Today, the Healey-Driscoll administration released its Fiscal Year (FY) 2026 budget proposal. The $62 billion spending plan increases spending over the FY 2025 GAA by $4.3 billion (7.4 percent) and over the administration’s estimated spending level of $60.256 billion by $1.8 billion (2.1 percent). Spending increases are reflected in the healthcare, education, and transportation sectors driven by non-discretionary cost increases and investments supported by the income surtax. To support this level of spending, despite expectations for limited revenue growth, the Governor’s budget utilizes approximately $1.94 billion in one-time and ongoing revenue generating-initiatives, including twelve tax policy proposals. 

The administration has also filed its proposal to spend $1.32 billion in surplus surtax revenue currently held in the Education and Transportation Innovation & Capital Fund. In the relevant spending sections below, this report summarizes those investments and discusses how they relate to the Governor’s operating budget recommendations. In the coming weeks, MTF will publish additional research on the surtax supplemental budget and the impact of FY 2026 surtax spending across the education and transportation sectors.