Senate's $2.61 Billion Closeout Bill Puts $1.8 Billion Into MassHealth, Caps Sheriffs' Spending and Skips Healey's Gas Tax Holiday

Massachusetts Senate Democrats released a $2.61 billion supplemental spending bill on Thursday that would pay off the state's remaining bills for fiscal year 2026, put $368 million into an education fund and cap spending by county sheriffs, while leaving out the gas tax suspension Gov. Maura Healey has proposed, according to the bill as described by the State House News Service.

The bill, S 3290, cleared the Senate Ways and Means Committee on a 15-0 vote and is scheduled for floor debate on Thursday, Nov. 5, two days after Tuesday's election. It will be the Senate's first formal session in three months. Amendments are due by 2:30 p.m. Monday.

The House passed its own version, H 5700, last week. The two branches will need to agree on a single bill this fall to close the books on fiscal 2026, which ended June 30.

By far the largest piece is MassHealth, the state's Medicaid program. The Senate bill sends $1.8 billion to MassHealth, more than two-thirds of the total, to settle accounts that came in over budget. That works out to about 69 cents of every dollar in the bill. A separate $52 million goes to MassHealth nursing home rates.

The second-largest item is $244.8 million to address budget shortfalls in county sheriffs' departments and pay bills dating back to fiscal 2025. Along with the money, senators propose that sheriffs may not spend more in the current fiscal year than they spent in fiscal 2026, effectively freezing their budgets at last year's level.

The bill deposits $368 million into the Student Opportunity Act Investment Fund as the state moves toward a new approach to education funding after the seven-year rollout of that 2019 law ends. It also includes $18.5 million in early education subsidies for the current fiscal year, aimed at family-based and center-based child care providers.

Other spending includes $78.9 million for interest payments on the state's unemployment insurance borrowing, nearly $6 million in connection with the restructuring of the Cannabis Control Commission, and $10 million for the Boston Holocaust Museum. The museum, scheduled to open on Tremont Street in summer 2027, announced Monday a $2 million gift from the Davis Family Charitable Foundation that brought its fundraising to $81 million toward a $110 million goal.

The bill also adds more than $84.5 million in net new spending to the fiscal 2027 budget that lawmakers passed and Healey signed in July.

Like the House version, the Senate bill goes beyond spending. It would make subscription cancellations easier, target so-called junk fees and recurring credit card charges, add technology and staff to prevent public benefit fraud, and give cities and towns more flexibility when buying goods and services. The State House News Service noted that Beacon Hill has increasingly moved away from passing bills individually in favor of loading up large omnibus bills.

Healey had asked lawmakers to suspend the state gas tax. Neither branch included it. Ways and Means Chair Michael Rodrigues blamed high gas prices on the war in Iran and on tariffs. "While we respect the Governor and share her desire to lower costs, whether its cutting taxes for working families, making community college and regional transit free, and capping prescription co-pays, our focus with this supplemental budget is on paying the bills and closing the books for Fiscal Year 2026," Rodrigues said. "We look forward to next week's debate and considering the amendments that members may file."

The bill arrives as the state's books are tight despite strong tax collections. The Massachusetts Taxpayers Foundation reported last week that the state collected nearly $2 billion more than forecast in fiscal 2026, but all but $59 million of that came from the income surtax on high earners and from capital gains taxes, revenue streams with restrictions on how they can be spent. Surtax revenue reached $3.38 billion and capital gains revenue $3.22 billion, according to preliminary MTF estimates, up 8% and 20% from fiscal 2025.

"With an already tight fiscal picture, the House and Senate face limited options for addressing final deficiencies and ending the year in balance," the foundation wrote. It said administration proposals to move capital gains revenue into the operating budget and to use surplus surtax money more flexibly were "pivotal" to Healey's approach, and that if lawmakers do not adopt them, "the Legislature will have to find other ways to increase budget resources or reduce spending."

Still unknown: how the Senate and House versions differ on the sheriffs' cap and the policy riders, and how long a conference committee would take to reconcile them.