Gov. Maura Healey’s fiscal year 2027 budget leans heavily on the 4% surtax on high earners, pairing $2.7 billion in “fair share” revenues embedded directly into the spending plan with a companion $1.15 billion bill to deploy surplus collections from previous fiscal years.
Taken together, the administration is proposing to spend $3.85 billion in income surtax dollars on education and transportation — the two purposes to which the surtax is constitutionally restricted — underscoring how the tax, approved by voters in 2022 on incomes over $1 million, has become a central part of the state’s operating budget rather than a marginal or add-on funding source.
The fiscal 2027 budget, filed Wednesday, and the supplemental surtax budget submitted alongside it reflect a continuation of a trend that has emerged over the past four years: surtax revenues, initially pitched by advocates as funding new investments on top of existing obligations, have been weaved by Beacon Hill leaders into core state responsibilities like K-12 school aid, early education, and day-to-day operations at the MBTA.
The administration proposes $1.66 billion in surtax spending on education in the fiscal 2027 budget and another $358.3 million in the supplemental bill. Transportation accounts for $1.04 billion in surtax spending in the budget and $784.7 million more in the supplemental proposal, with the MBTA alone slated to receive more than $1.1 billion across the two measures.
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“I think over the last three years, we’ve proven the good investments that we made there,” Healey said at a State House press conference. “I think about transportation, we finally got a T that’s working again. … In terms of the surtax, that revenue that’s come in, my job as governor is to take in that revenue and then make proposals and allocate that revenue in a way that I think brings us the best ROI for the state.”
Education
The fiscal 2027 budget proposes $7.6 billion in Chapter 70 aid to school districts, an increase of $241.8 million, or 3.3%, over fiscal year 2026. Of that total, $550.6 million — nearly all of the funding tied to the sixth and final year of the Student Opportunity Act — would be supported by surtax revenues.
The Student Opportunity Act, passed in 2019, was designed to phase in more than $1.5 billion in additional aid to districts over seven years. With fiscal 2027 marking the final implementation year, the increase is the smallest to date, a point administration officials attributed largely to declining enrollment.
Administration and Finance Secretary Matthew Gorzkowicz said enrollment is the largest single factor behind the relatively modest growth, noting that the Chapter 70 formula is operating as intended to reflect smaller enrollment growth and using an inflation assumption of about 2.7%.
He added that a $242 million increase in aid to schools was still a significant investment.
Asked whether using surtax dollars to support $550 million of that total signals comfort with using surtax revenue as permanent operating support for school aid — something supporters of the ballot question initially downplayed — Gorzkowicz pointed to the scale of the SOA, which predated the surtax.
Since Healey took office, the administration has overseen $1.6 billion in Student Opportunity Act spending, with total SOA investments reaching roughly $2.3 billion over the law’s six years — up from the $1.5 million originally intended in 2019.
Beyond Chapter 70, the fiscal 2027 budget directs an additional $240.2 million in surtax funds to K-12 education, including $198 million to continue universal free school meals, $25 million for literacy resources and $6 million for mental health systems and wraparound supports.
Early education and care receives $636.2 million in surtax funding in the budget, with another $150 million proposed in the supplemental bill. That includes $360 million for the Commonwealth Cares for Children (C3) grants — a pandemic-era program the state has continued with its own funds, which is funded at a total $475 million with other resources in the budget — and $244.2 million for child care financial assistance.
The budget also includes $32 million in surtax dollars for the Commonwealth Preschool Partnership Initiative to fully fund universal pre-K in so-called gateway cities. Healey has promised this so-called Gateway to Pre-K for years, to implement free, public pre-K in the state’s mid-sized cities with lower median household incomes.
Altogether, the budget proposes $1.2 billion in child care financial assistance, supporting roughly 65,000 children at more than 4,000 providers, though administration officials acknowledged the waitlist for services remains.
Higher education would see $236 million in surtax funding in the fiscal 2027 budget, including $137 million for free community college, $85 million for MASSGrant Plus financial aid, and $14 million for the State University SUCCESS program. The supplemental bill adds $18.3 million to expand state financial aid further.
The supplemental proposal directs a total $358.3 million of surplus fiscal year 2025 surtax revenue to education, including $150 million for early education, $190 million for K-12, and targeted investments such as $25 million for high-dosage tutoring, $10 million for a new Accelerating Achievement school improvement initiative, and $5 million to expand adult basic education and English for Speakers of Other Languages programs.
Special education is another area where the line between baseline funding and surtax support has blurred.
The fiscal ’27 budget funds the special education circuit breaker at $802.7 million, a 19% increase over fiscal ’26, while the supplemental bill makes an additional $150 million available for reimbursements in fiscal 2027.
The budget also funds out-of-district transportation reimbursements mandated under the Student Opportunity Act, using $62 million in surtax revenue toward a $154.4 million total. That includes $112.3 million for regional school transportation reimbursements, representing 87% of estimated costs. Last year, Healey recommended $116 million for those expenses and reimbursing 95%, closer to what rural towns have been asking for with full reimbursement. Healey also included $6.8 million for non-resident vocation transportation reimbursements to fully fund costs based on current estimates, $35.2 million for homeless student transportation.
The budget also proposes a $75 per-pupil minimum aid increase for every public school student, down from the $150 floor adopted in fiscal year 2026 but higher than the administration’s typical starting point. Administration officials framed the figure as preserving last year’s “historic high” by setting a higher baseline for legislative negotiations.
Transportation
If education shows surtax dollars propping up longstanding commitments, transportation demonstrates how surtax dollars have become a stabilizing force for systems under acute fiscal pressure.
The fiscal 2027 budget proposes $2.8 billion in total transportation funding, a $115 million increase over fiscal 2026, including $875 million in surtax revenues. Combined with the surtax supplemental bill, the administration is proposing the highest-ever level of operating support from surtax funds: $1.659 billion.
The MBTA is the single largest beneficiary. The fiscal 2027 budget includes $470 million in annual operating support from surtax revenues, on top of $1.4 billion in dedicated sales tax funding, bringing total MBTA funding to $1.9 billion. The supplemental bill adds another $644.7 million for the T, including $523 million for the MBTA Operating Subsidy and $121.7 million for the Federal Transit Administration Reserve.
Administration officials said the combination of budgeted and supplemental support would fully address the MBTA’s projected fiscal 2027 operating deficit and fund priorities such as low-income fare relief, water transportation and workforce development through the MBTA Academy.
“This operating support would allow the MBTA to continue strengthening the system, improving reliability, and funding priority initiatives,” the administration said in a budget brief.
Pressed on whether repeated injections of hundreds of millions of dollars to close the MBTA’s budget gaps point to deeper structural issues, Healey defended the investments as necessary and productive.
“When we started in January of 2023, the first mission was to stop the bleeding,” she said. “Literally, we had trains on fire. … I think we’ve been able to do that.”
Transportation Secretary and MBTA General Manager Phil Eng said the progress reflects both funding and operational changes.
“It wasn’t just give us more money. We did work differently,” Eng said, pointing to the reduction of slow zones and the decision to bring bus maintenance in-house, cutting projected costs from $120 million to $40 million.
Beyond the T, the fiscal 2027 budget proposes $217.5 million for Regional Transit Authorities, including $123.5 million in surtax funding to expand service improvements, maintain fare-free routes, and improve connections between RTAs and the MBTA. The supplemental bill adds another $60 million for RTAs, along with $15 million for microtransit and $7 million for unpaved roads.
The administration also highlighted long-term capital commitments, including more than $7 billion for roads, bridges and the MBTA, and an $8 billion, 10-year Chapter 90 program for municipal transportation infrastructure.
The constitutional amendment that created the surtax is clear that it is to be used only for transportation or education investments, and the fiscal 2027 budget dedicates $100 million in revenue to a health care-related cause, while still dedicated to transportation. There’s a $100 million line item for the Executive Office of Health and Human Services transportation, including those at MassHealth and the Department of Mental Health.
Gorzkowicz identified health care as the number one strain on the budget.
