On the same day President Donald Trump is set to sign a landmark domestic policy bill that will reshape state finances for years to come, Gov. Maura Healey approved a $60.9 billion annual budget and rolled out a companion proposal designed to empower her administration with greater cost-cutting power.
Healey on Friday signed the fiscal year 2026 budget lawmakers sent her on Monday, in the process vetoing $130 million in planned spending amid crystallizing concerns that federal funding to Massachusetts will drop and the state may face new costs in a world where the so-called “big, beautiful bill” is the law of the land.
Between her spending cuts and changes that legislative negotiators made to cushion against financial strain, the final budget that became law -- which is packed with big funding boosts for health care, education and transportation plus policy measures like a limit on renter-paid broker fees -- raises spending by more than 5% but is more than $1 billion smaller than the version Healey filed in January, before the federal bill emerged.
The governor and her deputies will pursue other steps to further buttress against budgetary impacts from economic downturn or federal funding cuts, especially to the massive and costly Medicaid insurance program.
Officials announced Friday that an executive branch hiring freeze implemented in May will remain in effect for the duration of fiscal year 2026, which runs through next June. The administration will also scrap a 2% raise for thousands of executive branch managers set to start in January, which officials said would save $17 million.
While Healey did not veto any of the earmarks lawmakers wrote into the budget to support projects and programs in their districts, the administration will delay paying about $125 million of those until at least the fall. Administration and Finance Secretary Matthew Gorzkowicz said if the state is in a precarious fiscal position at that point, everything will be on the table, including cancellation of earmarks.
Some of the governor’s biggest new plans to control state spending will need buy-in from the Legislature.
Healey on Friday filed a new $130 million supplemental budget bill that her office said would create a $100 million “flexible pool of resources” that the administration could tap later in the year to deal with “changing economic conditions and federal spending decisions.” The other $30 million would go toward a housing preservation and stabilization fund, which Gorzkowicz said would provide resources to housing programs amid concerns about safety-net impacts from new federal policy.
That bill would also grant the administration the ability to transfer some line-item spending between agencies and use capital dollars instead of operating dollars to pay for some Department of Transportation workers. The governor is also asking for new authority that might prove unpalatable to some lawmakers: a limited-time ability to cut spending unilaterally from the entire state budget.
The existing state law limits a governor’s power to trim spending midway through the year only to the executive branch, which according to Gorzkowicz makes up roughly 55% to 60% of the budget. Other areas like quasi-public agencies, local aid, retirement and other post-employment benefits, and debt service cannot be targeted by what are commonly known as “9C cuts.”
Gorzkowicz said the new supplemental budget would, only in fiscal year 2026, allow the administration to trim from anywhere if revenue collections fall at least $400 million below projected benchmarks or if federal policy changes cost the state budget $400 million or more.
