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Our members are the local governments of Massachusetts and their elected and appointed leadership.
The state’s budget writers announced yesterday that state tax collections, excluding the income tax surcharge, are expected to grow by 2.2% in fiscal 2026 over the fiscal 2025 benchmark.
Administration and Finance Secretary Matthew Gorzkowicz, Senate Ways and Means Chair Michael Rodrigues and House Ways and Means Chair Aaron Michlewitz announced a consensus state tax revenue forecast of $43.6 billion for the fiscal year that will begin on July 1. That figure includes a projected $2.1 billion in fiscal 2026 from a surtax on personal incomes over $1 million. As surtax revenue can only be spent on education and transportation programs, it is not factored into the percentage of overall growth for the consensus revenue forecast.
The Healey-Driscoll administration and the House and Senate will use the consensus revenue estimate to build their respective fiscal 2026 state budget recommendations. Gov. Maura Healey’s fiscal 2026 budget proposal is due to be filed by Jan. 22.
With modest projected growth in state tax collections, it is unclear what the forecast will mean for local aid accounts. Last January, the governor’s state budget proposal included a 3% increase in Unrestricted General Government Aid, despite a consensus revenue growth forecast of 2%.
Under state law, the three budget officials convene every year to establish a joint revenue forecast, and their estimate must be announced by Jan. 15. Part of the process is a public hearing — which was held on Dec. 2 — where budget writers hear testimony on the tax revenue outlook from the Department of Revenue, the Office of the State Treasurer, and independent, local economists.
The consensus revenue forecast announcement marks a key initial step in the fiscal 2026 state budget process. After the governor files her budget bill, the House and Senate budget plans are customarily released in April and May, respectively, with the objective of having a state budget in place by the beginning of the fiscal year on July 1.