Last week, Gov. Maura Healey released her FY26 State Budget Recommendation, which proposes to spend more than $62 billion in the upcoming fiscal year that begins on July 1, a spending increase of 7.4% over the bottom line of the FY25 budget she signed into law in July.  As she did last year, the Governor again this budget cycle is seeking to pair her plan with a separate municipal tax package that would allow cities and towns to increase local option taxes on room occupancy, auto excise, and meals, but that bill has yet to be filed.
 
Gov. Healey also filed a supplemental spending bill, H.51, making appropriations in the current fiscal year, FY25, utilizing excess surtax, or “Millionaire’s Tax,” revenue left unspent from FY23 and FY24.  The $1.32 billion supp divides the spending between $858 million for transportation needs and $462 million towards education items.
 
The proposed FY26 budget, now H.1, includes a few specific tax policy changes of interest to RAM members, including:

 

• Section 42 Taxation of Products Containing Synthetic Nicotine - subjects products containing synthetic nicotine to the same excise tax as smokeless tobacco products.
• Sections 46 & 47 Removing Sales Tax Exemption for Candy and Confectionary Products - eliminates the sales/use tax exemption for candy and confectionary products, making them subject to the 6.25% sales tax.

 

RAM will actively engage in opposition to both provisions.  Under current law, candy and confectionary products are exempt from the sales tax under the broad exemption for food products.  Removing candy from this exemption will open up a litany of questions as to what is candy and what is not.  Now is not the time for the state to pile on additional costs to our already elevated food and grocery prices. 
 
The House and Senate Committees on Ways and Means will next hold a series of public hearings on the budget, broken out by subject matter, over the next few months.  The House will then release and debate its budget plan in April.