House OK’s consolidated $1.8B supplemental budget bill

The House passed a consolidated fiscal 2026 supplemental budget bill on March 18 that would allocate $1.3 billion in Fair Share surtax revenue from fiscal 2025 and approximately $500 million from the general fund.

The package (H. 5280), which combines key elements of three previously filed bills, aims to address several deficiencies across state government and direct surplus surtax revenue to transportation and education initiatives.

For municipalities, the noteworthy provisions are $152 million for the Special Education Circuit Breaker account for fiscal 2027, $3 million for a regional school transportation reserve account, which includes support for out-of-district vocational school transportation, and $2 million for rural school aid. The Special Education Circuit Breaker funding would be added to $652.7 million the governor proposed in her fiscal 2027 state budget bill, for a total of $804.7 million.

The supplemental budget bill includes $20 million for the Green School Works program to help with school energy efficiency projects.

Education and transportation investments include support for early education initiatives, regional transit authorities, and the MBTA.

The bill includes several provisions that would adapt Massachusetts tax codes to soften the impacts of corporate policy changes included in the federal One Big Beautiful Bill Act, which was enacted last July. Known as OB3, the law included numerous provisions with implications for Massachusetts’ services and revenues. The Healey-Driscoll administration projects a loss of approximately $400 million in revenue over fiscal 2026 and 2027 if state policy changes are not made.

The supplemental budget bill includes a provision intended to stabilize state revenues and ensure funding for the multitude of budget investments, including state aid to municipalities, in the event that voters approve a potential ballot measure to lower the state income tax rate from 5% to 4%. 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 House bill would address multiple state deficiencies, including $300 million for the Group Insurance Commission to offset unexpected cost increases.

During the House session, members voted to amend the bill to include numerous earmarks for local and municipal projects and initiatives.

The bill moves to the Senate for its consideration.