Comparative Analysis of the House & Senate Budget Proposals: Opportunities for the Conference Committee to Promote Equity and Uplift Communities

Both the Massachusetts House and Senate have put forward their budget proposals for Fiscal Year (FY) 2026 that starts July 1. Now the Conference Committee will work to reconcile the differences between the House’s (HB4001) $61.5 billion and the Senate’s (SB2525) $61.4 billion budget proposals. This year, the House and Senate will also be conferencing their FY 2025 Fair Share supplemental budget proposals in tandem with their FY 2026 budget proposals.

Below, MassBudget examines differences between the House and the Senate’s proposals in specific policy areas and provides recommendations on what the Conference Committee should include for priority items.

Differences in Fair Share Allocations: Fair Share funding is generated by the 4 percent tax on personal income over $1 million that voters endorsed on the 2022 ballot. In order to best understand Fair Share spending, it is important to assess both the pending FY 2025 supplemental budget proposals (HB4010/SB2514), which allocate approximately $1.3 billion in above-anticipated Fair Share tax collections, and the FY 2026 House and Senate budget proposals that include $1.95 billion in Fair Share Funds.

In their FY 2026 budget proposal, the Senate transfers $165 million to the Education and Transportation Reserve Fund, which acts as a rainy day fund for Fair Share. This transfer is in addition to the statutory requirement to transfer 15 percent of Fair Share revenue above the spending cap to the Education and Transportation Reserve Fund. This is a notable difference from how the House handles Fair Share funding in their FY 2026 budget proposal. Since this funding would not yet be allocated to education or transportation programs, it is not included in our analysis. By contrast, the House includes the full $1.95 billion of Fair Share revenue available for spending in their FY 2026 budget.

The House FY 2025 Fair Share supplemental budget and FY 2026 budget combined results in a 50-50 allocation of Fair Share funding to education and transportation programs, while the Senate’s results in 58 percent of Fair Share funding going to education and 42 percent going to transportation.

For more information on Fair Share funding for specific education and transportation programs, see the transportation, early education and care, K-12 education, and higher education sections below. (For an explanation of the mechanics of how Fair Share revenue gets invested, see MassBudget’s “Three Funds, One Purpose: Implementing Fair Share”.)

Allocation of Above-Threshold Capital Gains Income: In terms of total tax revenues available for appropriation in FY 2026, the House and Senate proposals are very similar. The revenue documents (Section 1A of the respective budgets) show small differences in the amount of tax revenue each chamber is expecting the Commonwealth to collect, as well as small differences in statutory tax transfer amounts. Neither budget includes any of the revenue raising tax proposals recommended by the Governor in her FY 2026 budget proposal.

The House and Senate differ modestly in their proposals for use of anticipated above-threshold capital gains tax revenue. When revenue collected from taxes on capital gains income exceeds an annually adjusted threshold, the excess is placed automatically in reserve rather than remaining in the General Fund for budgetary appropriation. Absent intervention from lawmakers, 90 percent of these above-threshold tax revenues are deposited automatically into the state’s Stabilization Fund and the remaining 10 percent is split between two funds that help pay for the state’s pension and retiree benefits obligations.

As outlined in their FY 2026 budget proposals, both the House and Senate would redirect these automatic deposits and direct the lion’s share of above-threshold capital gains tax revenue to help pay for the state’s various annual pension liabilities. Drawing on these revenues to support pension costs frees up dollars in the General Fund (which otherwise would be needed to cover these pension costs). Lawmakers then are able to use these freed up General Fund dollars to fund other FY 2026 budget priorities.

The House would direct $532 million in above-threshold capital gains tax revenue to pension costs, and the remaining $133 million to the state’s Stabilization Fund. The Senate instead proposes directing $632 million to pension costs and depositing $33 million into the Stabilization Fund. As a consequence of this difference – and the small differences in anticipated tax revenue collections and statutory transfers – the Senate’s budget has $40 million more in General Fund tax revenue dollars available for appropriation.

Funding for the Massachusetts Bay Transit Authority: One of the largest ways that the House and Senate proposals differ is the amount each provides to support operation of the Massachusetts Bay Transportation Authority (MBTA), especially in the Fair Share supplemental budget. The Senate proposed $375 million for MBTA operations from the Fair Share supplementary budget while the House proposal would provide almost double: $733 million, plus another $60 million for MBTA capital investment. Moreover, the Fiscal Year 2026 House budget proposes $186.8 million more support for the MBTA than the Senate proposal.

The MBTA projected last summer how, due to depletion of one-time federal pandemic funds, the authority would face a $696 million shortfall in FY 2026. That shortfall grows to $740 million in FY 2027. The House proposal, like the Governor’s, would enable the MBTA to cover operating costs and create some reserve for future investments and contingencies. Although cost and revenue assumptions have not been fully revised, the Senate budget proposal apparently would not enable the MBTA to cover its budgeted operations.

Outside the MBTA’s annual operations budget, the transit authority plans $9.8 billion in capital investment over the next five years, such as to replace or improve old train cars, power systems and maintenance facilities. The MBTA’s five year capital funding plan relies 40 percent on future federal funds and would still leave $12.4 billion in prioritized repairs, improvements, and upgrades outside the plan due to lack of funds.

Investments in the Commonwealth Transportation Fund: Both the House and Senate seek to support capital investment by MassDOT and the MBTA by proposing major transfers into the Commonwealth Transportation Fund (CTF) using Fair Share funds in the FY 2026 budget. The CTF supports a wide variety of transportation programs across the Commonwealth. Both chambers have explained that their regular annual transfers are meant to provide the Commonwealth with a steady revenue source that it can use to issue bonds to finance billions in future capital investments. The House would provide $765 million to the CTF, with $500 million available for bonding, $155 million to MassDOT through the Massachusetts Transportation Trust Fund, and $110 million to support operation of Regional Transit Authorities. The Senate would provide $600 million to finance future bonding of capital investments and would set $165 million aside for the Education and Transportation Reserve Fund, a kind of rainy day fund for Fair Share spending that could be used to fill future shortfalls in Fair Share transportation or education spending.

Regional Transit Authorities: For the Commonwealth’s 15 Regional Transit Authorities (RTAs) across the state, the House would provide $204 million and the Senate would provide $214 million, with the House using $110 million in Fair Share funds. Both proposals would continue innovative fare-free programs launched in recent years, first using federal pandemic funds and then expanded through state grants. Fare-free policies have been very successful at increasing ridership and improving services. The House funds for RTAs would apparently designate $30 million to continue last year’s fare-free grant program. Those funds are likely to be insufficient, however, because last year two RTAs didn’t take advantage of the program and several did not launch the program until later in the year. To take advantage of the promising opportunity to grow ridership and support low-income travellers – as well as keep up with inflation – additional funds should be provided. The Senate budget proposal provides $40 million to support RTAs in eliminating fares which would support the program more sufficiently. An outside section of the Senate budget would moreover eliminate fares for all regular fixed routes and paratransit service, subject to appropriation of funds.

Other Fair Share Transportation Funding: In the recent Fair Share supplemental budget, the Senate proposes $165 million for a program to support municipalities in improving local roads. The nearest House counterpart is a $10 million grant program to municipalities to improve unpaved roads. The House proposes $29 million in additional one-time local transportation projects (“earmarks”) whereas the Senate proposes $13 million in different local projects. These differences, like the others, will need to be reconciled by the Conference Committee.

Child Care Financial Assistance: The most significant difference within early education funding is each chamber’s approach to Child Care Financial Assistance (CCFA). This includes both income-eligible child care (for low-income families seeking child care) and supportive child care (for children and/or families who are involved in the foster care system or receive transitional assistance). The House, which proposes a total of $1.062 billion for the Commonwealth’s child care subsidy program, uses their FY 2026 budget proposal, as well as their FY 2025 Fair Share supplemental budget to fund CCFA operations in FY 2026. The Senate’s Fair Share supplemental budget did not include any funding for early education and care, and the entirety of their $1.064 billion for proposed CCFA spending is in their FY 2026 budget.

The differences between the House and Senate CCFA proposals are primarily around expected costs for maintaining the program’s caseload, increasing reimbursement rates to educators, and expanding access to income-eligible CCFA in FY 2026. The Senate’s proposal for CCFA spending largely mirrors the Governor’s proposal. Similar to the Governor, the Senate invests approximately $1.064 billion to maintain current caseload, accounting for potential growth in caseload of children involved in the foster care system or receiving transitional assistance; this type of supportive child care is an entitlement and the Commonwealth is required to provide care for these children.

The House FY 2026 budget proposal intends to maintain the current CCFA caseload in FY 2026, including children who qualify for entitlement care. However, the House budget appropriates $1.019 billion to maintain CCFA caseload, $45 million less than the Senate. The Conference Committee will need to come to an agreement for CCFA appropriation that ensures that no child who is currently receiving financial assistance loses their child care. Of note, due to program spending outpacing the final budget appropriation, the Governor approved two supplemental funding increases for income-eligible CCFA in order to maintain payments to CCFA providers at the close of FY 2024. In May 2025, the Governor signed a bill (SB2521) allocating $190 million of additional funding for CCFA to maintain full function of the program through FY 2025.

The House’s Fair Share supplemental budget includes $20 million to increase reimbursement rates for subsidized child care in FY 2026. This is slightly less than what the legislature approved for a rate increase in the FY 2025 budget ($22.5 million), which allowed EEC to approve both across-the-board and targeted increases to center-based and family child care programs for FY 2025. The Senate did not include any proposed increases to reimbursement rates in their FY 2026 budget proposal or their FY 2025 Fair Share supplemental budget.

The waitlist for families seeking income-based financial assistance for child care has been frozen since early 2024 and whether more low-income families will be able to access care in FY 2026 depends heavily on the Conference Committee. The Senate’s budget proposal does not include any funding to provide new vouchers or contracted slots to low-income families on the child care waitlist. The committee should include the House proposal which provides $15 million for EEC to procure contracted slots with programs that will enroll children with CCFA. This would result in roughly 1,000 new seats. While every new seat matters for families seeking care, it is worth noting that contracts may offer less flexibility to families than vouchers do, as new seats are constrained to the geographic location of child care programs. The Conference Committee should adjust this language so that even if the funding amount does not change, some of the funding can be used to support vouchers, which families can use at any program that accepts them.

As of April 2025, there are more than 30,000 children on the CCFA waitlist. Assuming that the Conference Committee does not exceed the funding amount proposed by the House to reduce the CCFA waitlist, FY 2026 is likely to be a challenging year for families seeking financial assistance for child care and educators who would like to fill their programs with these children but are not able to.

Benefits to Educators: Between their FY 2026 budget proposal and FY 2025 Fair Share supplemental budget proposal, the House funds three support programs for early childhood educators that are not featured in either Senate proposal. Although this analysis does not cover the Fair Share supplemental process in depth, the programs included in the House’s FY 2025 Fair Share supplemental may be funded through the FY 2026 budget, depending on negotiations.

In their FY 2026 proposal, the House included a $7.5 million earmark for scholarships for early educators within the main EEC operating line item. The House’s FY 2025 Fair Share supplemental budget proposal includes $7.5 million for early education and care educator loan forgiveness and $8 million for grants to early educators for costs associated with personal child care. This proposed funding for personal child care would likely be delivered in the form of CCFA for eligible educators, based on their household income.

Both the loan forgiveness and scholarship programs were codified in the FY 2025 budget and they represent significant policy wins for the early education and care workforce. The continuity of these programs into FY 2026 depends heavily on conference negotiations.

Grants to Head Start Programs: Head Start, which provides child care and other support to over 11,000 children in Massachusetts, typically receives an annual grant from the MA legislature to support a program that is primarily federally funded. The House proposed grants of $18.5 million (a non-inflation adjusted level fund compared to the FY 2025 budget) while the Senate proposed $20 million. The Conference Committee should approve the Senate proposal to ensure continued support to the children and families served by this transformational program.

Commonwealth Preschool Partnership Initiative: This line item supports school districts in providing high-quality early education and care to three and four year olds. The House proposed $10 million for the program in FY 2026 and the Senate proposed over $27 million, $10 million of which comes from Fair Share revenue.

Student Opportunity Act Funding: Both the House and Senate proposals for the FY 2026 budget and FY 2025 supplemental budget meet the obligations of the fifth year of the Student Opportunity Act (SOA) by adding $460 million 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 this situation, both the House and Senate FY 2026 budget plans, along with the Fair Share FY 2025 supplemental budgets, propose spending excess Fair Share funds from prior years. This would provide significant new support to K-12 schools across the state.

Special Education and School Buildings: The Senate, as a whole, provided more funding (between their FY 2025 supplemental and FY 2026 budget proposals) to special education and school buildings, while the House plans would provide more for school meals, charter reimbursements, and transportation. These differences remain to be settled in conference. Overall, the Senate provided $14.8 million more to help cover cost growth for K-12 schools across these several areas (see table below). The combination of strong progressive increases from the Student Opportunity Act and grant funding flowing to all districts for specific costs, should significantly help all districts, including rural districts and those with declining enrollment that have recently faced particular challenges.

Examining Chapter 70 Funding: Neither plan contains large structural changes to K-12 funding, such as beginning to fund the up-to $465 million dollars needed to fully adjust for the high inflation of the past several years. The Senate budget includes $200,000 in funding and language directing the Department of Elementary and Secondary Education (DESE) to study funding challenges faced by districts and come up with recommendations, particularly relating to how city and town contributions are determined. This effort was not included in the House proposal. The Conference Committee should include this funding and study to ensure we address critical needs of the K-12 system moving forward.

Operating Budgets for UMass, State University, and Community College Campuses: The Senate FY 2026 budget proposal provided a relatively robust increase of $141 million to the standard operating budgets of UMass, state university, and community college campuses. This is compared to only $104 million in the House plan.

Fair Share Funding for Higher Education: Both plans heavily rely on Fair Share dollars to continue positive new investments in higher education programs such as free community college, financial aid increases, and advising and support services through the State University SUCCESS program. The House FY 2026 budget funded these programs slightly below current levels, while adding a combined additional $20 million in operating funds to state universities and community colleges.

The Senate proposal for Fair Share higher education items was roughly the same as the House overall, but increased a key financial aid program, MassGrant Plus, by $20 million compared to this year and the House proposal. This could allow more students to receive coverage for any gaps in financial aid and potentially provide more support for the costs of attendance. In their FY 2025 Fair Share supplemental budget, the Senate allocated a substantial $190 million to higher education capital projects to create an overall strong investment plan for public higher education. On the other hand, the House only provided $20 million in higher education funding in its supplemental budget.

Residential Assistance for Families in Transition: The housing affordability crisis has continued to put stress on the Commonwealth’s housing safety net programs. These programs help people make their rent payments, which is more difficult to sustain when rents are rising rapidly. Additionally, cuts to emergency shelter make it even more urgent to invest in other state programs that keep people housed.

The House and Senate differ on funding for Residential Assistance for Families in Transition (RAFT), which prevents displacement by providing short-term emergency assistance to keep families stably housed. With rapidly increasing housing costs, likely cuts to federal housing assistance, and new restrictions on access to state-funded emergency shelter, it is critical to fully fund housing assistance programs such as RAFT. The Conference Committee should adopt the Senate’s higher proposal of $225 million, rather than the House proposal of $207.5 million. This additional funding would allow the program to serve more than 4,000 additional households in the next fiscal year.

As of publication, the FY 2025 appropriation for RAFT has been nearly fully expended, with $201.9 million spent and $2.8 million remaining. With the current funding level on pace to run out before the end of the fiscal year, the need for expanded housing assistance is clear. Given this, even if the Senate’s higher appropriation of $225 million is adopted by the Conference Committee, supplemental funding may still be needed later for the program to avoid running out of money. Additionally, because RAFT has a fixed benefit maximum of $7,000 per year, the purchasing power for recipients is reduced by inflation and housing cost increases. The Senate budget would call for a report to be submitted to the legislature within 90 days regarding potential improvements to RAFT and other safety net programs, including a review of benefit limits.

Massachusetts Rental Voucher Program: The chambers also differ on funding for the Massachusetts Rental Voucher Program (MRVP), with the House proposing a higher funding level by $4.8 million. Rental vouchers are a critical tool to help people access and maintain stable and affordable housing. Anticipated federal budget cuts are likely to  cause thousands of Massachusetts households to lose their federal rental vouchers. Given this, the Conference Committee should adopt the House proposal of $258.1 million for MRVP.

The Senate budget includes stronger language restricting the practice of requiring tenants to pay real estate broker fees when renting a home. While the House language contains a significant loophole that excludes tenants who respond to a listing, the Senate language is simpler and would protect more people. The Conference Committee should adopt the Senate language.

Decreases in Funding for HomeBASE and Emergency Assistance Shelter: The House and Senate budgets both include cuts to shelter funding, and an effective cut to the HomeBASE program after accounting for inflation. Both chambers proposed a substantial cut to funding for emergency assistance (EA) shelter compared to last year’s budget (approximately $275 million this year, compared to $326.1 million last year). Since both chambers have proposed nearly identical amounts, it is unlikely that this appropriation will change as a result of the conference process. It will be important to monitor supplemental appropriations throughout FY 2026 to ensure that the shelter system is adequately funded. As MassBudget has noted in previous analyses, and as advocates have pointed out, the shelter system’s caseload reduction is largely due to restrictions on access, not less need.

Homeless Shelters Serving Individuals: In a smaller line item for shelter, the House proposed $5 million more than the Senate for homeless shelters serving individuals (as opposed to families). The House proposal of $115.8 million would allow this line item to keep pace with inflation compared to last year, while the Senate proposal of $110.7 million would be an effective cut after accounting for inflation. To avoid effectively cutting this program, the Conference Committee should adopt the House’s higher proposal.

Volunteer Income Tax Assistance: The House FY 2026 proposal provides an earmark of $820,000, level funding from FY 2025, for Volunteer Income Tax Assistance (VITA) sites. The Senate FY 2026 budget proposal does not include a designated earmark for this critical program. VITA funding decreased by $680,000 from $1.5 million in FY 2025, despite the sites serving as a critical partner in maximizing 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 across the Commonwealth 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. The Conference Committee should include the $820,000 earmark for VITA programs.

Funding for Cities and Towns: The House and Senate FY 2026 budget proposals differ in their handling of funding for Unrestricted General Government Local Aid (UGGA), a large source of flexible aid for cities and towns. The House funds UGGA at $1.31 billion, level with FY 2025. Historically, this funding increases at a similar rate to tax revenue growth, which was reflected in the Senate’s FY 2026 proposal with an additional $29 million for UGGA. Cities and towns rely on this aid to support local services including public works and first responders.

Capping Prescription Drug Prices: The Senate budget proposal includes a provision that would allow the Health Policy Commission to cap the price of certain prescription drugs, while the House budget proposal does not. This provision would potentially limit the price consumers spend on certain prescription drugs.

The Conference Committee, composed of three members of the House and three members of the Senate, will be drafting a state budget that, through compromise, strives to meet the needs of the Commonwealth. Meanwhile, the last few weeks have served as a preview of the possible impact that federal budget cuts could have on the Commonwealth’s fiscal stability. We recognize our Legislature is drafting a budget within an environment of extraordinary uncertainty for Massachusetts’s FY 2026 revenue and expenditures. MassBudget wants to call attention to the negative impact of out-of-touch federal fiscal policies on our most vulnerable populations, low- and middle-income families, and Black and brown communities. The Conference Committee should uplift these communities as it finalizes its FY 2026 budget.