Massachusetts’s budget basics

According to the National Association of State Budget Officers (NASBO), Massachusetts’s total expenditures in fiscal year (FY) 2022 were $74.0 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2022 were $2.9 trillion, ranging from $5.6 billion in Wyoming to $510.0 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Massachusetts’s combined state and local direct general expenditures were $86.8 billion in FY 2020 (the most recent year census data were available), or $12,357 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,540.

(Note: We cite data from both NASBO and Census to provide a broader picture of each state’s fiscal situation. However, these sources detail spending from different levels of government in different years, and the COVID-19 pandemic and the federal government’s response to it significantly affected these totals in different ways in different years. Please only use one source if you are looking for historical comparisons.)

Massachusetts’s largest spending areas per capita were public welfare ($3,657) and elementary and secondary education ($2,605). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Massachusetts’s combined state and local general revenues were $89.6 billion in FY 2020, or $12,761 per capita. National per capita general revenues were $10,933. Massachusetts uses all major state and local taxes. After federal transfers, Massachusetts’s largest sources of per capita revenue were property taxes ($2,638) and individual income taxes ($2,480).

Massachusetts’s politics

Governor Maura Healey, a Democrat, was elected in 2022 with 64 percent of the vote. The next gubernatorial election is in 2026.

Democrats control both the House of Representatives (132 Democrats to 25 Republicans and 1 independent) and Senate (37 Democrats to 3 Republicans), with veto-proof majorities in both houses. Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Massachusetts. The entire legislature is up for election in 2024 because both representatives and senators serve two-year terms.

Massachusetts’s budget institutions, rules, and constraints

Massachusetts uses an annual budget. The legislature must pass and the governor must sign a balanced budget, but a deficit can be carried over into the following year. Massachusetts further limits revenue growth, but the limit may be overridden by a simple legislative majority. There are also limits on total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Massachusetts’s current budget

Governor Healey released her FY 2024 budget proposal in March 2023. She has not yet given her state of the state address.

Massachusetts enacted its FY 2023 budget in July 2022. The enacted budget included $52.7 billion in general fund spending. (Massachusetts’s general fund includes spending that NASBO categorizes as “other state funds,” so the historical totals reported below are lower. See NASBO’s report for more detail.) In calendar year 2022, Massachusetts sent one-time tax rebates to residents after a large surplus triggered a 1986 law that required the state to return some revenue to taxpayers. State policymakers dropped their own plans for tax cuts when they learned of the tax rebate law.

Under the American Rescue Plan, Massachusetts will receive $5.3 billion in direct state fiscal aid and $3 billion in local government aid from the federal government. As of January 2022, Massachusetts had spent part of its ARP funds on public health programs and revenue replacement.

According to NASBO, Massachusetts’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2022: $32.7 billion/$74.0 billion
• FY 2021: $30.6 billion/$67.2 billion
• FY 2020: $29.5 billion/$63.1 billion
• FY 2019: $28.6 billion/$59.8 billion

For more on Massachusetts’s budget, see

• the Massachusetts Executive Office for Administration and Finance and
  
• the Comptroller of the Commonwealth of Massachusetts.

Massachusetts’s economic trends

Massachusetts’s per capita income (per the Bureau of Economic Analysis) was $84,945 in 2022, ranking second among the states. It was above both the national average of $65,423 and the New England regional average of $76,651. The state’s median household income (five-year estimate) was $89,026 in 2021, ranking third among the states and above the national average of $69,021. Massachusetts’s poverty rate was 9.9 percent in 2021 (five-year estimate), below the national rate of 12.6 percent.

Although Massachusetts’s averages tell a story about the entire state, Massachusetts is composed of diverse localities. For example, the city of Springfield’s median household income was $43,308, and its poverty rate was 26.3 percent; the city of Newton’s median household income was $164,607, and its poverty rate was 4.2 percent.

Massachusetts’s unemployment rate has historically been below the national average.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Massachusetts, the average unemployment rate in 2022 was 3.3 percent for white residents, 3.8 percent for Black residents, and 5.5 percent for Hispanic or Latino residents.