Massachusetts funds writers struggled Thursday to grapple with the impacts of President Donald Trump’s efforts to cut back the scale of the federal authorities and slash giant quantities of federal funding on Gov. Maura Healey’s $62 billion fiscal yr 2026 state funds.
The actions of Trump and billionaire Elon Musk’s Division of Authorities Effectivity infiltrated almost each facet of a funds listening to on the State Home the place high Democrats questioned whether or not Healey had a backup plan if the stream of money from Washington stops.
Administration and Finance Secretary Matthew Gorzkowicz stated it’s troublesome to observe what is occurring in Washington however state officers are “scenario planning and we’re trying to figure out what the impacts of those various scenarios might look like.”
“The problem is going to be too big for any one branch to think that they’ll have a proposal to solve it,” he stated. “We’re going to have to come together. It’s going to require legislation. It’s gonna require, perhaps, looking at appropriations and looking at resources. Maybe we have to allocate resources differently than we have in the past.”
Throughout his first a number of months in workplace, Trump has tried to freeze federal funding, together with grants and loans states depend on, that don’t align along with his political opinions. These makes an attempt have run into myriad lawsuits, together with from Massachusetts Legal professional Common Andrea Campbell.
Officers in Healey’s workplace acknowledged that the political and monetary atmosphere has modified dramatically since they first launched their spending proposal for the subsequent fiscal yr in January. Native lawmakers probed the governor on contingency plans as a result of her fiscal yr 2026 funds depends on $16 billion in federal {dollars}.
Healey stated there may be “no doubt” Massachusetts finds itself in a difficult second.
“The cost of providing services has only increased here and around the country,” Healey stated. “Revenue growth is ongoing, more modest and federal actions, real, potential, both on direct funding and also on broad economic disruption that we don’t know the full extent of yet creates a lot of uncertainty as we work together right now to do this important work.”
Healey’s spending plan for fiscal yr 2026 represents a 7.4% enhance in general spending in comparison with the fiscal yr 2025 plan she signed into legislation final summer time, a bounce that outpaces the speed of inflation in the US.
The funds plan additionally features a sequence of tax proposals like making use of the gross sales tax to sweet purchases and subjecting artificial nicotine merchandise like ZYN pouches to the identical excise tax as tobacco merchandise.
The governor additionally pitched capping charitable donation deductions at $10,000 for joint filers and $5,000 for particular person filers as an alternative of leaving the choice uncapped. Price range-writers in Healey’s workplace stated the change may generate $164 million in tax income.
However lawmakers pressed Healey on whether or not capping charitable donation deductions was a wise transfer. Rep. Aaron Michlewitz, a North Finish Democrat and lead budget-writer within the Home, requested Healey whether or not there was any room to “shift in relation to those” insurance policies.
Healey stated she has heard issues from not-for-profit organizations in regards to the proposal as a result of they “are going to probably be facing even greater strain than ever.”
“I think it’s something that we’d like to actively engage with you on in dialog in terms of working out a way to do what’s best, to support people in this state,” she stated.
Gorzkowicz stated officers checked out different states once they crafted the proposal.
“We’re happy to share that information with you as you’re thinking about it and partnering with you about better ways to structure this in light of the changing revenue environment we’re in,” he stated.
After the listening to, Healey stated her workplace would “evaluate” their charitable donation deduction cap measure.
“We filed it at a time where we hadn’t seen the impact of the Trump administration funding or lack thereof coming through,” she stated. “We listen and take seriously the concerns of the not-for-profit community and what might happen there.”
Healey didn’t say whether or not she was keen to rethink the appliance of the tobacco excise tax to artificial nicotine and gross sales tax to sweet.
“I’m not hearing any issues with those taxes,” she stated. “… All we were trying to do is treat candy the same as cupcakes.”
Rep. Todd Smola, a Warren Republican, stated the coverage modifications regarding sweet and artificial nicotine could appear “like small numbers” however the Legislature “always walks into these proposals very lightly.”
“These particular proposals, typically … target the individuals that are least likely to afford an increase, even if it’s minuscule to our eyes,” he stated.
