This analysis represents the next step in the FY 2027 state budget creation process.
The Senate Ways and Means (SWM) Committee’s Fiscal Year (FY) 2027 budget proposal, released on May 5, allocates approximately $63.3 billion in spending for the Commonwealth. This proposal includes $2.7 billion from the Fair Share surtax, the voter-approved ballot initiative that enacted a surtax on the highest incomes in Massachusetts. This is the next step in the FY 2027 state budget cycle, after the House finalized its FY 2027 budget proposal on April 29. The SWM proposed budget follows a similar approach to the governor’s proposal, bracing for difficult times ahead while making ample use of the Fair Share surtax.
The Massachusetts Budget and Policy Center (MassBudget) will release a conference committee preview analysis after the proposed FY 2027 budget is approved by the full Senate, which is slated to happen in late-May.
This analysis covers the following topics (click on one to be taken to that section): Fair Share Funding, Revenue, Commissions and Task Forces, Transportation, Housing, Early Education, K-12 Education, Higher Education, VITA, Department of Transitional Assistance, and Unrestricted Local Aid.
Fair Share surtax revenue continues to enable state investments in critical education and transportation programs.
The SWM FY 2027 budget proposal allocates $2.7 billion in Fair Share surtax revenue in education and transportation programs. Combined with $1.38 billion in the consolidated FY 2026 Fair Share supplemental budget passed by the Senate in April 2026, this totals over $4 billion in Fair Share funding.
| Category | Program | Amount Funded by Fair Share (in millions)1 |
|---|---|---|
| Education | C3 Stabilization Grants | $375.0M |
| Education | DTA and DCF Related Childcare | $119.4M |
| Education | Income-Eligible Childcare | $124.7M |
| Education | Commonwealth Preschool Partnership Initiative | $28.5M |
| Education | Chapter 70 | $576.1M |
| Education | School Meals | $180.0M |
| Education | Mental Health Supports and Wraparounds | $2.0M |
| Education | Early College Programs | $6.0M |
| Education | Innovation Pathways | $3.0M |
| Education | Regional School Transportation | $60.6M |
| Education | Non-Resident Vocational Transportation | $1.4M |
| Education | Advanced Placement Math and Science Programs | $2.3M |
| Education | MASSGrant Plus | $85.0M |
| Education | State University SUCCESS | $14.0M |
| Education | Free Community College | $137.0M |
| Education | UMass SUCCESS | $10.0M |
| Transportation | Massachusetts Transportation Trust Fund | $220.2M |
| Transportation | Massachusetts Bay Transportation Authority | $470.0M |
| Transportation | Regional Transit Authorities | $184.8M |
| Transportation | Human Services Transportation | $100.0M |
Proposal would not amply address the fiscal uncertainty Massachusetts faces
The SWM FY 2027 budget proposal includes two sources of revenue, both related to federal taxation:
- The FY 2027 budget proposal assumes $108 million in retained state revenue by limiting and temporarily delaying2 some federal corporate tax changes approved by Congress in July 2025 through the One Big Beautiful Bill Act (OB3) that would otherwise become part of the state tax code. The failure to opt-out completely from these costly, wasteful, and highly inequitable federal corporate tax breaks is a lost opportunity for state lawmakers to preserve more needed revenue for Massachusetts. This is particularly true for when the state will experience a significant loss of funding for federally funded anti-poverty programs, such as Medicaid and the Supplemental Nutritional Assistance Program (SNAP). If lawmakers choose not to fully opt-out, the Commonwealth will lose hundreds of millions of dollars in progressive revenue over the coming few years. All of this funding could be used to help alleviate the budget shortfalls and growing needs faced by communities and households across the state.
- Like the House and the governor, SWM includes an additional $296 million in revenue in their proposal by expanding the pass-through entity excise tax (PTE) program to include Fair Share surtax payments.3 This expands a program where the Commonwealth provides a mechanism to help mostly households with high incomes reduce their federal taxes and then skims off a portion of these households’ savings. This expansion would benefit only high income households as Fair Share is a surtax on high incomes.
The SWM budget proposal, like the House, fails to include a revenue raising policy proposal, adopted by many other states, to tax more of the profits multinational corporations currently shift to off-shore tax havens. This could generate hundreds of millions in progressive revenue each year for Massachusetts.
Changes of Excess Capital Gains Allocations “Frees Up” Money for Appropriations
SWM, like the governor and House of Representatives budget proposals, sets the threshold for capital gains tax revenue available for the FY 2027 budget at $2.25 billion. This upward adjustment of the threshold frees up $470 million of capital gains tax collections to support funding needs in the FY 2027 budget. Also, like the governor and the House budget proposals, the SWM budget proposal alters the allocation of the remaining $256 million in above-threshold capital gains tax revenue. The SWM directs $51 million to the Stabilization Fund, $150 million to retiree benefits, $35 million to pension obligations, and $20 million to the Disaster Relief Fund.
Proposed establishment of commissions and task forces help prepare longer term solutions
The SWM FY 2027 budget proposes the creation of several commissions and task forces to determine solutions to long term issues the Commonwealth has been facing. For instance:
- The Foundation Budget Review Commission (Outside Section 27) would review the way the education foundation budgets are calculated and make recommendations for potential changes in those calculations. The commission can make recommendations to address the eroded value of the Student Opportunity Act (SOA) funding due to recent high levels of inflation and declining enrollment in public school districts across the Commonwealth.
- The Commission for the Massachusetts School Building Authority (Outside Section 39) would review the funding capacity, equity of the school building funding formula, and ensure the reimbursement process aligns with actual costs of building.
- The task force regarding the Commonwealth Stabilization Fund (Outside Section 15) would periodically review and recommend appropriate long-term funding levels for the Stabilization Fund, which has reached over $8 billion and is one of the largest in the country.
An increase for fare-free buses helps bolster a critical program
The SWM FY 2027 proposal includes language allocating $40 million, a $5 million increase, for Regional Transit Authorities to run fare free bus programs (1595-6370). Fare-free regional transit has been highly successful as it has encouraged a sharp increase in ridership, which reversed long-term declines. It is a well-targeted affordability program because regional transit riders tend to have lower incomes and often cannot afford other options to get to work, show up to medical appointments, or other travel. Fare-free transit also has major operational benefits – making travel more efficient by enabling riders to board quicker and eliminating additional tasks of fare enforcement, money tracking, and security.
Additional support for most core housing programs, yet insufficient to address the continued need
The Massachusetts Rental Voucher Program (MVRP, 7004-9024), the state’s primary rental voucher program, receives $278.3 million in the SWM FY 2027 proposal. This is an increase from FY 2026 General Appropriations Act (GAA) of approximately $25 million without adjusting for inflation and $3 million less than the House FY 2027 budget proposal for MRVP. This would allow the program to initiate new housing vouchers, helping more households access safe and affordable housing. According to SWM, this would allow the state to support more than 11,500 mobile and project-based rental vouchers in total.
HomeBASE (7004-0108), the state’s primary tool for moving families from Emergency Assistance (EA) shelters into stable housing, as well as providing housing support to families eligible for shelter4, would receive $82.3 million, a $25 million increase over FY 2026. This is the same funding level the governor and the House put forward. While this appears to be an increase over the final FY 2026 GAA, it falls short of the $97 million used for HomeBASE so far in FY 2026. Additional funds were transferred into HomeBASE during the current fiscal year (FY 2026) to meet the current need for housing assistance.
The Residential Assistance for Families in Transition (RAFT, 7004-9316) program, which helps individuals and families facing eviction, foreclosure, loss of utilities, and other housing emergencies, would receive an allocation of $201.5 million. This is a $6.3 million decrease when compared to the FY 2026 GAA, not accounting for inflation. The housing affordability crisis in Massachusetts is such that RAFT received $13.8 million more than what was initially allocated in FY 2026 GAA from an FY 2025 supplemental budget. This additional funding was to meet the demand for housing assistance needs, which makes this funding cut in FY 2027 more significant. In contrast, the House proposal increased RAFT funding by $2.6 million, not adjusting for inflation or accounting for the funds carried over in the FY 2025 supplemental budget.
Early education and care investments continue to grow; access remains uncertain
The SWM proposal continues funding for the Commonwealth Cares for Children (C3) grant program (3000-1045) at $475 million, the same as it was funded in the FY 2026 GAA, not adjusting for inflation. Massachusetts continues to be the only state in the country that has maintained these federally funded, COVID-19 pandemic-era grants with state dollars. While this investment should be lauded, it is important to note that as child care capacity grows and the demand on C3 is increasing, continual level-funded will likely weaken the impact of this incredibly successful program. This will also prevent newly licensed child care providers from accessing this vital support, which allows them to cover operational expenses, including workers salaries.
The majority of funding proposed for early education and care would support the Child Care Financial Assistance program (CCFA) (3000-3060 and 3000-4060), which connects families with low incomes and/or high needs to affordable child care. The SWM budget proposes $1.2 billion for CCFA. This funding amount would allow the Department of Early Education and Care (EEC) to effectively maintain FY 2026 CCFA enrollment levels. The SWM proposal does not include funding to reduce the income-eligible CCFA waitlist. New families have been largely unable to access income-eligible CCFA since March 2024; without additional funding, this is unlikely to change. As of March 2026, there are over 32,000 children on the income-eligible CCFA waitlist. It is important to keep in mind that Massachusetts childcare costs are above the national average and account for about 12 percent of families’ income.5
The SWM budget dedicates $28.5 million for the Commonwealth Preschool Partnership Initiative (CPPI) (3000-6025), which supports partnerships between school districts and community-based providers to increase access to child care, improve affordability, and increase the quality of care. There are currently 30 communities participating in CPPI and this funding would allow EEC to expand the program into even more communities.
Increases in minimum per-pupil aid for education funding, still not addressing immediate declining enrollment needs
The SWM proposes $7.66 billion for Chapter 70 funding (7061-0008), including increasing minimum aid to $160 per pupil from $150 per pupil in FY 2026, the same as the House’s budget proposal. While this is a helpful step, the proposed budget does not address the declining enrollment of multilingual learners in school districts across the Commonwealth, which has led to losses in funding for school districts. Many of these districts have seen notable declines in multilingual learners, leaving communities facing continued fiscal strain. Recent reporting has highlighted growing concern within communities about immigration enforcement activity. This has included the presence of Immigration and Customs Enforcement (ICE) agents in Massachusetts, specifically close to public buildings, including schools. Some families, particularly immigrant parents, are hesitant to send their children to school, contributing to the multilingual learners enrollment decline.
Higher education wraparound services would be cut while free community college would receive a boost
The SWM budget proposes $137 million for Free Community College (1596-2501), $10 million more than the House’s FY 2027 budget proposal. This program has been responsible for a 40 percent increase in community college enrollment, makes higher education more affordable for all Commonwealth residents, and constitutes a crucial investment in workforce development.
The Supporting Urgent Community College Equity through Student Services (SUCCESS) program was created in 2021 to assist historically underserved students enrolled in the 15 community colleges by providing them with additional funding for wraparound services, such as mentoring, advising, and coaching to improve students retention and graduation rates. In FY 2025, SUCCESS was expanded to include the nine public state universities. The Community College SUCCESS Fund (7100-4002) and State University SUCCESS Fund (1596-2439) each receive $14 million in the SWM proposal, $4 million less for each than the House proposal. The House6 and SWM both would allocate $10 million in funding for UMass Amherst SUCCESS programming (1596-2705) in their FY 2027 budget proposals. The SUCCESS program is of particular importance for equity in education because, since January 2025, the federal government has eliminated, defunded, or underfunded programs that support underserved and underrepresented populations in higher education.
No funding guarantee without earmark for tax assistance
The SWM budget does not include earmark language designating funding for the Volunteer Income Tax Assistance (VITA) sites (1201-0100). The House budget proposal restored funding to $1.5 million. Without earmark language in the budget, there is no guarantee VITA sites will receive much needed funding. The program has experienced significant cuts every year since FY 2023. More than 80 sites across the Commonwealth annually serve over 30,000 taxpayers with low incomes 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 are also crucial to ensure the maximum impact of the Child and Family Tax Credit, the expanded Earned Income Tax Credit, and the Senior Circuit Breaker. This funding is even more vital in light of federal cuts to tax assistance.
Funding for DTA workers maintain status quo, putting at risk federal program benefits and funding
The SWM’s FY 2027 budget proposes nearly $148 million in funding for Department of Transitional Assistance (DTA) caseworkers, who 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. This is the same amount of funding proposed in the governor’s FY 2027 budget. The Healey administration described this funding increase as keeping up with projected need; though, the proposed funding would maintain the same number of caseworkers as at the end of 2025.7 Increased funding is needed to ensure DTA staffing is keeping up with elevated needs. Additional investments above what has been proposed are critical for families to receive food assistance benefits and for maintaining essential federal funding for SNAP. Failing to address the shortage of caseworkers will also have dire consequences for federal funding moving forward. Eligibility changes to SNAP, and other human service programs included in the federal OB3 legislation, together with the requirement to states to assume part of the cost of the program benefits, will require skilled and experienced caseworkers to make sure program users comply with new eligibility requirements and reduce the Payment Error Rate. Failure to reduce the SNAP Payment Error Rate will result in Massachusetts having to assume a larger percentage of the cost of SNAP benefits, potentially requiring the state to pay hundreds of millions of dollars more.
Changes to unrestricted local aid increases funding for cities and towns, but risks regressivity
The SWM budget proposes a total of $1.38 billion in unrestricted local aid funding known as Unrestricted General Government Assistance or UGGA (1233-2350). Of the total, $1.32 billion would continue to be distributed in the same proportion as prior years. The additional $53 million would be distributed on a per-capita basis to cities and towns. While this 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.
Looking Forward
The next step in the FY 2027 budget cycle will be the full Senate debating amendments to the SWM budget proposal over the next few weeks before passing a final proposed version. MassBudget will conduct a conference committee preview analysis of the proposed FY 2027 budgets approved by the House of Representatives and Senate. Afterwards, the conference committee will release their budget proposal. MassBudget will conduct a preliminary analysis of the conference committee’s proposed budget and then an in-depth analysis of the General Appropriations Act.
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.
Endnotes
1 Some programs are funded via multiple funding streams and not all funding may come from Fair Share surtax revenue. The table highlights only the funding allocated from Fair Share surtax revenue. The funding amounts in the table are based on analysis released by the SWM committee.
2An FY 2026 supplemental budget which delays federal corporate tax changes is currently pending.
3The PTE excise program is an accounting “workaround” that allows filers with “pass-through” income – which is overwhelmingly collected by households with high incomes – to choose to pay their Massachusetts state taxes through a special payment structure. This special structure allows these tax filers to deduct more of their state tax payments from their federal taxable income, thus reducing their federal tax bills significantly. As part of the PTE excise workaround, the Commonwealth collects the equivalent of a small portion of the federal tax savings generated by these PTE filers. The PTE excise program thus increases tax revenue for the Commonwealth, while also significantly cutting federal taxes for many high-income households.
4Families living in non-EA domestic violence shelters and residential use treatment programs may also be eligible for HomeBASE.
5Analysis based on income for full-time working parents with children in center-based care in 2025.
6Funding for this in the House budget is an earmark in line item 7100-0200
7FY 2026 GAA funding and additional funding pending in a supplemental budget for FY 2026 would maintain the existing number of caseworkers.
