No new taxes, fees planned Healey says

Governor calls for more spending

Governor Maura Healey said Thursday she will not pursue any tax or fee increases this year to help pay for a series of proposed spending increases she unveiled during her first State of the Commonwealth address.

Healey, a first-term Democrat, committed on Wednesday to ramping up spending on transportation and education next fiscal year, and hinted at tackling even larger plans, such as pursuing universal pre-kindergarten for 4-year-olds statewide.

In her address, she said she would “double” what the state commits to the MBTA’s operating budget, but declined on Thursday to offer a specific number when pressed by reporters.

The promises come months after Healey signed a sweeping $1 billion tax relief plan, and in recent weeks, bad fiscal news: She slashed $375 million in spending amid underperforming tax collections, and officials now project the state will take in less tax revenue next fiscal year than it had planned for the current one.

Amid those pressures, Healey waved off proposing tax or fee increases in her upcoming state budget plan, which she is expected to unveil next week.

“No,” Healey said after testifying at an unrelated State House hearing. “I think we’ve got to remind the public, we’re still seeing revenue growth, OK? We see revenue growth this year over last year. It just happens [that] it’s growing at a slower rate” than expected.

Through December — the midpoint of the fiscal year — tax collections had inched up $60 million compared with the same point a year earlier, for a 0.3 percent increase. But the revenue was nearly $770 million, or 4.1 percent, below what state officials had projected collecting.

Healey’s administration has since downgraded the amount of tax revenue expected this fiscal year by $1 billion.

Healey indicated many of the proposed increases will rely on revenue generated by the state’s so-called millionaires tax, the new surtax voters passed in 2022 on annual income over $1 million.

State officials project they’ll have $1.3 billion to spend in the surtax revenue, which is required to specifically go toward education and transportation.

“We’re going to make the very best use of that money,” Healey said. “Our job as stewards here, and stewards of the taxpayer dollars, is to make sure that we’re making budget proposals that are smart, that are strategic.”

Healey’s other proposals included one to fund permanent, reduced fares for low-income T riders. MBTA officials have said they’re considering a low-income fare program that would give a 50 percent fare discount to tens of thousands of riders. Under that plan, an individual rider could save more $29,000, they said.

For the T, that could mean tens of millions of dollars in losses. In the fall of 2022, T officials estimated that a similar means-tested fare program — in which low-income riders could take half-price trips on all modes — could cost up to $58 million a year.

Healey also proposed Wednesday a five-year plan to bolster early literacy efforts with an initial $30 million investment — a figure nearly six times the state’s current annual commitment.

The administration plans to pay for the new investment with revenue from the millionaires tax, officials told the Globe.