Massachusetts lawmakers sent their fiscal year 2026 spending plan to Governor Maura Healey’s desk on Monday — the first time in nearly a decade that they passed a budget deal before the start of the fiscal year on July 1.
The proposal passed in the shadow of storm clouds over Washington, D.C., and represents a deal between House and Senate leaders that slashed hundreds of millions of dollars in spending from health care and other areas from earlier drafts passed by each chamber just this spring.
Those reductions in the state spending plan, which House budget chief Aaron Michlewitz said “will better prepare the Commonwealth for potential economic turmoil in months ahead,” were driven by worries about deep federal spending cuts by the Trump administration and estimates that tax revenue may come in hundreds of millions below what state officials originally projected. Even with the changes, though, the sweeping compromise would still increase spending by 6 percent over the current fiscal year.
The $61 billion plan comes in $1 billion less than the price tag of Healey’s initial budget proposal and roughly $500 million less than what either the House or Senate committed to in recent months.
Legislative leaders cut $300 million in what they had originally planned to spend on MassHealth, the state’s Medicaid program; stripped out some administrative costs from across many state agencies; and cut a number of local earmarks, which provide funding for projects in individual districts.
They also quietly included a cushion for themselves against ongoing financial and economic uncertainty, according to a report published Monday by the Massachusetts Taxpayers Foundation think tank. The report said the budget included a unspent balance of more than $800 million “which could mitigate negative tax revenue impacts in the future.” Budget officials confirmed the assessment to State House News Service.
While Healey will almost certainly sign the bill, she has 10 days to review it and wield line-item veto power, which enables her to send provisions back to the Legislature with amendments, if she wants.
The 10-day period likely makes this the 15th straight year the state will begin the fiscal year without a budget in place. To account for the lag, lawmakers on Monday also passed a $7.5 billion stopgap budget to pay the state’s bills and fund accounts in the meantime. (Still, Monday’s vote marks the first time the Legislature sent a spending bill to the governor before July 1 since 2016.)
A number of major policy proposals didn’t make the cut, including a rider that would give local officials, as opposed to lawmakers on Beacon Hill, the power to determine the number of liquor licenses distributed in their city or town. Proposals to pause admissions reforms at vocational and technical schools and lower prescription drug costs were left out of the final deal, too
Here’s a more detailed look at what made it into the final budget deal:
Abolishing tenant-paid broker’s fees
The measure that would outlaw mandatory tenant-paid broker’s fees became a reality after years in the making. The charges typically amount to a month’s rent and have become a rarity. After New York City outlawed tenant-paid broker fees last year, Boston and neighboring cities like Cambridge and Somerville constitute the only major urban centers in the country where renters are obligated to pay them, the Boston Globe has reported.
Senate President Karen Spilka told reporters Monday that while the measure “didn’t survive” last year, she is “proud that we were able to get it adopted.”
“You know, this happens a lot with bills and budget pieces, where it sometimes takes a while for the parties to continue negotiation and discussion to finally get it adopted,” the Ashland Democrat said.
Healey already said she supports such a move.
In a statement, Homes for All Mass executive director Carolyn Chou called the policy “a long-overdue win for tenants.”
“It’s a common-sense step to ensure that renters are not forced to pay unnecessary costs to rent an apartment, and to reduce the steep cost of moving to a new home,” said Chou, who rents in Dorchester.
Fare-free regional transit
The budget mandates that regional transit authorities provide fare-free service, while giving them $209 million in funding to make it a reality.
According to the Healey administration, regional transit use surged since a series of fare-free pilot programs began, with 26.5 million rides in fiscal year 2024.
Backing the state’s prosecutor in chief
Amid ramped up legal action against the Trump administration, the budget bill would deliver a 12 percent increase ($9 million) to Attorney General Andrea Campbell’s office, giving her $83 million for the 2026 fiscal year.
In President Trump’s first 100 days in office, Campbell sued him more than a dozen times on issues ranging from funding cuts to dismantling the Department of Education and signed onto efforts challenging federal employee firings, diversity initiative restrictions, and more.
In recent weeks, she has backed a number of lawsuits challenging the Trump administration, including over funding freezes to Harvard, rollbacks on clean vehicle programs, and an order to end birthright citizenship.
Banking on the surtax
The fiscal year 2026 budget leans harder on the pot of money generated by the so-called ‘millionaires tax.’ The plan sent to Healey Monday commits spending $2.4 billion from that pot of revenue, a $500 million increase from what House and Senate lawmakers initially agreed to and more than $1 billion above what they budgeted for in surtax revenue this fiscal year. The $450 million lawmakers dedicated to local school districts will now be funded entirely by surtax revenue.
The money generated by the surtax has repeatedly blown past state projections, with nearly $2.6 billion rolling in this fiscal year by the end of April alone. But budget watchdogs have warned the money it collects could fluctuate greatly year to year.
Earlier this month, Healey signed a separate spending bill that injected $1.3 billion in surplus surtax revenue to transportation and education, including $535 million for the T.
The House and Senate each proposed giving the T at least $500 million in various funding through the state budget. But leaders ultimately dedicated only $470 million in what they called a “direct investment” into the beleaguered agency.
Campaign funds for caretakers
Language in the budget allows for candidates running for office to use campaign funds to pay caretakers for parents or other adult dependents, a policy rider that builds off similar language passed by the Legislature last year, which approved the use of campaign funds for child care.
Anjali Huynh and Matt Stout of the Globe staff contributed to this report.
Samantha J. Gross can be reached at samantha.gross@globe.com. Follow her @samanthajgross.