While reading through the commonwealth’s 274-page annual spending blueprint – likely to come in at more than $60 billion for the fiscal year that begins in August – may not be top of mind for most, it matters to employers in two important ways.

First, the fiscal health of Massachusetts affects the ability of government to provide the services required for economic growth – paving roads, providing fire protection and supporting the schools and workforce training programs from which our employees come. It also serves as a proxy for how well state government is managing its affairs and stewarding your tax dollars.

Second, the budgets approved by the Massachusetts Legislature and signed by the governor often contain important policy provisions called “outside sections” that affect the business climate. The budget for the current fiscal year, for example, contained provisions to eliminate renter-paid broker fees and to study vocational-school admissions.

The House Committee on Ways and Means last week released a $63.3 billion proposal to increase spending by 3.6% in fiscal year 2027. AIM anticipates thousands of amendments will be filed and the Government Affairs team will be busy reviewing them all.

Start with the good news: The proposed House budget contains no new taxes on individuals or businesses. This is always AIM’s primary goal in budget advocacy, and we applaud policy makers for crafting a budget the meets the needs of the Commonwealth without raising new taxes or withdrawing money from the state’s rainy-day fund.

One significant outside section involves a new Workforce Productivity Fund to help employers mitigate some of the issues related to the Paid Family and Medical Leave (PFML) program. The fund will provide grants to small employers with more than 50 workers to help offset the costs associated with absent workers using the paid family leave program.  The money can be used to (1) hire replacement workers or (2) train current workers to cover the responsibilities of someone out on leave.

The Workforce Productivity Fund provision was included in part due to AIM’s direct advocacy. We heard loud and clear from our members that staffing shortages related to PFML were a major burden and shared the results of several surveys with the administration and the legislature.

The policies that are not included are equally important to the ones that are. For example, the House declined to adopt a controversial policy section proposed by the Governor seeking to regulate subscription cancelations. The issue was primarily addressed last year by the Attorney General’s so-called Junk Fee regulations.

The Massachusetts budget process begins on the fourth Wednesday in January when the governor files her spending plan for the upcoming fiscal year. Governor Maura Healey filed a $62.8 billion state budget proposal for Fiscal Year 2027, a nearly 4 percent increase over the FY 2026 budget with an emphasis on education, transportation, and housing.

Budget deliberations are particularly fraught this year in the face of a sluggish economy, eroding federal support, growing discontent around a rising cost-of-living, and two potential ballot questions that could put dollars back in taxpayers’ pockets while taking a chunk of revenue away from the state budget and severly limiting discretionary spending on resources and programs for individuals and businesses.

One of the other biggest investments the House budget makes is to local cities and towns, with nearly $10 billion going to local aid through Chapter 70 education funding, unrestricted aid, special education circuit breaker funding and the sixth and final year of implementation of the Student Opportunity Act bringing an extra infusion of dollars to school districts.

The bulk of the new spending and revenue growth in the budget comes from surtax on incomes of more than $1 million. The revenue is constitutionally limited to transportation and education spending and will provide $2.7 billion to those two areas.

In past budgets, the Governor and Legislature intentionally spent less surtax revenue than was collected to allow for later surplus spending. This year they will spend the full estimated collection amount.  The budget fair share revenue provides $1.725 billion for education spending and $975 million to the Commonwealth Transportation Fund.

“The budget that we are presenting today aims to fund critical programs that help a wide range of initiatives, while at the same time making fiscally sound decisions in these uncertain and ever-changing times,” House Ways and Means Chair Aaron Michlewitz said as he unveiled the budget to reporters at a press conference at the State House Library on Wednesday.