On January 22nd, alongside their budget proposal for Fiscal Year (FY) 2026, the Healey-Driscoll administration filed the first ever Innovation and Capital Fund supplemental budget. The supplemental spending bill appropriated $1.32 billion in surplus surtax revenues collected in FY 2023 and FY 2024, and like all revenue generated by the four percent surtax on income over $1 million, these resources are constitutionally obligated to support education and transportation-related initiatives.

The House and Senate have now each acted on their own versions of the supplemental budget, and all differences between the two bills must be reconciled through a conference committee. Conference negotiations for the supplemental budget will be taking place alongside deliberations on the FY 2026 budget, creating new challenges and opportunities for policymakers.