diff --git a/internal/cmd/dry_run.go b/internal/cmd/dry_run.go
index 650d4546..bc2b72da 100644
--- a/internal/cmd/dry_run.go
+++ b/internal/cmd/dry_run.go
@@ -74,7 +74,7 @@ func runDryRun(cmd *cobra.Command, args []string) error {
 	}
 
 	// Validate envelope is parseable
-	envBytes, err := base64.StdEncoding.DecodeString(envXdrB64)
+	envBytes, err := base64.StdEncoding.Strict().DecodeString(envXdrB64)
 	if err != nil {
 		return errors.WrapUnmarshalFailed(err, "envelope base64")
 	}
diff --git a/simulator/Cargo.toml b/simulator/Cargo.toml
index cc4d837a..1a5a313f 100644
--- a/simulator/Cargo.toml
+++ b/simulator/Cargo.toml
@@ -21,7 +21,7 @@ nursery = "warn"
 # HostedContractEvent.failed_call field that this simulator relies on.
 # We accept any release in the 21-25 range so the binary stays compatible
 # with both mainnet protocol 21 and subsequent minor protocol bumps.
-soroban-env-host = { version = ">=21.0, <26" } # Updated to latest version
+soroban-env-host = { version = ">=21.0, <26", features = ["testutils"] } # Updated to latest version
 base64 = "0.21"
 clap = { version = "4.4", features = ["derive"] }
 serde = { version = "1.0", features = ["derive"] }
diff --git a/simulator/src/runner.rs b/simulator/src/runner.rs
index bebc6343..c99c69f4 100644
--- a/simulator/src/runner.rs
+++ b/simulator/src/runner.rs
@@ -57,6 +57,18 @@ impl SimHost {
         host.set_diagnostic_level(DiagnosticLevel::Debug)
             .expect("failed to set diagnostic level");
 
+        // Hook memory_limit into the Budget tracking mechanism via reset_limits()
+        if let Some(mem_limit) = memory_limit {
+            // Get the current CPU limit to preserve it
+            let cpu_limit = host.budget_cloned()
+                .get_cpu_insns_remaining()
+                .unwrap_or(100_000_000);
+            // Reset both CPU and memory limits to enforce memory_limit during execution
+            if let Err(e) = host.budget_ref().reset_limits(cpu_limit, mem_limit) {
+                eprintln!("Warning: Failed to set memory limit: {:?}", e);
+            }
+        }
+
         Self {
             inner: host,
             ledger_snapshot: LedgerSnapshot::new(),
@@ -79,6 +91,18 @@ impl SimHost {
         let host = Host::with_storage_and_budget(storage, budget);
         host.set_diagnostic_level(DiagnosticLevel::Debug)?;
 
+        // Hook memory_limit into the Budget tracking mechanism via reset_limits()
+        if let Some(mem_limit) = memory_limit {
+            // Get the current CPU limit to preserve it
+            let cpu_limit = host.budget_cloned()
+                .get_cpu_insns_remaining()
+                .unwrap_or(100_000_000);
+            // Reset both CPU and memory limits to enforce memory_limit during execution
+            if let Err(e) = host.budget_ref().reset_limits(cpu_limit, mem_limit) {
+                eprintln!("Warning: Failed to set memory limit: {:?}", e);
+            }
+        }
+
         Ok(Self {
             inner: host,
             ledger_snapshot: snapshot.clone(),