On November 13, 2025, a flurry of fiscal and political developments swept across North America, as Canada unveiled its 2026-27 Federal Budget and the debate over energy costs and climate policy intensified in Massachusetts. Both stories, though unfolding in different countries, offered a window into how governments are grappling with economic pressures, public spending, and the ever-contentious question of how to balance environmental ambitions with affordability for ordinary citizens.
Canada’s federal government made headlines by tabling its 2026-27 Budget, shifting the tradition by releasing the budget in the fall for the first time, ahead of the fiscal year’s start. According to the official budget documents, the projected federal deficit for 2026-27 stands at $65.4 billion, a notable decrease from the $78.3 billion forecast for 2025-26. The government expects revenues to rise by 3.1%, outpacing a 1.3% increase in expenditures. Yet, despite this modest improvement, Ottawa anticipates running budgetary deficits every year through to 2029-30.
In an effort to enhance transparency, the new budget distinguishes between capital investments and day-to-day operating expenses. Capital investments, which include grants, tax incentives, infrastructure support, and measures to grow Canada’s housing stock, are reported separately from operating expenditures. After adjusting for revenues associated with capital investments, the day-to-day operations deficit is projected at $8.7 billion for 2026-27, shrinking to $5.5 billion by 2027-28. Small operating surpluses are expected by 2028-29 and 2029-30, but the remainder of the federal deficit will be tied to capital expenditures.
Measured as a share of GDP, the federal government’s footprint is set at 18.0% in 2026-27, gradually declining to 17.5% by 2028-29 and 2029-30. The federal deficit for 2026-27 will amount to 2.0% of nominal GDP, while the federal debt is projected to rise to 43.1% of GDP, peaking at 43.3% in the following two years before easing back to 43.1% by 2029-30. On a per capita basis, expenditures will reach $14,153 in 2026-27, funded by $12,567 in revenues and a per capita deficit of $1,573.
Compared to the fiscal plan outlined in the December 2024 Fall Economic Statement, the latest budget projects higher expenditures and lower revenues, leading to a more pessimistic deficit outlook. The government’s economic assumptions are cautious, reflecting weakened near-term growth due to new US economic policies that have dampened investment, productivity, and employment in key traded sectors. The budget forecasts real economic growth of 1.1% in 2025 and 1.2% in 2026, with nominal growth at 3.5% and 3.0% respectively. Over the medium term, real growth is expected to return to around 2%, with nominal growth at 4%. Inflation is projected to hover near 2%, aided by lower oil prices and a softer US dollar, which should allow for continued monetary easing and lower borrowing costs.
Key measures in the 2026-27 budget include a sweeping reduction in the federal public service, with about 40,000 jobs—or roughly 10%—set to be eliminated largely through retirements and attrition. This move is projected to save $13 billion annually by 2028-29 and $60 billion over five years. The budget also fast-tracks nation-building infrastructure projects, launches a Trade Diversification Strategy complete with a new Trade Diversification Corridors Fund, and commits $115 billion to infrastructure investments over five years. Other notable initiatives include a Buy Canadian Policy to bolster domestic supply chains, a new Defence Industrial Strategy, a Productivity Super-Deduction to spur private sector investment, and a GST exemption for first-time homebuyers purchasing newly built homes under $1 million.
Additionally, the government is establishing a new agency—Build Canada Homes—to accelerate private capital investment in residential construction, making the National School Food Program permanent, automating federal benefits, supporting the development of Canadian artificial intelligence tools through a Digital Transformation Office, and launching a $1.7 billion International Talent Attraction Strategy. These efforts, officials say, are designed to foster economic growth, enhance security and defense, reduce costs, and make generational capital investments, all while slimming down the cost and size of the federal public administration.
Meanwhile, south of the border, energy costs and climate policy have become flashpoints in Massachusetts’ gubernatorial race. On the same day as Canada’s budget release, Republican candidate Mike Kennealy called for an independent review of all green energy programs and climate-related spending in the state. Massachusetts, currently ranking as the third-most expensive state in the US for energy, faces looming utility bill increases as winter approaches. Kennealy was blunt in his criticism, stating, “Massachusetts is one of the most expensive states in America when it comes to utility bills. This is not accidental. It’s the result of an overly-partisan governing approach that puts political ideology ahead of the people of Massachusetts.”
Kennealy laid the blame squarely on Governor Maura Healey’s energy policies, pointing to her decision to block two major natural gas pipelines during her 2022 campaign. He argued that the administration’s aggressive push toward a 2050 net-zero emissions mandate is driving up costs for families and small businesses. Kennealy’s proposed review would scrutinize tax credits, subsidies, and grants for green energy companies, regulatory mandates that increase utility costs, and the overall impact of state climate programs on affordability and reliability. “We must identify which policies are driving energy costs through the roof and burdening our families and make cuts. If this administration won’t act, I will,” Kennealy declared.
Legislative battles are already underway on Beacon Hill, where House Democrats have introduced an omnibus bill to roll back green energy spending—including the 2050 net-zero emissions mandate. The bill, championed by Braintree Democrat Mark Cusak, would create an “affordability and competitiveness standard” for clean energy regulations. It would also shift the focus of the Mass Save rebate program from greenhouse gas reduction to cost-effectiveness and energy efficiency, make cuts to the program, and remove the ban on rebates for efficient gas heating systems. Small business owners have praised the bill, while climate activists and clean energy advocates have voiced strong opposition.
Governor Healey, for her part, filed legislation (H 4144) in June 2025 aimed at lowering energy costs by rolling back state energy mandates, increasing oversight of investor-owned utilities, and boosting the state’s energy independence. She claims the bill would reduce energy costs by $10 billion over the next decade.
The debate in Massachusetts highlights the complex trade-offs facing policymakers as they attempt to navigate between environmental goals and affordability. “We represent 0.01% of global CO2 emissions. There is no justification for forcing families to pay drastically higher electricity and heating bills in pursuit of a symbolic goal that does nothing to meaningfully change global climate outcomes,” Kennealy argued. He further criticized Governor Healey’s administration for, in his words, “filling her administration with climate activists while ignoring consumers.”
Across both Canada and Massachusetts, the central tension remains the same: how to fund ambitious public programs and climate initiatives without overburdening households and businesses. As governments refine their fiscal strategies and political leaders stake out their positions, the coming months will reveal whether these competing priorities can be reconciled—or whether the divide will only deepen.
