By SAM DRYSDALE, May 6, 2026
STATE HOUSE, BOSTON, May 6, 2026….A Senate proposal to change how some local aid is distributed is drawing scrutiny from progressive budget analysts, who warn the approach could weaken efforts to direct more resources to communities with the greatest need.
Researchers at the Massachusetts Budget and Policy Center say a Senate Ways and Means Committee plan to allocate new unrestricted general government aid on a per-capita basis risks stripping away a distribution approach that addresses property wealth gaps, even as it increases overall funding.
A Senate Ways and Means official described the proposal as an initial move toward overhauling an outdated system, adding that lawmakers are interested in developing a more equitable distribution formula in the future and view the per-capita approach as a straightforward starting point.
The Senate plan would add $53 million in unrestricted local aid in fiscal year 2027 and distribute that increase based on a per capita formula, while leaving underlying $1.323 billion allocation approach unchanged.
Phineas Baxandall, MassBudget’s policy director, said the plan represents a mixed step forward.
“We have two cheers for this proposal,” Baxandall said, pointing to both the funding increase and the Senate’s acknowledgment that the current distribution system is outdated. “We are supportive of an increase in funding that might even keep up with inflation after years of underfunding.”
But in an analysis released Wednesday, MassBudget says the Senate committee’s plan “increases funding for cities and towns, but risks regressivity” due to the per-capita model for the extra $53 million increase.
Baxandall said the change to a per-capita model moves the state away from addressing disparities in municipal resources.
In a state where municipalities depend heavily on property taxes to fund local services, communities with higher property values are able to generate more revenue locally than those with lower values, creating disparities in funding capacity. Local aid is one of the primary mechanisms used to offset those differences.
“Local aid is crucial to bring some kind of equity and equality of opportunity for residents across the commonwealth,” Baxandall said. “Replacing obsolete targeting with no targeting whatsoever isn’t the direction to go.”
Unrestricted local aid is a major source of flexible funding for cities and towns, supporting local public safety, public works and parks systems. The pot of state aid is funded with state Lottery and other gambling revenue and has largely maintained historical distribution patterns for decades, even as community demographics and fiscal conditions have changed, Baxandall said.
The Senate Ways and Means official said there is currently no formal formula governing how unrestricted local aid is distributed, but a leftover system from before fiscal year 2009.
Before unrestricted general government aid, the same local aid revenue was distributed as so-called Lottery aid, which incorporated equity considerations. When those funds were consolidated into what has become known as UGGA, it locked allocations in place, the official said. Since then, increases have largely been applied uniformly year over year without adjusting for shifts in population, development, or changing local needs, leaving some fast-growing communities receiving more aid than they would under a modernized approach.
Sean Fitzgerald, spokesperson for Senate Ways and Means Chair Michael Rodrigues, pointed out that every community would receive an increase under the per-capita proposal.
“Under the Senate’s proposal, all 351 Massachusetts communities will see an increase in aid at a time when cities and towns are facing rising costs,” he said. “This formula accounts for less than 4% of the Senate’s total local aid allocation and was developed through conversations with members from across the state. We believe it delivers a more equitable, modern approach to sharing resources when every dollar matters.”
A 2025 MassBudget report on gambling-related revenue found that the existing system generally directs more aid to lower-property wealth communities. However, there are about a dozen cities and towns that have above-average income, due to shifting factors over the past few decades, that receive above-average UGGA.
“That is to demonstrate how it’s not finely tuned anymore,” Baxandall said.
The MassBudget analysis says, “While this [plan] acknowledges that the existing distribution process is outdated, it replaces a mildly progressive funding distribution with one that is not targeted at all to communities with lower-incomes or less fiscal capacity. In order to ensure cities and towns receive the aid they need, more progressive funding formulas should be considered.”
The committee official said the Senate’s plan is intended as an opening step to signal the need for reform, emphasizing that the Senate has proposed creating a commission in recent budget cycles to study and update the UGGA formula, though those efforts have not yet made it into a final budget. The official added that the goal is to eventually direct funding more precisely to communities with the greatest need.
Municipal leaders attended and celebrated the Senate Ways and Means Committee’s rollout of their new plan.
The Massachusetts Municipal Association has advocated for larger bumps to UGGA for years, this year saying the need had reached a crisis level and requesting a $351 million increase to support all 351 cities and towns in the state. The committee’s proposal falls well short of that major ask, but leaders from the group threw their enthusiastic support behind the proposal on Monday.
“These targeted investments will pay dividends for our residents now and in the future, helping to mitigate fiscal pressures that residents are shouldering and to help protect essential services,” said Adam Chapdelaine, executive director and CEO of the MMA.
Kiana Baskin, chair of the Sharon Select Board and vice chair of the MMA, described cost pressures facing municipal governments, which have led to override initiatives where voters are weighing tax increases “just to maintain the same essential services that are so critical to everyday life for residents.”
Brookline on Tuesday passed the largest override in state history on Tuesday, preserving the fire department’s budget and hundreds of positions in schools, but increasing taxes for property owners by about 18% over the next three years.
“It is important to note, cities and towns have an important responsibility here to deal with these growing challenges, but with strict limitations on revenue generation, we rely on our partners in the state to help provide critical services and targeted investments,” Baskin said.
A study released this week by the Fiscal Alliance Foundation found “Massachusetts provides significantly less local aid to municipalities than the national average and per capita basis. If local aid levels matched national norms, cities and towns would receive an additional $1.82 billion dollars more in revenue, an amount roughly equivalent to a nine percent increase in property tax collections,” according to the foundation.
The report focused on Proposition 2 ½, which limits how much municipalities can raise property taxes every year, unless voters pass an override.
The foundation said “stagnant” state aid to municipalities, not Proposition 2½, is “the primary driver of fiscal pressure on local governments.”
