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Mass. budget observers warn against 'preemptive panic' amid federal funding threats

Chris Van Buskirk, Boston Herald on

Published in News & Features

BOSTON — Gov. Maura Healey made it clear this week that Massachusetts does not have the money to cover major losses of federal funding, a dizzying scenario that has thrust Beacon Hill into uncertainty just as lawmakers are patching together a spending plan for the next fiscal year.

But state budget observers and key lawmakers are cautioning against panic and rash decisions even as President Donald Trump takes a bulldozer approach to slashing the size of the federal government, cutting the flow of money to states, and placing tariffs on major trading partners.

Rep. Todd Smola, who serves as the top Republican on the House’s budget-writing committee, acknowledged that Trump is “moving quicker than most” to cut waste, fraud, and abuse but with a new federal administration “comes new goals, new approaches.”

“We really don’t know what cuts are going to look like overall. Unlike many other people, I’m not ready to announce that the sky is falling,” he told the Herald Thursday. “Our job as state legislators is to watch this closely, get the best understanding we can of what those cuts may or may not be, and then determine how we’re going to prioritize those things that matter most to us in the commonwealth.”

Healey’s $62 billion fiscal year 2026 spending plan relies on $16 billion in reimbursements from the federal government, nearly all of which support MassHealth, the state’s Medicaid program.

Congressional Republicans are pushing through a federal spending plan that could require cuts to Medicaid or Medicare but the proposal still needs to clear the U.S. Senate, where Democrats have promised to put up a blockade and potentially shut down the federal government.

The threats to federal funding in Massachusetts stretch beyond the yearly budget cycle and into local grants. The Trump administration announced last week the suspension of a $12 million grant for schools in the Bay State to provide food sourced from nearby farms to students.

Cornerstone industries in Massachusetts — education, healthcare, scientific research — have also come under fire by Trump, who has argued he is reducing funding in areas that do not align with his policy views.

The scrutiny on higher education led Harvard University to freeze hiring this month after Trump withheld $400 million in grants from Columbia University in New York. The UMass Chan Medical in Worcester also paused hiring and discretionary spending amid federal funding uncertainties.

Another effort to cut billions of dollars for research at the National Institutes of Health threatens Alzheimer’s and dementia research at the University of Massachusetts Amherst as well as other projects at Brigham and Women’s Hospital and the Broad Institute of MIT and Harvard.

During a radio interview Wednesday, Healey said the state cannot cover any substantial loss of federal dollars, either in the state budget or elsewhere, even when taking into account the $8 billion reserve account officials have built up over the years.

“That’s not even enough to get us through what we had to get through back in the 2008 recession,” she said. “The scale of this is massive, and it’s devastating for all states around the country, which is why people need to speak up. There needs to be pressure on Republicans in Congress to stop the madness and to shut this down.”

 

Massachusetts Taxpayers Foundation President Doug Howgate said he is concerned about “material changes” to the partnership between states and the federal government on a broad range of things, including those could impact Massachusetts’ budget.

But the former State House staffer warned against “preemptive panic,” or making changes to policy or spending decisions before knowing the full scope of what federal lawmakers and the Trump administration plan to do.

“I get that folks don’t want to wait until it’s too late to make changes. I totally understand that. But the bottom line is, especially when we’re talking about the state budget, it would not make sense to make preemptive cuts, preemptive revenue raisers,” he told the Herald. “We need to sensibly manage spending, absolutely, but it doesn’t make sense to make changes before you know what you’re changing in response to.”

Smola, the Warren Republican on the House’s budget-writing committee, said nothing Trump has done at this point “is a nightmare scenario for Massachusetts or any other state.”

“I would also say that in less than two months of the administration being there, when they’ve made decisions that some may consider knee-jerk, the administration has recognized quickly in a number of cases that money or decisions need to be restored,” he said. “I’m not as frightened as a lot of people are, and I don’t see this as the end of the world right now. I see this as a different administration, different approach, a different style.”

Massachusetts budget writers are in the process of holding public hearings to review Healey’s $62 billion plan for fiscal year 2026.

The House is likely to release its version of the state budget in mid-April and debate it at the end of the month. State senators will follow suit in the following months with their own state budget proposal ahead of the July 1 deadline to have a spending plan in place for the next fiscal year.

Howgate said top budget-writers need to make clear to lawmakers that post-pandemic economic “growing pains” and uncertainty in Washington “makes further extension on new programs, new policies, things like that, not a good idea right now.”

“I think, largely speaking, the governor’s budget, you’re not seeing a lot of new program proposals and things like that and I think that that makes sense,” he said.

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