Illustration of a columned city hall beside a bar chart representing the Boston FY27 budget

Boston FY27 Budget: $4.9B Plan, Taxes and BPS Costs

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The Boston FY27 budget, which took effect July 1, 2026, totals $4.9 billion in operating spending and was finalized in June without a City Council override of Mayor Michelle Wu’s revisions. Three months into the fiscal year, the city’s own budget documents, an independent research bureau and recent council action give a detailed picture of where the money comes from, where it is going and where officials say the pressure points are. This report summarizes those documents and attributes each figure to its source. It does not take a position on any spending choice.

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How the Boston FY27 Budget Was Adopted

Wu’s transmittal letter to the council, dated April 6, 2026 and included in the city’s budget council orders volume, described a $4.9 billion operating budget and a $4.4 billion five-year capital plan for FY27-31. The letter said the plan “holds growth to 2 percent,” which it called the lowest rate since FY10. The Boston Municipal Research Bureau (BMRB), a business-backed watchdog, wrote in an April 14 analysis that the $4.94 billion operating budget was a 2.1% increase over FY26 and that property taxes were growing at their slowest rate since FY98.

According to the city’s FY27 executive summary, the council passed an amended operating budget within existing funding levels on June 10. The mayor returned it on June 17 with further revisions inside the seven-day statutory window, and with no override votes the FY27 budget was finalized. The council’s record in file 2026-1222 shows the Committee on Ways and Means recommended no further action and the order passed on June 24.

Where the Money Comes From

The city’s FY27 Operating Budget volume reports that FY27 spending of $4.9 billion is up $29 million, or 0.6%, from FY26 as budgeted. After adjusting for one-time FY26 year-end supplementals, including one for extraordinary snow and winter costs, the increase is $99 million, or 2.1%.

  • Property tax: the net levy is $3.61 billion in FY27, or 73.1% of revenue, compared with an estimated $3.49 billion and 72.0% in FY26. The city notes Proposition 2½ limits annual levy growth to 2.5% plus “new growth” from new construction and renovations.
  • New growth: budgeted at $40 million, which the budget book says is roughly 54% below the average of the previous ten years. The city says it budgeted new growth “conservatively due to economic uncertainty” tied to inflation and high interest rates affecting development. From FY17 through FY26, the document says, new growth added almost $900 million to the levy.
  • State aid: $538 million, or 10.9% of the budget. Net state aid, which subtracts state assessments, is projected to rise by $1 million, or 0.9%.
  • Local receipts: $753.0 million, down $40.7 million, or 5.1%, from FY26, which the budget attributes mostly to lower projections for investment income and permit revenue.
  • Reserves as a bridge: the city increased its Parking Meter Fund appropriation to $46 million from the historical $30 million, describing it as a one-time “bridge” given lagging local receipts and cost growth. It also uses $40 million of budgetary fund balance (Free Cash) for retiree health obligations. In FY26, the document says, a year-end supplemental of almost $70 million from Free Cash covered snow costs.

The city’s FY27 property tax page reports that total property values were $228.6 billion in FY26, up $5.5 billion, or 2.5%, in FY25 and $2.2 billion, or 1.0%, in FY26. In FY26 residential taxpayers accounted for 46% of the levy and commercial, industrial and personal property for 54%. The FY26 residential rate was $12.40 per $1,000 of value and the commercial rate was $26.96. The page does not list the FY27 rates, which are set later in the year.

Where the Money Goes

Per the Operating Budget volume, public education, which combines the Boston Public Schools (BPS) appropriation and charter school tuition assessments, totals $2 billion, or 41% of the budget. Public safety is $882 million, or 17%. Selected figures from the document:

  • BPS: the appropriation is $1,726,565,143, an increase of $64.4 million, or 3.9%. The city says the growth is driven by health insurance, wage increases from settled contracts, special education and transportation, and is 2.3% when health insurance is excluded. It also describes savings from central office efficiencies, school closures and mergers, and staffing reductions tied to enrollment declines.
  • Health benefits: $532 million, or 11% of expenditures versus 9% in FY26. The central health insurance appropriation is $295 million, up 17% over FY26. The document says costs have risen with claims in the city’s self-insured plans and medication costs, including GLP-1 drugs.
  • Fixed costs: down $26.2 million overall. The city reports $24.7 million in pension savings (a 5.3% reduction to $443 million) under a revised funding schedule, and a $13.1 million reduction in debt service after restructuring. Charter school tuition assessments rise $9.9 million to about $306 million, and the MBTA assessment rises 2.7%.
  • Staffing: a projected net decrease of 519.8 full-time equivalent positions between Jan. 1, 2026 and Jan. 1, 2027, including 421.4 in BPS, and the elimination of 57 long-term vacant positions for $3.1 million in savings.
  • Snow and winter: the Streets Cabinet decreases 19%, or $47.9 million, because FY26 included a one-time $47 million snow supplemental.
  • Collective bargaining: a $21.9 million reserve for unsettled union contracts.

The document also lists reductions in several smaller programs. These include the Legacy Business Grant program within the Office of Economic Opportunity and Inclusion, the scale of the Open Streets program, and community grants within the Equity and Inclusion Cabinet. It states that the budget funds 6,115 city-funded summer jobs for young adults, matched by 4,000 externally funded jobs toward a 10,000-job goal. Total external funds are estimated at about $559 million, down from $631 million in FY25 spending, with Boston Public Schools external funds falling from $215.3 million to an estimated $143.3 million.

The city reports Aaa/AAA credit ratings from Moody’s and S&P and an unfunded retiree health liability of $2.89 billion as of its most recent valuation, with $40 million budgeted toward it in FY27.

Independent Analysis From the Research Bureau

BMRB’s April summary said “hard decisions” accompanied the 519.8-position reduction and cuts across many departments. It reported that the $92.0 million increase in health insurance spending represents a 23.9% rise from FY26 to FY27, and that BPS spending, excluding health insurance, is growing 2.7%, or $40.1 million, while the total for all other departments shrinks by 1.0%, or $16.4 million. BMRB also noted that the capital plan of $4.44 billion is a 1.0% decrease from the prior plan. The city’s executive summary lists the capital plan as $4.5 billion in one place and the transmittal letter as $4.4 billion, so readers comparing documents will see both figures.

BPS Spending Questions Since Adoption

Two developments since the budget passed involve school spending. First, the Massachusetts Inspector General’s office released a report on Aug. 26 finding that BPS spent about $857,000 improperly or in violation of state procurement law. WBUR reported that Inspector General Jeffrey Shapiro said investigators did not find evidence of fraud or criminal conduct, but that poor oversight and informal vendor arrangements wasted money. Shapiro told BPS to pause payments on vendor contracts for non-essential goods and services for 10 business days, and a district spokesperson said BPS would implement the pause. BPS leadership said it had reformed its business practices, removed individuals and hired new operations leaders. Councilor Erin Murphy said “the buck always stops at the top,” and Councilor Julia Mejia called for a “comprehensive, independent investigation.” The report examined conduct from 2018 through 2024, according to WBUR.

Second, the council has continued to act on school-related appropriations. At its Oct. 7 meeting, according to the council’s roll call vote page, the council passed a supplemental FY27 appropriation of $10,320 for a contract between the School Committee and AFL-CIO Council 93, Local 2814, by 11 yeas, with Councilor Mejia voting present and Council President Liz Breadon absent. The contract provides a 2% base wage increase in September 2026 and $800 added to annual salaries in January 2027. More detail on that day’s agenda is in our report on the Oct. 7 City Council meeting.

The Boston Policy Institute (BPI), a nonprofit that tracks the council, noted in its Oct. 7 preview that BPS Transportation accounted for $13 million of BPS’s $53 million FY26 deficit and that Councilor Murphy filed a hearing order on BPS transportation performance. Our earlier coverage of school transportation includes Boston School Buses Hit 80% On-Time and the city’s stop-arm camera vendor search.

Other Fall Budget Items

Budget-related items continue to move through the council in the fall, including collective bargaining agreements funded from the reserve. We reported on the council’s review of police detectives pay deals in September. The city also pursues revenue and housing measures outside the operating budget, such as proposed tax abatements for stalled housing projects that the city says would produce no net revenue loss.

What to Watch

  • Tax rate setting: the FY27 residential and commercial rates are not yet set, according to the property tax page, which lists FY26 rates.
  • Unsettled contracts: the $21.9 million collective bargaining reserve is designed to cover agreements still being negotiated, and the council approves related appropriations as they come forward.
  • Revenue trends: the budget book flags investment income and permit revenue as weaker, and new growth as a conservative $40 million estimate; actual results will be reported in the city’s year-end financial reporting.
  • BPS oversight: the Inspector General’s recommendations that the mayor and the superintendent each appoint a senior official to assess the district’s Division of Operations are not binding, WBUR reported.

Sources

Further Reading

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