Gorzkowicz, Rodrigues, Michlewitz Announce Consensus Revenue Forecast of $44.9 Billion for Fiscal Year 2027

Gorzkowicz, Rodrigues, Michlewitz Announce Consensus Revenue Forecast of $44.9 Billion for Fiscal Year 2027

Baseline state tax revenue growth expected to grow by 2.9 percent, including surtax

BOSTON – Today, Secretary of Administration and Finance Matthew J. Gorzkowicz, Senate Ways and Means Chair Michael J. Rodrigues and House Ways and Means Chair Aaron Michlewitz announced agreement on a consensus revenue forecast for Fiscal Year 2027 (FY27) of $44.9 billion, including the income surtax.  

 

Excluding the income surtax, the baseline FY27 consensus revenue estimate totals $42.2 billion, an increase of 2.4 percent over the current FY26 benchmark. The three parties agreed to an equal income surtax estimate and spending threshold of $2.7 billion, representing $300 million in additional surtax available for spending compared to the FY26 General Appropriations Act (GAA). This increase in budgeted spending is both responsible and sustainable following total surtax collections of $3 billion in FY25.

 

“The consensus revenue estimate for Fiscal Year 2027 represents a responsible and sustainable projection for revenues, including the income surtax, that captures growth in our economy as well as the underlying uncertainty caused by actions at the federal level. This agreement will enable us to present a thoughtful budget that protects key investments and priorities, while also confronting the real challenges of controlling inflation-driven spending growth and putting state finances on a structurally sound path forward. The increase in available resources from surtax is also critically important, aligning our estimates with another year of experience and the strong performance we saw in FY25 in surtax collections that has enabled transformative spending on our education and transportation systems,” said Administration and Finance Secretary Matthew J. Gorzkowicz. “I want to thank Chair Rodrigues, Chair Michlewitz, and the Ways and Means teams for their continued collaboration as we navigate challenging fiscal circumstances and I look forward to continued partnership through the FY27 budgeting process.” 

 

“At a time when residents, families, small businesses, and our communities, are feeling the financial pinch, this consensus revenue agreement will serve as a foundation to build a fiscally responsible FY27 budget that ensures the Commonwealth will live within its means, while also providing the necessary resources to deliver services that our constituents can depend on during this period of economic uncertainty,“ said State Senator Michael J. Rodrigues (D-Westport), Chair of the Senate Committee on Ways and Means. "I want to thank Chair Michlewitz and Secretary Gorzkowicz for their continued partnership in reaching this important agreement. I look forward to working with them, their teams, and all of my colleagues in the Legislature as we develop a budget that supports our most vulnerable neighbors, prioritizes ways to make life more affordable, and sustains investments that can be counted on by our residents, businesses, and the 351 communities that make up this great state.”

 

“This Fiscal Year 2027 consensus revenue figure will allow the Legislature and the Healey-Driscoll administration to collectively construct a reasonable and suitable budget for the upcoming fiscal year. By being ever watchful of the Commonwealth's finances and basing the budget on a judicious consensus revenue figure, we will be able to make fiscally sound decisions over the next few months as we work to make the critical investments that our residents deserve,” said House Committee on Ways and Means Chair Representative Aaron Michlewitz (D-Boston). “I want to thank Chair Rodrigues and Secretary Gorzkowicz for their partnership in reaching this agreement. I look forward to continuing to work closely with both of them as we work towards a final budget for fiscal year 2027.” 

 

Conversations continue about how the Commonwealth will approach the major tax provisions impacting collections from the federal One Big Beautiful Bill Act (OBBBA). As agreed to, this consensus revenue estimate assumes the full impact of the tax cuts in FY27.

 

The consensus revenue forecast is the basis on which the Healey-Driscoll Administration, the House, and the Senate will build their respective FY27 budget recommendations. Pursuant to Section 5B of Chapter 29 of the General Laws, the Executive and Legislative branches convene every year to establish a joint revenue forecast. This process was informed by testimony given by the Department of Revenue, the State Treasurer’s Office, and independent, local economists from area foundations and universities during a public hearing held by the Secretary and Chairs on December 16, 2025. 

 

Of the forecasted $44.9 billion in FY27 state tax revenues, an estimated $2.506 billion is projected to be capital gains tax revenue of which $724 million will be statutorily transferred to support long-term liabilities, such as the Stabilization Fund, pension costs and retiree health insurance expenses.  

 

The agreement also includes several off-budget transfers that are mandated by current law, including: 

 

• $5.131 billion to be transferred to the pension fund, a $198 million increase over the FY26 contribution that keeps the Commonwealth ahead of its statutory obligation to fully fund its pension liability by 2040  
• $1.445 billion to support the operations of the Massachusetts Bay Transportation Authority (MBTA)  
• $1.284 billion for the Massachusetts School Building Authority (MSBA), which will support school construction projects across the Commonwealth 
• $27 million for the Workforce Training Fund to support the Commonwealth’s workforce and business productivity and competitiveness  

 

The Executive Office for Administration and Finance and the House and Senate Committees on Ways and Means also determined the potential gross state product (PGSP) growth benchmark for calendar year 2026, as required by M.G.L. Chapter 29 Section 7H ½. The PGSP growth benchmark informs the Commonwealth’s health care cost growth benchmark, established by the Health Policy Commission each year. The three bodies have reached agreement that the PGSP figure for calendar year 2026 will remain 3.6 percent. PGSP is a measure of the “full employment” output of the Commonwealth’s economy and reflects long-term trends in the economy rather than fluctuations due to the business cycle and, as a result, is meant to be fairly stable from year to year.