BOSTON — State budget chief Matthew Gorzkowicz warned municipal officials Tuesday that despite strong tax collections, Massachusetts faces another tight exercise closing out this year’s state budget because of slower growth in general tax receipts.
Speaking to the Local Government Advisory Commission, the administration and finance secretary said April tax receipts of $7.3 billion were 7.7% higher than April 2025 and $923 million above benchmark expectations.
“That was relatively good news,” Gorzkowicz said, adding that the state is about $1.5 billion above benchmark for the fiscal year with two months remaining.
But he emphasized that the headline numbers obscure underlying budget pressures heading into fiscal 2027.
“What we know to be true is that most of this over-benchmark performance is in both surtax and capital gains,” he said. “There’s not a lot of room for error.”
Supplemental spending to shore up underfunded accounts adds to budget pressures when revenues are tight.
Gorzkowicz compared the outlook to fiscal 2025, when taxes ran more than $2 billion above benchmark largely due to surtax and capital gains revenues that are restricted on how they’re spent. After adjustments, he said, the state ended the year about $52 million above benchmark on a budget exceeding $60 billion.
“So it’s not as though we won’t have to make some decisions about how we close out the year,” he said, describing, “what we know will be a tight budget despite the fact that revenues are performing quite well.”
Municipal leaders who had been at the meeting also rallied outside the State House against a proposed ballot question that would gradually reduce the state income tax rate from 5% to 4%.
Local officials and municipal advocates said the measure would significantly reduce state revenues and eventually trigger cuts to local aid, one of the largest sources of unrestricted funding for cities and towns.
Adam Chapdelaine, executive director and CEO of the Massachusetts Municipal Association, called the proposal a threat to municipal finances already strained by inflation, workforce shortages and rising education and infrastructure costs.
“When state revenues decline, local aid becomes vulnerable. This is because there are only small portions of the Commonwealth’s budget that are actually discretionary,” Chapdelaine said. “This ballot question would change this fiscal forecast from one of a storm to a devastating natural disaster.”
Communities rely on state support to fund road maintenance, police and fire departments, public schools and other basic services, while facing limits under Proposition 2½ on how much they can raise annually through local property taxes.
Chapdelaine said local governments historically bear part of the burden when state budgets tighten.
“It wouldn’t just tighten the belt, but cut into bone,” he said.
Kassandra Gove, the Amesbury mayor and MMA president, said municipal officials are trying to maintain essential services while confronting growing financial pressures and voter resistance to higher local taxes.
“In Amesbury in November of last year, voters rejected a Proposition 2½ override,” Gove said. “I know that affordability is a top priority for our residents. I also know that they want more than the minimum in our operating hours at the library, in staffing at our police department, in pay for our educators.”
Supporters of the tax cut proposal argue Beacon Hill could reduce taxes while preserving municipal aid by restraining spending growth elsewhere in the state budget.
During the House budget debate last week, Republican Rep. Ken Sweezey rejected arguments that local aid cuts would be inevitable if revenues decline.
“We have the ability to do both,” Sweezey said during debate on an amendment closely resembling the ballot proposal.
“Every rebuttal has come back to say that the first thing we must cut is local aid, as if to say that it is mutually exclusive, that we can’t both cut radical spending and yet invest in our communities. And what we are arguing over here is that those things are not mutually exclusive. We have the ability to do both,” he said.
Republican gubernatorial candidate Brian Shortsleeve watched Tuesday’s press conference outside the State House and talked to reporters after to reiterate his support for the ballot question and broader tax relief proposals.
Shortsleeve argued that state spending has increased dramatically in recent years while local aid growth has lagged behind. He said Massachusetts residents are struggling with rising property taxes, energy costs and income taxes.
Asked directly whether the state could maintain adequate local aid while cutting income tax revenues, Shortsleeve said, “I think we have to do it.”
When asked how he would meet local budget needs with declining state revenues, Shortsleeve pointed to what he described as waste and inefficiency in state government and said, if elected governor, he would pursue audits of major spending programs to identify fraud, abuse and unsustainable cost growth. Shortsleeve specifically cited programs like Medicaid, SNAP and other large budget accounts as areas he would scrutinize.
Municipal leaders countered that local aid has been vulnerable during state downturns and warned that cities and towns have few alternatives when revenues fall beyond cutting services or increasing pressure on property taxpayers.
Sam Drysdale is a reporter for State House News Service and State Affairs Pro Massachusetts. Reach her at [email protected].
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