The City of Worcester’s adopted FY26 budget, Strengthening Core City Services, totals approximately $948 million, a 3.4% increase from FY25. Breaking Down the Budget: An Examination of Worcester’s FY26 City Budget is the Bureau’s latest analysis in its long-running series on municipal finance, outlining how the City funds services, allocates resources, and prepares for future challenges.
The report begins with an overview of Worcester’s budget process and governance structure. Under the City’s Council–Manager system, the City Manager proposes the budget while the Council reviews and votes within strict limits. The Council can reduce spending but cannot increase it, underscoring the executive’s strong role in shaping fiscal priorities.
REVENUES & EXPENDITURES
Revenues for FY26 are split roughly evenly between state aid and locally raised funds. Property taxes make up 43.6% of revenues ($413.8M), with state education aid contributing another 44.4% ($420.6M). Local receipts such as excise taxes, meals, and hotel revenues provide smaller but important contributions. The City’s dual tax rate for FY25 was $13.19 per $1,000 of residential property and $28.61 for commercial/industrial property. Worcester has $1.56 million in FY26 PILOT agreements across six nonprofits, “bringing back” 7.25 times less revenue per dollar of tax-exempt property than Boston’s program.
Expenditures are divided across three main categories:
- Education: $574M (61% of budget), up 6.1% from FY25, reflecting Student Opportunity Act requirements.
- City Services: $210M (22%), up 4.3% from FY25 and covering departments such as police, fire, public works, and libraries.
- Fixed Costs: $163M (17%) pensions, up 6.5% from FY25. Goes toward debt service, and health care, which declined slightly due to reduced OPEB contributions and debt payments.
NOTABLE FY26 INVESTMENTS
- Public Safety: +$9.1M for paygrade shifts, software upgrades to improve enforcement data, PFAS-free firefighter uniforms, and expanded overtime.
- Capital Projects: $145M overall, with $49.7M in borrowing for infrastructure, facility improvements, and equipment. Projects include $11M for a new South Division Fire Station, $20.2M for sewer upgrades, $6M for Chandler Street water main replacement, $18M in park improvements, and $2.5M for Worcester Memorial Auditorium roof rehabilitation.
- Contingency Fund: $5M (down from $6.9M in FY25), intended for unsettled union contracts and potential aid reductions. Though smaller than last year’s peak, it is still 58% higher than FY24, reflecting a continued emphasis on fiscal safeguards.
Worcester’s FY26 budget reflects a cautious balance between investing in core services and maintaining long-term fiscal discipline. With a total appropriation of $948 million, the City increases funding for education, public safety, and infrastructure while managing debt under its Financial Integrity Plan. Structural challenges remain—heavy reliance on property taxes, declining fixed costs, and a large share of tax-exempt property—but strong credit ratings and disciplined management provide stability. Major commitments such as the Burncoat project and looming federal impacts will test the City’s ability to sustain services. Overall, the FY26 budget represents continuity, setting the stage for larger decisions in the years ahead. The Worcester Regional Research Bureau will continue to monitor how the City’s budget aligns with residents’ needs and long-term fiscal health.
Download Breaking Down the Budget.