Governor Healey today proposed her budget for Fiscal Year 2025. The proposal, dubbed H.2, seeks to allocate $58.15 billion in state spending, a roughly 3.7% increase over the current year’s budget. The Governor’s budget continues several popular spending programs and fully funds the tax cuts that AIM helped to secure last year.  

Most importantly, the FY’ 25 budget contains no new broad-based taxes on businesses or individuals. Legislative leaders in both the House and Senate have made similar commitments not to raise taxes this year. The budget proposal also does not tap into the more than $8 billion in the state’s rainy-day fund.  

The pace of state revenues significantly dropped this year compared to the last two years and the FY’25 year promises to be a significantly tighter budget for policymakers. Collections for FY’ 24 underperformed at 4% below the expected benchmark. The Healey administration proposes to raise spending despite flat revenue growth by cutting $450 million from various line items and using roughly $1.25 billion in non-recurring state resources.  

The overall government spending is largely driven by $20 billion in direct allocations to the MassHealth program. Even so, the Healey administration anticipates spending on that program to grow by only 2%, which is significantly lower than traditional growth.  

A few notable budget items include $475 million in Commonwealth Cares for Children grants to help support childcare providers and $127 million in new funding to help the operating expenses of the MBTA.  

The budget contains a one-time tax amnesty program that would create a two-month amnesty program for both individuals and corporate filers. The scope of the program and months when the program is available will be determined by the Commissioner of the Department of Revenue. The administration believes this program could generate roughly $75 million in revenue. 

While the budget does not call for any new taxes, it allocates the roughly $1.3 billion in new revenue that the state anticipates collecting from the Question 1 income surtax proposal that voters adopted in 2022. This is a roughly $300 million increase over last year’s spending.  

The Healey Administration plans to split the spending roughly evenly between education and transportation initiatives.  

This administration budget is the beginning of the FY’ 25 process. The budget will move to the House of Representatives which will debate state spending in April and the Senate will do the same in May.