Press Room

The Fiscal Year 2026 (FY26) consolidated supplemental budget agreement reached by the Legislature provides $1.35 billion in meaningful education and transportation investments and prioritizes municipal relief, housing development, and mitigates the revenue impacts of federal tax changes.

The conference report provides municipal winter relief for cities and towns, supports improvements and infrastructure upgrades across the MBTA system, and invests in regionally equitable transportation initiatives.

It bolsters vital public education initiatives including special education reimbursements for local school districts, expanded support for early literacy initiatives, funding for regional and rural education, and scholarship programs for students seeking career pathways as primary care doctors or teachers in Massachusetts.

Additionally, the conference report includes $207.7 million to address time sensitive FY26 supplemental appropriations, including funding for Department of Transitional Assistance caseworker staffing needs and home heating fuel assistance for households with children, veterans, disabled individuals or elderly people.

It also funds collective bargaining agreements across government and higher education campuses, recognizing the critical work public sector employees perform every day to serve our Commonwealth.

The details of the package of investments and provisions contained in the conference report are outlined below.

Fair Share Investments in Transportation – $794 million

MBTA Supports, Improvements and Infrastructure Upgrades. $595 million for improvements and transportation infrastructure upgrades across the MBTA system, including:

• $450 million for MBTA operating assistance;
  • $60 million for capital improvements, including commuter rail system maintenance and infrastructure upgrades;
  • $50.4 million for MBTA workforce and transportation safety improvements;
  • $20 million for the MBTA’s low-income fare relief program; and
  • $15 million for statewide water transportation infrastructure improvements.

Regional Equity in Transportation. $144 million for regionally equitable transportation investments, including:

• $100 million for municipal winter relief, including $80 million to help support communities by distributing funds based solely on road mileage and $20 million for communities that experienced adverse impacts from recent winter storms;
  • $25 million for workforce recruitment and retention at the regional transit authorities (RTAs);
  • $10 million for capital improvements to equipment and facilities at RTAs;
  • $5 million for on-demand micro-transit shuttles and Last Mile grants; and
  • $3.75 million for maintenance of unpaved roads.

Fair Share Investments in Education – $558 million

Special Education. $152 million for special education costs and circuit breaker reimbursements to local school districts.

High-Quality Early Education and Care Affordability Fund. $150 million for initiatives in the Fiscal Year 2027 (FY27) budget to promote a high-quality and accessible early education and care system across the Commonwealth.

Literacy Growth. $40 million for early literacy initiatives, including $20 million for high dosage tutoring and $20 million for the literacy launch initiative to improve educational outcomes and support accelerated literacy growth and success for learners in kindergarten through grade 3.

School Regionalization Supports and Rural School Aid. $27.5 million for regional and rural education support, including $16.5 million to incentivize regionalization and shared services in smaller school districts, $4 million for FY26 rural school aid payments, $4 million to support FY27 rural school aid payments, and $3 million for regional school transportation costs.

Green Schoolworks. $25 million for grants to eligible local school districts for clean energy infrastructure improvements and upgrades.

Endowment Match. $20 million for the endowment incentive match program to leverage public funds to encourage private fundraising by the Commonwealth’s public institutions of higher education. The endowment match supports accessible and affordable education programming and includes $10 million for the Department of Higher Education endowment incentive match and $10 million for the University of Massachusetts endowment incentive program.

Financial Aid Expansion. $18.3 million for financial assistance to Massachusetts students enrolled in and pursuing a program of higher education at a public institution of higher education in the Commonwealth.

Primary Care Workforce Education Support. $10 million for a pilot scholarship program to provide financial assistance to medical students at the University of Massachusetts medical school and grow the workforce of family medicine physicians in the Commonwealth.

Tomorrow’s Teachers Scholarship and Loan Forgiveness. $10 million for scholarships and loan forgiveness initiatives to encourage qualified high school and currently enrolled college students to seek a career pathway to teach in the Massachusetts public school system.

Adult Basic Education and Workforce Readiness. $5 million for programs to support individuals develop literacy and English-language skills needed to qualify for further education, job training, and better employment.

School-Based Mental Health. $2.5 million for school-based mental health supports and wraparound services.

Cell-Phone Free Schools. $1 million for public school districts to implement bell-to-bell cell phone-free school policies.

FY 26 Supplemental Appropriations – $207.7 million

DTA Caseworkers. $41.7 million for DTA staffing, supporting caseworkers responsible for administering core assistance programs, and implementing recent federal eligibility changes.

Home Heating Assistance. $20 million for increased Low Income Home Energy Assistance Program (LIHEAP) home energy fuel assistance, supporting households with children, veterans, disabled and elderly persons facing strain with their heating bills because of the colder than average winter.

Correctional Facility Costs and Operations. $31 million for Department of Correction (DOC) operations, reflecting funding shortfalls identified after the enactment of the Fiscal Year 2026 budget primarily due to increased health care contract costs.

Public Defense Court Costs. $12.3 million for Committee for Public Counsel Services court costs, including expert witness and vendor services tied to elevated caseloads.

Sheriffs’ Reserve. $54.4 million for payroll costs incurred during FY25 related to the direct care and custody of inmates, while requiring the offices to submit detailed spending plans ensuring spending is in line with the legal responsibilities of the office.

World Cup Costs. $10 million for costs related to the 2026 World Cup matches hosted in Massachusetts.

Mental Health Needs. $5.5 million to support community health centers, schools, and frontline health care workers battle against the mental health crisis.

Affirming Care Trust Fund. $3.5 million to support health centers providing gender-affirming care services to vulnerable populations.

Immigrant Legal Defense. $1 million for legal services to increase access to legal representation, advice, and advocacy for immigrants and refugees who are facing enhanced legal threats from the federal government. The funding is in addition to $5 million allocated in the FY26 budget to establish the Massachusetts Access to Counsel Initiative.

Transitional Age Youth Services. $1 million for increasing access to transition-aged youth to high-quality, evidence and community-based services.

Cannabis Public Education Awareness. $1 million for a public education awareness campaign on the responsible use of cannabis.

Tax Policy Changes

Incentivizes New Housing Construction. Creates a new sales tax exemption to foster multifamily housing production in Massachusetts and help alleviate the increased cost of building materials associated with housing projects stalled by federal tariffs and ongoing economic uncertainty. The exemption would apply to the sales of building materials used in the construction of approved affordable, moderate income, and middle-income housing projects. It would be capped at $35 million per year.

Mitigates Federal Tax Changes. In response to federal policies that continue to cause economic uncertainty, the conference committee report contains several provisions that phase in implementation of conformity to tax policy changes included as part of the federal One Big Beautiful Bill Act (OB3) signed into law last July. With this prudent and sensible step, the Legislature is mitigating the near-term revenue impacts in F26 and FY27 associated with the OB3 tax changes in a responsible manner without sacrificing the Commonwealth’s fiscal responsibility.

The conference report includes provisions that would pause these tax changes if the proposed ballot question to lower the State’s income tax from 5% to 4% were to pass in November, which would help mitigate the expected loss in revenue that the ballot question would inflict.

Bolsters Efforts to Achieve Net Zero Emissions. Establishes a new tax credit that incentivizes and helps pay for the use of sustainable aviation fuel by airlines in order to help reduce the state’s aviation-related carbon footprint and meet the legislative mandate to achieve net zero emissions by 2050.

Encourages Healthy Food Assistance. The conference committee report creates a new tax credit up to $5,000 for Massachusetts farmers that donate excess food to food banks and pantries.

Ensures Paid Family and Medical Leave (PFML) Medical Benefits are Not Taxed. Based on IRS guidance, the conference report makes technical changes to the PFML contributions statute to ensure that medical benefits paid to employees are not subject to income tax.

Funding Sources
The Committee’s consolidated Fair Share supplemental budget is comprised of the following revenue sources:

• $1.35 billion in resources collected in Fiscal Year 2025 through the Fair Share surtax, which is paid by households in Massachusetts that earn more than $1 million per year; and
• $207.7 million in general fund revenues collected in Fiscal Year 2026.