(BOSTON 9/24/2024) — Last week, 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.
“Using the interest accrued by the Commonwealth’s rainy day fund to invest in our communities is a smart use of tax dollars, made even smarter when those funds can unlock massive federal grants for projects across the Bay State,” said Senator Michael Moore (D-Millbury). “Making Massachusetts more competitive is critical to ensuring we continue to attract game-changing companies and innovators to our state. I am thrilled to have voted to approve this measure, and I’d like to thank my colleagues in the Legislature and Governor Maura Healey for their leadership in unlocking more funds for the people of Massachusetts in a fiscally responsible way.”
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% 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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