As economic storm clouds gather, state budget writers prioritize state-local partnership

From the Beacon, June 2025

Every morning as we read the news, it increasingly feels like economic hazards lie on the road ahead. Whether it be concerns about the impacts of tariffs, the effects of new Medicaid eligibility requirements on the state budget, or the consequences of federal funding reductions in science and research on the Massachusetts economy, there are many issues that rightfully raise concerns about the economic future.

At the MMA, we will continue to watch these issues very closely as we work to assess the potential impacts on the Commonwealth’s budget — and the potential impact on the state’s ability to fund local aid accounts. It goes without saying that, given the constraints of Proposition 2½, state aid to local government is critical to maintaining core municipal services.

In this context, we’ve been buoyed by the funding proposals that both the House and the Senate have advanced for both fiscal 2026 as well as through a supplemental budget bill developed to allocate surplus proceeds from the “Fair Share” surtax. State budget writers are also watching all of the concerns referenced above, but even in the face of that, they have prioritized state aid to municipal government across many accounts.

In fiscal 2026 state budget planning, this prioritization has been seen in legislative proposals to both fully fund the Student Opportunity Act and fund minimum new aid at $150 per student in fiscal 2026. This prioritization has also been seen in efforts to increase Unrestricted General Government Aid by 2.2%. Further, we have seen state budget writers prioritizing local programs such as the Special Education Circuit Breaker, Regional School Transportation, and Universal School Meals.

The state-local partnership is also evident in the supplemental surtax surplus budget, with proposals being advanced that would provide supplemental funding for the Chapter 90 program, small bridges and culverts, and unpaved roads. This supplemental budget process has also seen inclusion of proposals to fully fund the state’s obligation under the Special Education Circuit Breaker for both fiscal 2025 and 2026.

We are also grateful for the growing support around the governor’s transportation bond bill, which proposes a five-year authorization of $300 million in annual Chapter 90 funding. This proposal was granted a very early hearing by the Legislature, and the MMA remains poised to advocate for this critical local funding in the months ahead.

At the MMA, we know that budgets at the local level are as stressed as they’ve ever been. We also know that the uncertain road ahead due to federal action makes these budgets feel even tighter. But in the face of that, we applaud the Commonwealth’s budget writers — in the governor’s office, in the House, and in the Senate — for their commitment to prioritizing municipal accounts. We stand ready to work with state decision-makers on your behalf to see these funding proposals enacted and put to work in your communities.