Transportation, housing, climate projects could benefit from up to $17.5 billion in investment
BOSTON (9/19/2024) — Today, the Massachusetts Legislature passed a bill that will allow the Commonwealth to more effectively compete for federal funding that could be invested in transformative projects related to transportation, housing, climate, economic development, and technology.
S.2954, An Act to provide for competitiveness and infrastructure investment in Massachusetts, takes advantage of the interest accrued from the Commonwealth’s Stabilization Fund and leverages that interest to ensure the state receives the maximum possible share of federal funds. The Commonwealth’s Stabilization Fund has an all-time high balance of over $8 billion. It is currently estimated that Massachusetts could receive up to $17.5 billion through historic, once-in-a-generation federal funding opportunities.
“Remaining competitive, equitable, and affordable as a Commonwealth means thinking creatively about our state’s finances and seizing opportunities,” said Senate President Karen E. Spilka (D-Ashland). “We have been fiscally prudent in building up the largest rainy day fund in Massachusetts’ history, which allows us to leverage our robust interest earnings to compete for federal dollars that will help us strengthen our infrastructure. I am grateful to the Governor and her Administration for filing this legislation, to Chair Rodrigues for his leadership, and to the Senate’s members for their efforts and support.”
“Ensuring that the Commonwealth is able to aggressively compete for the federal funding being made available to states is critical,” said House Speaker Ronald J. Mariano (D-Quincy). “The projects and investments that will be funded across the United States because of the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act will transform this country and create a significant number of jobs in the process. It’s vital that Massachusetts does everything that it can to share in that prosperity. I want to thank Chairman Michlewitz and Chairman Lewis for their work on this issue, as well as all my colleagues in the House and our partners in the Senate for recognizing the importance of this legislation.”
“With this agreement in place, the Commonwealth will now be able to fully leverage federal funds for substantial investments in housing, transportation, climate, and economic development and technology,” said Senator Michael J. Rodrigues (D-Westport), Chair of the Senate Committee on Ways and Means. “By diverting interest accrued from the Stabilization Fund, which currently sits at more than $8 billion, we can unlock our share of the $17 billion available at the
federal level, spur investments in regional projects, and dedicate $12 million to further assist municipalities when they compete for federal matching funds. This legislation also allows us to pay down long term liabilities quicker when the Stabilization Fund is at its current healthy level. By establishing a dedicated and primary funding account, we are sending a strong message to the federal government that the Commonwealth is serious about partnering on capital investment projects.”
“Giving the Commonwealth a competitive edge when it comes to competing for Federal dollars is paramount. By building off the interest earned from the historic high balance of the Rainy Day Fund we will be better positioned to compete for Federal matching grant to improve our infrastructure and other critical needs,” said House Committee on Ways and Means Chair Representative Aaron Michlewitz (D-Boston). “I want to thank all my colleagues in the House and Senate for their commitment to getting this legislation over the finish line.”
“Our Commonwealth will now be in a position to take advantage of every available federal dollar, so that we can continue to meet our ambitious goals and remain fiscally responsible,” said Senator John J. Cronin (D-Fitchburg), a member of the conference committee. “I’m thankful to Senate President Spilka and Chairman Rodrigues for their work to make our state more competitive and affordable for everyone.”
“This final legislation passed today increases our Commonwealth’s ability to compete for federal funds while also paying down our debt obligations,” said Representative Jack Patrick Lewis (D-Framingham), Chair of the House Committee on Federal Stimulus and Census Oversight. “It was an honor to chair this bill’s legislative hearing with my Vice Chair, Rep. Chris Hendricks, and to work with my committee to put forward the bill passed by the House earlier this year. I’m grateful to Speaker Ron Mariano for naming me to this conference committee, and to Chair Aaron Michlewitz and the other conferees for crafting this final bill. I look forward to supporting and celebrating the transformation projects that this legislation will make possible.”
“I am optimistic that there has been an agreement made upon where the federal funds will be allocated within our Commonwealth. The needs of the public are ever-changing when it comes to the infrastructure of the state, and to be able to keep up with the needs of our residents is imperative when it comes to accomplishing important public purposes,” said Senator Patrick M. O’Connor (R-Weymouth), a member of the conference committee. “Public safety and convenience will ensure that the roles that we all have continue to operate smoothly and keep Massachusetts on the national stage as a competitive economy. Thank you to my colleagues in the House and Senate for their joint work on this bill.”
“We are constantly competing with 49 other states for our share of limited federal dollars,” said Representative Mathew J. Muratore (R-Plymouth). “Leveraging the interest on our Rainy Day Fund will give us a significant advantage by better positioning Massachusetts to successfully secure much-needed federal dollars that will help pay for a wide range of infrastructure projects.”
The initiative requires the Comptroller to transfer interest from the Stabilization Fund to the Commonwealth Federal Matching and Debt Reduction Fund on a quarterly basis if the stabilization balance reaches certain benchmarks. The Secretary of Administration and Finance (A&F) would then pursue federal funding opportunities available due to the availability of federal funds for infrastructure, resiliency and economic development projects.
At its current level, the Stabilization Fund is anticipated to accumulate approximately $250 million in interest annually. Currently, that interest is deposited directly back into the fund. Once signed into law, this bill will require the Comptroller to transfer interest from the Stabilization Fund to the Commonwealth Federal Matching and Debt Reduction Fund when amounts exceed 10 per cent of budgeted revenues of the previous fiscal year; and the balance of the fund has not decreased in the previous year. When a diversion does occur, the interest will be used for two key purposes, including matching funds for federal grants, during this unique opportunity of Federal investments; and long-term debt management strategies.
Over the coming years, this bill is expected to unlock more than $800 million in funds that will be used to fund the state or municipal match requirement for federal competitive grant opportunities, as well as planning work that will help municipalities with the process of preparing applications for federal grants. Once federal grant opportunities expire, money in this fund will go toward reducing the Commonwealth’s long-term liabilities.
Through three pieces of federal legislation—the Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA), and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act—over $2 trillion in spending is being made available to states through competitive grant programs and formula allocations. With this bill, the Commonwealth will be maximizing its position to capitalize on these substantial federal funding opportunities.
Having been passed by both chambers, the bill now goes to the Governor for her signature.
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