Legislature enacts supplemental budget with winter relief, other investments

A fiscal 2026 supplemental budget bill with $1.56 billion in education and transportation investments, including $100 million to help municipalities with costs associated with the harsh winter season, has been sent to the governor for her consideration.

The House passed the compromise version of the bill yesterday, and the Senate followed suit today. The bill allocates surplus funds from the Fair Share surtax on personal incomes over $1 million.

The final bill includes the following items for municipalities:
• $152 million for reimbursements for extraordinary special education costs, including transportation, to supplement funding in the forthcoming fiscal 2027 state budget
• $100 million for cities and towns to address winter infrastructure damage and snow and ice removal budget deficits, with $80 million distributed based on road miles and $20 million allocated to communities that experienced extraordinary costs due to extreme weather
• $16.5 million to incentivize regionalization and shared services in rural school districts
• $20 million to support early literacy initiatives
• $8 million for rural school aid with $4 million intended to support fiscal 2026 and $4 million for fiscal 2027
• $3.75 million for maintenance of unpaved roads
• $2.5 million for school-based mental health support and wraparound services in public school districts
• $1 million for districts implementing bell-to-bell cell-phone-free policies in public schools
• $1 million for municipal grants for the purchase of truck safety devices

A policy item would allow cities and towns to amortize snow and ice debts over three fiscal years. Another would repeal the sunsetting of the local transportation network company (TNC) fee, which was scheduled for 2027.

“The MMA greatly appreciates the Legislature’s action to provide critical investments in local education and transportation through this supplemental budget,” said MMA Executive Director and CEO Adam Chapdelaine. “The municipal winter relief funding will provide essential support after a demanding winter season as communities repair roads and mitigate overwhelmed snow maintenance budgets. Funding focused on special education costs, regionalization efforts, rural schools, and much more will complement the fiscal 2027 budget investments to provide much-needed, strategically delivered support to cities, towns, and school districts in the coming fiscal year.”

The budget bill includes appropriations to address several deficiencies across state government as well as policy provisions intended to adjust tax policies to soften revenue impacts anticipated from the federal One Big Beautiful Bill Act (OB3), which was enacted last July.

Another provision would tie tax policy changes to the outcome of a potential ballot measure to lower the state income tax from 5% to 4%. Under the terms of the bill, if the referendum were to pass, the state would permanently decouple the tax code changes from federal tax policies in order to mitigate an estimated $5 billion revenue loss.

The MMA and local leaders gathered on the State House steps in May to express strong opposition to the income tax reduction ballot question, saying it would have a devastating impact across the state budget.