This analysis represents the next step in the FY 2027 state budget creation process.
The House of Representatives budget proposal for Fiscal Year (FY) 2027 is the first annual state budget offered by the Legislature since the federal “One Big Beautiful Bill” Act (OB3) was passed by the United States Congress on July 4, 2025. The past year has raised alarms over deep federal spending cuts, raised tariffs, foreign wars, intensified immigration enforcement, and other unprecedented federal threats and disruptions. On top of these threats, two proposed ballot initiatives in Massachusetts, if passed, would deeply curtail the Commonwealth’s ability to collect future revenue for public needs.
In responding to these events, the House follows many of the broad contours of Governor Maura Healey’s FY 2027 budget recommendation. Legislators’ task is made easier with the support of $2.7 billion in revenue from the Fair Share surtax. Additionally, there is a still-pending FY 2026 supplemental budget that would allocate roughly $1.3 billion in prior surtax collections exceeding budgeted amounts – all being allocated for education and transportation programs, services, and investments.
The House FY 2027 budget proposal, beginning July 1, would assign spending for $63.4 billion in public revenue. The amount is roughly $81.3 million more than had been proposed earlier this month by the House Ways & Means Committee and about 4 percent more than enacted in the FY 2026 General Appropriations Act.
This analysis covers the following topics (click on one to be taken to that section): Revenue, K-12 Education, Early Education and Care, Housing, Transportation, and Other Noteworthy Inclusions.
It all Starts with Revenue
The amount the House can spend depends on how much revenue is available to the budget. The House budget proposal is based on the FY 2027 Consensus Revenue Estimate (CRE), which is $44.9 billion. This total includes $2.7 billion in Fair Share surtax revenue, $300 million more than was available in the FY 2026 budget process. Once various required pre-budget transfers (for example, for state pension obligations, for the MBTA, and the MSBA, among other uses) are accounted for, the amount of tax revenue available for appropriation through the FY 2027 budget totals $35.0 billion.
Setting aside the Fair Share surtax revenues, the FY 2027 base tax revenue estimate of $42.2 billion ($44.9 billion – $2.7 billion = $42.2 billion) anticipates only modest revenue growth of 2.4 percent over the estimate from the previous year. Muted revenue growth presents potentially significant challenges for the Commonwealth, especially in the face of federal cuts and economic uncertainty. Given these fiscal challenges, it would be timely for lawmakers to identify and advance additional sources of revenue, including recapturing taxes on profits multinational corporations shift onto the books of offshore subsidiaries.
Unlike the FY 2026 General Appropriations Act (GAA), which included no sizable tax initiatives to preserve or expand revenue, the House’s FY 2027 budget proposal includes two. The first is progressive, but would only preserve rather than generate new revenue, and the savings would occur only for the coming several years. The second also is progressive, but would generate new, ongoing revenue for the Commonwealth.
- The House’s proposed budget assumes adoption of the governor’s proposal – which is pending as part of the most recent FY 2026 supplemental spending bill – to limit and delay state implementation of five costly, wasteful, and highly inequitable federal corporate tax cuts that were included in the federal “One Big Beautiful Bill” Act (OB3) passed in July 2025. By delaying state implementation of these federal tax cuts for a year or two and limiting one, lawmakers will preserve $108 million in state tax revenue that would have been foregone in FY 2027. Fully opting out from these federal changes, as many other states have done, would preserve hundreds of millions of dollars of progressive revenue over the coming several fiscal years.
- The House also follows the governor in proposing to expand the state’s pass-through entity excise tax (PTE) program to include Fair Share surtax payments. The PTE excise tax program provides a mechanism to help mostly households with high incomes reduce their federal taxes. While providing these households with a workaround to a limit on a federal tax deduction, the Commonwealth then collects the equivalent of a small portion of the tax reduction received by tax filers that participate in the program. The PTE excise program thus increases tax revenue for the Commonwealth while also cutting federal taxes significantly for many households with high incomes. The House’s FY 2027 budget proposal assumes that the proposed expansion of the PTE program would generate an additional $296 million for the Commonwealth in FY 2027, all of which would be highly progressive and ongoing.
The House also broadly follows the governor’s proposal to limit new deposits of capital gains taxes into the Commonwealth’s Stabilization Fund (also known as the “Rainy Day Fund”). The House, like the governor, adjusts the excess capital gains threshold upward by approximately $470 million. Doing so makes these funds available in the General Fund for FY 2027 appropriation, rather than transferring it automatically to the state’s Stabilization Fund. At a time when the Commonwealth’s Stabilization Fund exceeds $8 billion – a reserve total that is larger than that of almost every other state reserve fund – it is reasonable to invest these funds in meeting the challenges of the coming year for people and communities across the Commonwealth.
K-12 Education
Fair Share surtax revenue continues to play a central role in supporting K–12 education by funding both core aid and key cost areas. The $551 million increase in Chapter 70 aid, proposed by the governor and maintained by the House’s proposed FY 2027 budget, is funded by Fair Share surtax dollars to sustain the last year of the Student Opportunity Act implementation. Additional Fair Share surtax funding is supporting the House’s proposed higher per-pupil minimum aid increase.
Fair Share surtax revenue also fully funds universal free school meals, which at a time of changing eligibility criteria and limiting access to the Supplemental Nutrition Assistance Program (SNAP), this program becomes more crucial. Fair Share surtax funding also provides $62 million for school transportation reimbursements, helping school districts manage the rising costs of student transportation services. In the proposal for the FY 2026 Fair Share Supplemental Budget, the House is allocating $456 million in education spending.
In the final year of implementing the Student Opportunity Act (SOA), the House proposes $7.66 billion in Chapter 70 aid to school districts in FY 2027, a nearly $300 million increase from FY 2026 GAA. Of that increase, $52.2 million comes from raising the minimum aid level to $160 per pupil, which is $85 higher than the Governor’s proposal and $10 per pupil above last year. The increase helps ensure that districts continue to receive at least some growth in state support, even as enrollment declines and other factors limit formula-driven gains.
The House also proposes a $10 million reserve fund to offset reductions in Chapter 70 aid tied to unexpected declines in English Learner enrollment. This declining enrollment fund is a targeted response to recent shifts in student populations that can disproportionately impact district aid levels. While relatively small compared to the scale of potential losses, it represents an important acknowledgment of the fiscal instability districts face when enrollment drops quickly.
Special Education Circuit Breaker
The House proposes $653 million for FY 2027 for the program that provides financial support to school districts to afford the high costs of special education services. While this may appear to be a significant budget allocation, it is only about $16.5 million above FY 2026 (not adjusted for inflation) when accounting for both the $485 million GAA and $152 million supplemental budget (about $637 million total) used to meet prior-year reimbursement obligations.
For school districts in rural areas, the House FY 2027 budget proposal maintains existing support levels, keeping Rural School Aid at $12 million, no change when compared to FY 2026 GAA, not accounting for inflation. This includes $10 million in the FY 2027 budget and $2 million provided through the FY 2026 Fair Share supplemental budget. The Fair Share supplemental budget also proposes $3 million for Regional School Transportation Aid, recognizing the unique cost pressures faced by regional and rural districts, where public transportation is very limited, contrary to more urban areas and Gateway Cities.
The House did not take action to establish a Foundation Budget Review Commission, which is necessary to resolve immediate and long-term issues with the K-12 aid formula.
Comparison of Major K-12 Spending Areas (not adjusted for inflation)
K-12 Cost Category Line Items FY26 GAA FY27 House
Chapter 70 7061-0008, 1596-2450, 1596-2438 $7,361,864,553 $7,658,399,506
Charter School Reimbursement 7061-9010 $198,988,065 $200,402,605
School Meals 1596-2422 $180,000,000 $198,000,000
Special Education 7061-0012 $484,927,484 $653,444,886
Transportation 7035-0006, 7035-0008, 1596-2451 $132,439,587 $154,381,960
Total $8,358,219,689 $8,864,628,957
Early Education and Care
The House’s proposed FY 2027 budget includes $1.86 billion for early education and care, a nine percent increase compared to the FY 2026 GAA, not adjusted for inflation.
Child Care Needs Drives Early Education and Care Budget Increase
The House budget proposal allocates $1.2 billion for the state’s Child Care Financial Assistance (CCFA) program, which provides child care access to and high-need families with low incomes. During the FY 2026 budget cycle, the Legislature included early education and care appropriations in both the FY 2026 budget proposal and in their proposal to spend excess Fair Share revenue from FY 2025. Taken together, spending for CCFA in the previous fiscal year totaled $1.09 billion (Table 1). The House appears to be taking a similar approach this fiscal year with regards to combining their annual budget proposal with their proposal for excess FY 2026 Fair Share surtax revenue.The total combined spending proposal for CCFA totals $1.3 billion, a 15 percent increase compared to the previous fiscal year.
The number of children receiving CCFA fluctuates throughout the year, with caseloads typically spiking during the summer months when more families need care for their school-age children. Still, caseloads continue to grow steadily year-over-year. Between October 2024 and October 2025, the CCFA caseload grew by just over 2,000 children (about three percent). Compared to October 2022, CCFA is serving about 13,000 more children, a 26 percent increase.
The House’s FY 2027 budget proposal provides the resources expected to maintain the current caseload. Although the caseload increased modestly over the past year, the increase in overall program costs is also driven by increased reimbursement rates for providers that participate in CCFA.
In their FY 2026 Fair Share supplemental budget, the House includes $31.2 million to address the income-eligible child care waitlist. This would allow nearly 2,000 children currently on the CCFA waitlist to get access to affordable child care. As of March 2026, there are 32,000 children on the CCFA waitlist. The waitlist has been frozen for over two years making this funding need to begin to increase access to affordable child care
Child Care Financial Assistance Comparison (not adjusted for inflation)
| Line Item Name | Line Item | FY 2026 GAA** | FY 2027 House Budget Proposals** |
|---|---|---|---|
| Supportive Child Care (DCF and DTA-related) | 3000-3060 | $448,211,115 | $598,633,977 |
| Income Eligible Child Care (Child Care Access) | 3000-4060 | $517,637,865 | $623,593,845 |
| Child Care Supports | 1596-2452 | $83,000,000 | $0 |
| Subtotal | $1,048,848,980 | $1,222,227,822 | |
| FY 2025 Fair Share Supplemental Budget** | FY 2026 House Fair Share Supplemental Proposal** | ||
| Early Child Care Workforce Supports | 1596-2511 | $28,000,000 | |
| Income Eligible Waitlist Supports | 1596-2702* | $31,200,000 | |
| TOTAL | $1,076,848,980 | $1,253,427,822 |
** Line item totals in the chart may differ from line item totals in budget proposals based on earmarks.
Program success warrants additional investments to support new providers
The House budget proposal dedicates $475 million to the Commonwealth Cares for Children (C3) grant program, which would level-fund the program. The House’s proposal uses multiple funding sources to support C3, including the General Fund, Fair Share surtax revenue (Education and Transportation Fund), and revenue from online lottery sales (Early Education and Care Operational Grant Fund) (Table 2). FY 2027 would be the first year that online lottery revenue would be used to support C3.
C3 is an essential support for early education programs, and in turn, children and families. The monthly grant program has contributed to increased program staffing, wages, and educator retention. A more stable workforce has led to more child care program slots, particularly in under-resourced communities. Child care centers that receive C3 grants have often been able to reduce the financial burden on families, either by offering tuition relief or foregoing tuition increases. Massachusetts is the only state in the country to maintain and build upon the pandemic-era support from the federal government that allowed for the creation of C3.
According to the Department of Early Education and Care (EEC), there are approximately 600 newly licensed programs that do not have access to C3 grants due to limited funding. Universal availability to this funding has been a hallmark of the C3 program but insufficient funding threatens that model and threatens the stability of the sector.
C3 Fund Distributions (not adjusted for inflation)
| Line Item # | Fund Name | Line Item Total | Fund Contribution |
|---|---|---|---|
| 3000-1045 | Early Education and Care Operational Grant Fund | $110,000,000 | $100,001,000 |
| General Fund | $9,999,000 | ||
| 1596-2410 | Education and Transportation Fund | $365,000,000 | $365,000,000 |
Lack of Universal Pre-K Funding Threatens Progress
The House budget proposal includes $5 million to support the Commonwealth Preschool Partnership Initiative (CPPI). The CPPI program facilitates partnerships between school districts and community-based programs to increase access to preschool in communities where access may be limited. For a program whose maintenance cost hovers around $20 million, this proposal threatens the progress that this program has made in the years that it has been active. As of FY 2026, 30 districts receive CPPI grants and are either already offering preschool or are creating the infrastructure that will allow them to serve children within the next couple of school years. Without adequate funding, districts may have to reduce access and/or postpone implementation.
Housing
The House FY 2027 budget proposal includes $1.2 billion in Housing and Livable Communities investments. This would be an increase of approximately 5.9 percent, not adjusted for inflation, compared to the final enacted budget for FY 2026. Many of the Commonwealth’s core housing safety net programs saw increased funding in the House budget proposal. However, despite the state’s increased investments, the high cost of housing calls for substantially higher investments to keep up with costs and meet continued pressing housing affordability needs.
Increased investments but need is still great for core housing assistance programs
The House proposes increases to most housing assistance programs when compared to the FY 2026 GAA. Overall, the House proposal for these core programs either mirrored or invested more than what the governor proposed. The increased investment of approximately $28 million (not adjusted for inflation) for the Massachusetts Rental Voucher Program (MRVP) would allow for new vouchers for households experiencing homelessness or housing instability. HomeBASE, a vital program that provides residents with housing stability, will see a large increase and RAFT, which helps residents avert eviction and foreclosure, will receive a slight increase, additional funds were added into both line items during FY 2026 because existing funds were insufficient to meet housing needs. With little reason to believe need will diminish in FY 2027, additional funding will almost certainly be necessary to support both programs as they play a vital role in preventing and reducing homelessness.
Funding Comparisons of Core Housing Assistance Programs (not adjusted for inflation)
| Program | Line-Item | FY 2026 GAA | House FY 2027 |
|---|---|---|---|
| Residential Assistance for Families in Transition (RAFT) | 7004-9316 | $207,477,715* | $210,060,000 |
| HomeBASE – Mass. Short Term Housing Transition Program | 7004-0108 | $57,322,001⌖ | $82,322,001 |
| Mass. Rental Voucher Program (MRVP) | 7004-9024 | $253,311,840 | $281,341,728 |
| Alternative Housing Voucher Program (AHVP) | 7004-9030 | $19,461,214 | $19,263,183 |
⌖ HomeBASE has expended approximately $97 million so far this year as about $40 million in additional funds were transferred into the line item to meet needs.
Positive steps forward but additional funding is needed to better address homelessness
The House’s proposed budget makes some new and increased investments while also cutting funds for the Emergency Assistance (EA) family shelter program when compared to FY 2026 GAA. The House proposal significantly increases funding by 61.75 percent (not adjusted for inflation) for operation of homeless shelters. This funding includes compensation of caseworkers and support personnel. The House budget language directs the Executive Office of Housing and Livable Communities to take steps to extend intake hours for families seeking shelter which could account for part of this large increase. This very positive inclusion will provide families experiencing homelessness with more opportunities to access support. The House proposal also includes a new investment in additional shelter capacity during the winter months.
The House did not include funding to address family shelter diversion like the governor did. The new funding would divert families away from EA shelters through the provision of other services. This new investment would have partially offset the proposed funding cut to EA shelters and services. The House proposal cuts EA shelter funding by 6.27 percent without accounting for inflation. While restrictions have reduced access to EA shelters, homelessness is still elevated in Massachusetts making support to address homelessness vitally important.
Investment Differences for Key Homeless Programs (not adjusted for inflation)
| Program | Line-Item | FY 2026 GAA | House FY 2027 |
|---|---|---|---|
| Emergency Assistance Family Shelter and Related Programs | 7004-0101 | $276,421,903 | $259,100,649 |
| Homeless Individuals Assistance and Related Programs | 7004-0102 | $113,327,398 | $115,050,000 |
| Winter Beds | 7004-0111 | $0 | $8,000,000 |
| Family Shelter Diversion | 7004-0110 | $0 | $0 |
| Operation of Homeless Programs | 7004-0100 | $18,248,242 | $29,515,982 |
Public housing investments
The House’s budget proposes approximately $119.1 million in public housing investments. Compared to the FY 2026 GAA, this is a small increase in absolute dollars ($2.2 million – not adjusted for inflation). Together these line items fund state public housing operations (7004-9005) and make needed improvements to public housing processes and systems (7004-9007).
No new revenue proposals for housing
The House’s proposed budget does not include new revenue proposals for housing. In order to better address the Commonwealth’s affordability crisis, legislative leaders can strengthen the FY 2027 budget proposal by including a revenue source to fund more affordable housing, such as a local option real estate transfer fee on high-end real estate.
Transportation
Like education, the full picture for state transportation spending will be provided both by the FY 2027 budget process and by the still-pending FY 2026 Fair Share supplemental bill, in which the House proposed directing $834 million in surplus Fair Share surtax funds to transportation.
The House’s FY 2027 budget proposal allocates $975 million in Fair Share surtax funding to be transferred through the Commonwealth Transportation Fund (CTF). The CTF provides operating support and financing for capital projects through several state transportation agencies and programs. Mixing other CTF funds and Fair Share surtax funding, the House budget proposes $605 million for an operating transfer to the Department of Transportation through the Massachusetts Transportation Trust Fund, $470.2 million for the MBTA, and $217.5 million for the Commonwealth’s 15 regional transit authorities (RTAs).
The operating support for the RTAs would be a 4.0 percent increase over the FY 2026 GAA. The budget proposal does not include line-item language designating RTA spending between spending areas. In recent years, there have been designated funding amounts provided within this line item to support the elimination of fares. While the funding isn’t designated within the language for FY 2027, House Ways and Means notes their intent to fully fund fare free buses in their executive summary
Fare-free regional transit has yielded very positive outcomes, such as encouraging a sharp increase in RTA ridership, reversing long-term declines. It is a well-targeted affordability program because regional transit riders tend to have low incomes and often cannot afford other transportation options to get to work, show up to medical appointments, or other necessary travel. Fare-free transit also has major operational benefits – making travel more efficient by enabling riders to board quicker and dispensing with additional tasks of fare enforcement, money tracking, and security.
Transportation Spending in House FY 2027 Budget Proposal (not adjusted for inflation)
| Program* | Line item | FY 2026 GAA | House FY 2027 |
|---|---|---|---|
| Massachusetts Transportation Trust Fund | 1595-6368 | $558,945,163 | $605,056,384 |
| Mass. Bay Transportation Authority operations | 1595-6369 | $470,200,000 | $470,150,000 |
| Regional Transit Authorities | 1595-6370 | $209,000,000 | $217,450,000 |
The still-pending FY 2026 supplemental budget that the House proposed in March would additionally use past Fair Share surtax collections that had exceeded budget expectations. The House version of the supplemental budget, if passed, would provide $834 million that likely would largely become available for FY 2027. These proposed amounts include:
- For the MBTA, $525 million in operating support; $125 million for the workforce and safety reserve, $20 million for low income fares; $60 million for capital investments; and $10 million for water transportation.
- For the Regional Transit Authorities, $25 million in operating support.
- For the Massachusetts Department of Transportation for developing a workforce pipeline, $30 million.
- For credits for Sustainable Aviation Fuel, $30 million
- For other one-time, mostly local transportation projects, $9.09 million
Other Noteworthy Inclusions
- Collecting information about health care cost shifts – The House budget proposal directs the Center for Health Information Analysis (CHIA) to work in collaboration with other relevant state agencies and departments. They are directed to prepare an annual public health access program beneficiary employer report, providing information about each Massachusetts employer of 50 or more public health access beneficiaries (subscribers to MassHealth or Connector programs). In doing so, it will provide insight about which large employers are in practice relying on subsidized coverage of their employees rather than providing employer-based coverage themselves.
- The House’s budget proposal would allocate $122 million in funding for Department of Transition Assistance (DTA) caseworkers (4400-1100), $26 million less than the governor’s FY 2027 budget proposal. It would be a nearly $21 million cut from expected FY 2026 funding which includes the additional funds pending in the FY 2026 supplemental budget. According to an analysis performed by the Massachusetts Law Reform Institute (MLRI), the proposed funding would risk approximately 150 caseworkers being laid off. These caseworkers help administer programs like the Supplemental Nutrition Assistance Program (SNAP), Health Incentive Program (HIP), and employment and training – all serving families and individuals with low incomes. Providing adequate funding to ensure DTA staffing is keeping up with increased need is critical for families to receive much-needed food assistance benefits. It is also crucial for maintaining essential federal funding for years to come in light of new eligibility barriers to SNAP and other human service programs included in recent federal legislation. While there is $41.6 million in additional funding pending the passage of a FY 2026 supplemental budget that would bring FY 2026 funding total to $142.8 million. The heightened need, given federal program cuts and new bureaucratic obstacles, make the cut to this budget line item appear to move in the wrong direction.
- The House budget proposal restores funding for the Volunteer Income Tax Assistance (VITA) sites (1201-0100) to $1.5 million. The program has experienced significant cuts every year since FY 2023. Although the program is small, it provides critical support to more than 80 VITA sites across the Commonwealth that serve over 30,000 taxpayers with low incomes along with other VITA sites throughout the state. VITA assists these taxpayers by helping them access free tax preparation, claim refundable tax credits, and connect to other services like the Women, Infants, and Children (WIC) food program and Head Start. These sites have become even more important in light of federal cuts to tax assistance and other income support programs, including to maximize the impact of the Child and Family Tax Credit, the expanded Earned Income Tax Credit, and the Senior Circuit Breaker.
Looking Forward
The next step in the FY 2027 budget cycle will be the Senate Ways and Means (SWM) committee releasing their budget proposal next week – and then the full Senate – will follow the same progression for their proposed FY 2027 budget, starting in early May. MassBudget will conduct a preliminary analysis of the SWM proposed budget and then an in-depth analysis of the proposed budget approved by the full Senate.
Massachusetts lawmakers continue to draft a state budget within a volatile and unpredictable state and federal budget environment. From proposed ballot initiatives that significantly hinder the state’s ability to raise revenue to looming federal budget cuts, lawmakers need to consider other ways to grow the budget to adequately fund much-needed programs across the state. Lawmakers continue to have the opportunity to demonstrate that they can create a Commonwealth where everyone, independently of their race, nationality, and socioeconomic background, can thrive.
