State budget officials and policymakers have reached the point during the calendar year when it is necessary to balance the demands of three fiscal years at one time. The Healey administration’s closeout supplemental budget proposal for Fiscal Year (FY) 2025 was filed on August 14 and awaits legislative action, the first quarterly certification of tax revenue collections in FY 2026 takes place on October 15, and budget writers in the administration and Legislature are actively preparing for FY 2027.

On top of this, stakeholders from the public, private, and non-profit sectors are actively monitoring the impacts of federal action on Massachusetts and the broader economy. Significant changes to the state/federal partnership will impact not only state budget decisions, but will also require new strategies to ensure that the state can assess and respond to new and emerging risks.

To put all of these factors in context and connect the state’s current fiscal position to the key decision points facing policymakers, MTF is publishing two fiscal updates. This first brief provides a review of FY 2025 tax revenue collections, the current budget balance estimate, and the administration’s closeout supplemental budget proposal. It also offers MTF’s recommendation for swift action that prioritizes setting aside surplus resources now to prepare for future federal action or an economic downturn.

In a follow-up report, MTF will expand on this analysis to offer an update on FY 2026 and the fiscal exposures and opportunities available to policymakers in the months ahead.