Senate Overwhelmingly Passes Legislation to Increase The Commonwealth’s Competitive Advantage
Legislation leverages Stabilization Fund interest to compete for federal funds for transportation, housing, climate and economic development projects
BOSTON (01/11/2024) – Today, the Massachusetts Senate passed S.2548, An Act to provide for competitiveness and infrastructure investment in Massachusetts, an economic development bill that 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 currently has a historic balance of $8.2 billion.
It is estimated Massachusetts currently has the opportunity to receive up to $17.5 billion through historic, once-in-a-generation federal funding opportunities.
“Remaining competitive, equitable, and affordable entails thinking creatively about our Commonwealth’s finances and funding, and that is what we accomplished today in the Senate,” said Senate President Karen E. Spilka (D-Ashland). “We have been fiscally prudent in building up the largest rainy-day fund in Massachusetts history, and today we are doubling down on our fiscal responsibility by using the interest on that fund to compete for federal dollars that will save our Commonwealth even more in the long run. I am grateful to the Governor and the Administration for filing this legislation, to Chair Rodrigues for his leadership and to the Senate’s members for their efforts and support.”
“The legislation that the Senate approved today provides us with a smart accounting measure that we can utilize to effectively stretch and maximize our taxpayer dollars to place the Commonwealth in the very best position to compete for these lucrative federal funds, while also ensuring we continue to protect our rainy day reserves and adhere to sound fiscal discipline,” said Senator Michael J. Rodrigues, (D-Westport) Chair of the Senate Committee on Ways and Means. “Government is all about partnership, and I thank the Senate President, and the Administration for this cost saving initiative as we work to capitalize on these historic federal funding opportunities to support projects throughout all corners of our state.”
This smart financial accounting initiative will require 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 is of a healthy amount. The Secretary of Administration and Finance would then pursue federal funding opportunities available thanks to the historic availability of federal funds for infrastructure, resiliency and economic development projects.
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 Act (CHIPS), 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.
The Senate’s actions have garnered support from organizations around the state.
“This is a big deal and we are grateful for the Senate’s leadership on this important bill. It will help ensure Massachusetts can take advantage of federal infrastructure grants that can improve our transportation system, address climate challenges, and improve our economy,” said Tom Ryan, Senior Advisor on Policy, Government and Community Affairs for A Better City. “Having state matching funds available to both the Commonwealth and municipalities shows that Massachusetts is ready to partner with the Biden-Harris Administration on infrastructure projects that will benefit the region.”
“ELM applauds the Senate for passing S.2548, which will give the Commonwealth new tools to secure competitive federal funding,” said David Melly, Legislative Director for the Environmental League of Massachusetts. “With the opportunities this legislation will help unlock, cities and towns can make critical investments to both modernize our infrastructure and meet our climate and emissions goals.”
Key components of the legislation include:
At its current level, the Stabilization Fund is anticipated to accumulate approximately $250M in interest annually. Currently, that interest is deposited directly back into the Fund.
This bill proposes redirecting future Stabilization Fund interest when the Fund is at healthy levels, which is defined as when:
Amounts in the Fund exceed 10% 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:
(i) Matching funds for federal grants, as long as those funds are available; and
(ii) Long-term debt management strategies.
By creating a dedicated pool of funds, the Commonwealth can leverage this money to unlock some of the $17.5 billion available in once-in-a-generation federal funding for investments in transportation, housing, climate, economic development, and technology.
Maintaining a primary pool of funds will signal to the federal government the Commonwealth’s willingness and desire to partner on these projects.
The bill was originally filed by Governor Healey on October 19, 2023. It now heads to the Massachusetts House of Representatives for consideration.
###