Healey packs energy, election policy into $2.45 billion spending bill

BOSTON — Gov. Maura Healey has announced plans for $2.45 billion in additional fiscal year 2025 spending, coupled with outside sections setting the date of the 2026 statewide primary election and responding to shifts in federal policy.

The bill allocates $2.05 billion in funding to MassHealth, the massive public health insurance program that is the largest program in the annual state budget. While the coming federal Medicaid cuts are dominating headlines, Healey’s office says federal reimbursements will cover all but $540 million of the $2 billion. 

While the bill’s bottom line might cause lawmakers to feel sticker shock as Massachusetts grapples with the impacts of federal economic uncertainty, the governor’s office says the net cost of the bill to the state is $947 million after “revenue offsets.”

“The question is going to be, are you able to, with this spending proposal as put forward by the Healey administration, end the year in balance? Do you have sufficient resources to cover spending and not draw down from your stabilization fund and things like that? And I think the answer to that is yes,” Massachusetts Taxpayers Association President Doug Howgate told the News Service, adding that he expects the year to likely end in “some level of surplus.” 

“I think the larger question is kind of long-term spending trends,” Howgate said. 

Spending allocated in the $60.9 billion fiscal 2026 annual budget rose by 5.4% over fiscal 2025, according to MTF, but Healey and the Legislature have added hundreds of millions of dollars in fiscal 2025 spending through numerous supplemental spending bills. 

Healey has signed six spending bills in 2025 and filed two others. Supplemental spends include a bill plugging the emergency shelter system, one addressing state employee health insurance costs, another allocating millions to child care, and one attempting to solve a pay dispute between the state and court-appointed attorneys. Healey also signed a supplemental income surtax spending bill in June.

“With this legislation, we are controlling spending and ensuring that our state budget remains responsible, while also strengthening our ability to weather economic unpredictability coming from Washington,” Healey said in a statement about her latest budget bill, which aims to close the books on fiscal 2025.

MassHealth spending

The MassHealth spending boost might have been influenced by several factors, Howgate said.

“My guess would be that some chunk of this is reflective of the breakdown of Steward finances that we saw,” Howgate said. “Another factor is when the FY25 budget was signed, at the time, I think there was some feeling that it had been kind of underfunded from MassHealth budget assumptions by several hundred million dollars.”

“And the other trend that has been occurring over the last couple years that we saw reflected in the FY26 budget is this idea that the acuity of MassHealth members has been higher than expected,” Howgate said. 

States across the country are preparing for changes to Medicaid required under the One Big Beautiful Bill Act. Medicaid work requirements are not expected to begin in most states until the end of 2026, and funding changes to Medicaid and food stamps are slated to begin in 2028, according to New York Times reporting. 

A MassHealth spokesperson, who communicated on background only, noted that states have felt the impact of increasing health care costs and said the program has seen significant above-budget cost growth tied to long-term care, drug spending and medical care utilization. The program’s caseload also remains 250,000 cases higher than prior to the COVID-19 pandemic, which the office said places additional pressure on the budget.

The closeout budget also sets aside $163 million for a reserve for costs accrued by sheriffs, who oversee county jails and houses of correction.  It’s an amount an Administration and Finance spokesperson called “slightly larger than we typically see.” Each sheriff’s office manages their own expenses, and historically the allocation goes toward any deficiencies they’ve incurred throughout the year.

“The budgeting for the sheriffs is consistently a challenge, and I think it is a challenge that we need to kind of figure out a better way forward for,” Howgate said. “That is something that is a bit of a signal to me that I think it’s time once again, this happens not that infrequently, to take a close look at, as everyone in this Commonwealth is challenged with living within a budget and living within our means, how do we make sure that’s true for the sheriffs as well?”

The proposal Healey outlined would also deposit $125 million into the state’s stabilization fund and use $150 million in income surtax revenue to fund recurring K-12 school aid increases required under the funding reform law known as the Student Opportunity Act. 

The final certification of fiscal 2025 surtax resources doesn’t occur until December, though the Department of Revenue preliminarily certified the number at around $3 billion in July. The administration determined its closeout budget with that figure, which Healey’s office said exceeded its spending threshold by $1.7 billion. 

Healey’s proposal bill would also create an Economic Resiliency and Federal Response Fund built on capital gains tax revenues collected in the fiscal year that ended June 30 “to ensure that the state remains fiscally resilient against the negative impacts of federal budgetary and policy decisions,” according to Healey’s office.

As state officials repeatedly beat the drum of fiscal storm clouds, lawmakers included an about $800 million cushion in their fiscal 2026 annual budget, and the governor vetoed $130 million from the Legislature’s already-slimmed-down proposal. Healey also recently proposed a separate spending initiative as a way to address federal fluctuations specifically in research and education support.

Massachusetts is also facing federal resistance in its push to get more offshore wind energy on the grid. Healey’s proposal would delay the state’s deadline to contract 5,600 megawatts of offshore wind power from 2027 to 2029 “due to uncertainty surrounding federal permitting and tax credits” and changing market conditions. 

The Department of Energy Resources said in early August that it has put any offshore wind procurement expected in 2025 on pause until at least 2026. Healey’s bill also proposes to remove a requirement that a solicitation for more wind energy be conducted every 24 months. 

Another outside section would decouple state vaccine authority from federal recommendations, proposing that the Department of Public Health be able to set independent standards for Massachusetts should the federal government fail “to maintain a robust schedule of vaccine recommendations.” Healey tucked a similar policy into a spending bill in July, which remains before House Ways and Means five weeks after she submitted it.

The new proposal also would set Tuesday, Sept. 1, 2026 as the statewide primary election day. In 2026, Labor Day falls on Monday, Sept. 7.

The bill addresses funding gaps for universal free school meals and at public health hospitals, the governor’s office said, and new spending includes $20 million for the Massachusetts Life Sciences Center, $20 million to propel tourism during the 2026 World Cup, and $5 million in reproductive health care provider grants.

Another provision would again enable the Register of Motor Vehicles to make driving records public that detail a history of motor vehicle violations with “guardrails,” and another proposes to make state institutional records public if they’re more than 75 years old.     

Completion of the closeout budget enables the state comptroller to finish an annual financial report that’s due by Oct. 31. Lawmakers routinely continue their deliberations on the spending bill into the fall, preventing the comptroller from meeting that deadline.