Massachusetts Budget Reality Check

Budget season is drawing to a close on Beacon Hill, with the House and Senate currently negotiating the final FY26 budget. Once finalized, the enacted General Appropriations Act (GAA) is likely to come in at close to $62.0 billion.

That means since FY2018, the state budget has increased by approximately 54 percent. This growth seems especially staggering when putting it in context of rising cost of living or other economic indicators. 

It’s worth taking a step back and asking: what would the state budget look like today if it had grown in line with inflation, personal income, or other common economic benchmarks?

The Cost of Unchecked Growth

Using FY2018 as our baseline, we can examine how different growth scenarios would have shaped today’s budget landscape. (We chose FY2018 because it offers a clear, pre-COVID reference point before federal stimulus and pandemic-related volatility significantly skewed state spending.)

The results reveal just how bloated current budget spending is.

Inflation

Had Massachusetts’ budget increased based on local inflation since FY2018, today’s spending would have yielded far more reasonable outcomes. Using just the most recent year’s inflation data (as measured by the U.S. Bureau of Labor Statistics’ Consumer Price Index data), the FY2026 budget would be around $52.2 billion. A three-year average inflation approach would result in $51.7 billion. Both scenarios would have saved taxpayers over $10 billion compared to the proposed budget.

Personal Income Growth

Perhaps the most logical approach would be tying budget growth to the income growth of the people actually paying the bills—Massachusetts taxpayers. Aligning budget growth with growth in personal income (measured by the U.S. Bureau of Economic Analysis) would have produced a $53.5 billion budget, while using a three-year average of personal income growth would yield $56.2 billion.

Mirroring Other Massachusetts Caps

In Massachusetts, Proposition 2 ½—which was passed by voters and implemented in 1982— limits local property tax growth at the rate of 2.5 percent. Prop 2 ½ recognizes a fundamental principle: government spending growth should be constrained to protect taxpayers from unlimited increases.

Had Massachusetts lawmakers implemented a similar restraint mechanism to its general budget in FY2018, our current budget would be approximately $49.0 billion—nearly $13 billion less than what was proposed for FY2026. That’s not a typo. We’re talking about $13 billion in additional spending that accumulated simply because there were no meaningful guardrails in place.

If a 2.5 percent revenue cap works for cities and towns across the Commonwealth, why can’t the same principle apply to state spending?

Fiscal Responsibility Isn’t Radical

The scenarios outlined above aren’t extreme austerity measures. They’re examples of  common-sense approaches to fiscal management that millions of Massachusetts families and businesses apply to their own budgets every day—and that other states have implemented. 

Of course, it’s important to note that spending growth in general doesn’t automatically translate into government waste. Much of the 2020-2022 surge addressed genuine crises—pandemic relief, unemployment support, and public health measures that helped Massachusetts survive an unprecedented emergency. Other increases tackle real long term challenges: crumbling infrastructure, rising healthcare costs, and educational needs that residents support.

Curbing state budget growth has inevitable tradeoffs. But we have to ask ourselves whether this growth rate is sustainable longterm. If not, the state could face much worse economic consequences down the line by not making these tradeoffs—even the tough ones—today. 

Looking Forward

The difference between responsible growth and actual spending represents real money that could have stayed in taxpayers’ pockets, been saved for genuine emergencies, or used to pay down debt.

Moving forward, Massachusetts needs policies that combat the current tax-and-spend trend. The question isn’t whether Massachusetts can afford fiscal discipline—it’s whether we can afford to continue without it.