The House budget chief wants to direct $1 billion in surplus income surtax funds towards transportation investments, mainly MBTA capital investments, he told business leaders at an event in Boston.
“We have nearly a billion dollars in surplus funds,” House Ways and Means Chair Aaron Michlewitz said during an Associated Industries of Massachusetts event at Northeastern University. “A majority of the funds have been used towards educational programs like universal schools meals, free community college and supporting early child care programs, as worthy as those all are — we love those — these funds were designed to be split evenly with education and transportation needs.”
The surplus developed as state budget officials used conservative revenue assumptions in the early days of the existence of the new tax. The 4% surtax on those who earn over a million dollars in a single year was approved by voters in 2022, and lawmakers have capped how much they’ve spent from that new pot of money in the two years since.
The surplus will equal about $1.09 billion after the collections from fiscal 2023 and 2024, plus $193 million that was redirected to a surtax reserve fund, according to a House Ways and Means spokesperson.
Michlewitz told reporters after the event that he is “probably” proposing using it all, excepting the surtax reserve fund, to finance transportation improvements in the next budget cycle.
“I’m thinking that we’ll probably have to use all of it,” he said, “but exactly what the exact number is, yet, I don’t know how we’re going to chop that up. And that’s a conversation for probably early next session.”
He added: “Since the majority of the funds from the fair share has been spent on education, it’s only right that the majority of the surplus funds available to us now go to supporting transportation, particularly capital investments, the MBTA and other public transit needs.”
Michlewitz said he was specifically interested in using the money to help the struggling MBTA with its financial woes.
In fiscal year 2026 T budget-writers expect to face a roughly $700 million budget shortfall. Without additional assistance or major cuts, the MBTA could run out of cash in the first quarter of fiscal 2026, the latest agency-produced forecast suggests.
The House budget chief pointed out to the audience that transportation is one of the business community’s main priorities — and later paraphrased former Boston Celtics coach Rick Pitino to weigh in on the business community’s complaints around the surtax and other Beacon Hill policies.
“Massachusetts still has a dynamic economy and offers its residents a high quality of life … But judging from the attitude in our community lately, you wouldn’t necessarily know that. To quote a much maligned former coach of the Celtics — we have to throw the Celtics in there — ‘The attitude in this town stinks.’ He used a different word,” he said in his prepared remarks.
Michlewitz continued, “The negativity I hear on a daily basis is enough to make you think we are bordering on the Great Depression, or that we’re almost wishing it into existence.”
Asked by a reporter after the event about balancing the T’s need for funding with other transportation needs around the state, especially in areas not serviced by the MBTA, Michlewitz said the T has been turning a corner in terms of service reliability under new leadership and needs funding to continue its improvement.
“We have a general manager that we trust, we think is doing the right thing, is on the right track, really is taking care of some of the challenges that we’ve been facing with the MBTA,” he said.
Healey appointed General Manager Phil Eng a year and a half ago, after a decade of constantly shifting leadership at the T as infrastructure conditions worsened, service slowed, and safety challenges escalated to the point of needing federal intervention.
Since Eng started, the T has implemented systematic shutdowns of each subway line to make track repairs where it was unsafe for trains to move at normal speeds — and are expected to completely eliminate the slow zones by the end of 2024. Trip frequency on the core subway has climbed, and in some cases is running at its highest level since 2016.
— Sam Drysdale / State House News Service