By Sam Larson 
Vice President, Government Affairs 

The Healey-Driscoll administration on Thursday unveiled a Fiscal Year 2027 budget proposal that “invests in key programs that residents rely on to make their lives easier and more affordable.” The budget contains several relevant proposals of interest to the business community.  

The $63.4 billion blueprint includes $2.7 billion in surtax spending. The budget represents a 3.8% increase in spending from the FY’26 budget signed last summer. Tax revenue collections are projected to increase by 2.9%. Health and Human Services spending, combined with Chapter 70 education spending and unrestricted local aid, make up more than 80% of proposed spending. The increase in spending is modest compared to recent budgets.   

Most importantly, the budget containsno new broad-based taxes on individuals and businesses. The proposal does not make any withdrawals from the state’s $8.7 billion rainy-day fund.  

The administration seeks to close a roughly $3 billion budget gap by reducing MassHealth growth rates, adjusting the pension-funding schedule, spending $1.5 billion in one-time resources and proposing a permanent increase in capital gains taxes revenues dedicated to the budget. The MassHealth administrative strategies will help to manage costs over the next several fiscal years and keep spending growth below five percent. 

After several years of significant state spending increases, the FY’ 27 budget proposal restricts spending to a more sustainable pace without making significant cuts or raising new taxes.  

The House and Senate will redraft Governor Healey’s spending blueprint and debate their own versions, typically in April and May. The state’s Fiscal year 2027 begins July 1, but Massachusetts usually misses the annual budget deadline.   

Outside Sections of Note 

The governor’s FY’27 budget contains several policy provisions with 102 total outside sections. Several may impact your business.  

• Simplified Subscription Cancelation-Enshrines a portion of the Attorney General’s so-called ‘junk-fee regulations’ which mandate that the method of canceling subscription services must be the same as the method for signing up. For example, online subscriptions must have an online cancelation option and the same for phone-based subscriptions.   

• Drug Pricing Direct Negotiation- Allows MassHealth to directly negotiate rebate agreements for drugs not subject to the Medicaid Drug Rebate Program and for certain non-drug products dispensed by pharmacies.  

• Work Productivity Trust Fund- Creates a $1million sub-fund within the Paid Family and Medical Leave (PFML) trust fund to provide grants to assist small businesses managing workforce needs related to employees taking paid family or medical leave. Small businesses can use grants to (1) hire a replacement worker to cover the employee out on leave or (2) provide training/certification for current workers to cover whoever is out. This proposal based was on direct feedback from AIM alerting the administration to the struggles of members experiencing PFML leave.   

• Alcohol Modernization- Several sections update the state’s alcohol licensing process.  These sections allow certain licenses for the sale of alcohol to include sales at locations on premises that are operated by the licensee but do not adjoin the licensed structure. Currently, the sale of alcohol by certain licenses – such as to hotels, wineries and breweries – is limited to areas that adjoin the licensed structure. The governor proposes to authorize these licensees to sell alcohol at all locations on the licensed premises. 

• EV Chargers- Exempts level 3 electric-vehicle chargers, also known as fast chargers, from certain regulations within the ENERGY STAR program, increasing access to fast chargers, reducing their upfront costs, and facilitating the deployment of practical and reliable charging infrastructure.  

• Speed Cameras- Authorizes the Massachusetts Department of Transportation to establish a speed camera enforcement program to allow DOT and municipalities to enforce posted speed limits through speed cameras in construction zones and school zones, respectively.  

Fair Share Spending 

The bulk of new spending and revenue growth in the budget comes from $2.7 billion in surtax spending. In past budgets, the governor and legislature intentionally spent less surtax revenue than was collected to allow for later surplus spending. This year the administration proposes to spend the full estimated collection amount.  The governor is also filing a separate budget that will seek to spend $1.5 billion in excess FY 2025 revenue. Please see a chart breaking down the spending: 

Key Spending Decisions 

 Most line items are level funded from the previous year; however, the FY’27 does contain a few notable increases.   

• 2.5% increase in Unrestricted General Government Aid (UGGA) to cities and towns  

• $7.6 billion total funding for Chapter 70 education, finishing the sixth and final year of the mandated funding increases from the Student Opportunity Act   

• $475 million for Commonwealth Cares for Children (C3) grants