these dollars available to support FY 2026 budget priorities. The rainy day fund currently has a balance of $8.2 billion, among the largest reserve funds of any state in the nation.
While a number of the Governor’s proposed tax initiatives would generate meaningful amounts of progressive revenue, during this uncertain budget cycle and beyond, the largest and likely most progressive of her proposals is placing caps on the state charitable deduction. By failing to follow the Governor’s lead on reining in this costly, ineffective, and regressive break tax, the House budget proposal misses an opportunity to improve both the FY 2026 budget and the overall fairness and adequacy of our state tax code. The Governor’s budget proposal estimated that setting caps of $5,000 for single filers and $10,000 for joint filers on the amount of charitable contributions that can be deducted from one’s taxable income would prevent the loss of $164 million annually in state revenue. The state charitable deduction delivers the majority of its benefits to filers with incomes over $1 million. Likewise, the state charitable deduction delivers a disproportionate share of its benefits to white households. Additionally, the charitable deduction can be taken for contributions made anywhere, not just to Massachusetts-based nonprofits. The state charitable deduction worsens existing economic and racial disparities in Massachusetts and deprives the Commonwealth of much-needed, progressive revenue.
Additional revenue is still needed to support the critical services on which low- and middle-income residents rely. Budget-writers should consider implementing other policies – such as closing a corporate tax loophole used by billion-dollar multinational corporations – that would provide more resources to sustain these essential programs.
It is also worth noting that the House budget proposal establishes a commission tasked with studying migration to and from the Commonwealth, focused on taxes on high-income households (including Fair Share and estate taxes), business taxes, and business tax breaks. Cost of living and employment opportunities also appear on the list of topics to be studied. All the non-governmental organizations invited to join the commission represent businesses across the Commonwealth, voicing the interest of large employers who have been outspoken critics of progressive taxes. No organization that represents the interest of low-income and working families has been included in the commission. Organizations with expertise in progressive taxes and the relationship between taxes and migration are also absent. The commission is tasked with generating a report, including recommendations on state tax policies and other economic development and workforce competitiveness policies, no later than July 1, 2026.
The House budget proposal level-funds the Unrestricted General Government Local Aid (UGGA), a large source of flexible aid for cities and towns, at $1.31 billion. This is nearly $28.8 million less than the Governor’s budget proposal. Cities and towns rely on this aid to support all local services including public works and first responders. Instead, the House budget proposal provides more funding in Chapter 70 Aid for local school districts.
Additionally, the House proposes extending a helpful tool to mid-size nonprofits by increasing the employee cap from 20 to 100 for the publicly-managed retirement savings programs for small nonprofits. Increasing the employee cap will make this retirement program more accessible for workers at nonprofit organizations across the Commonwealth and will significantly decrease the administrative costs that nonprofits pay for traditional 401k programs.
