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Gov. Charlie Baker. Photo by Sam Doran | State House News Service/file
Having watched the legislature largely seize control of American Rescue Plan Act spending decisions, the Baker administration is gearing up for public hearings that it expects to get underway this month on plans to spend the state’s roughly $5 billion in federal money, including the governor’s specific proposal to immediately spend more than half of the total, including $500 million on housing production and an equal amount on homeownership help.
Gov. Charlie Baker and legislative leaders have been at loggerheads over how and how quickly the state’s ARPA money should be put to use since the comptroller’s office received a $5.3 billion lump sum on May 19. Baker yielded to the legislature’s desire for a thorough public hearing process when he signed legislation late last month transferring most of the money into a segregated account. But he also refiled his proposal to put $2.9 billion of the ARPA money to immediate use, hoping it will get close consideration once lawmakers start their hearings.
During a briefing Tuesday on the details of the administration’s proposal, the Executive Office of Administration and Finance said it expects the legislature’s hearings, which will be run by the Joint Committee on Ways and Means, to begin very shortly and be underway by the end of the month.
A spokesman for the Senate side of the committee said Tuesday that no hearings had yet been scheduled.
Baker’s budget office detailed the governor’s plan to start doling out ARPA money to pay for a slew of short-term priorities for reporters on Tuesday, almost a preview of what to expect when the legislature invites the administration to testify during its hearing process.
In all, Baker is seeking to spend $2.91 billion of the state’s remaining ARPA balance – about $400 million of ARPA money is already spoken for, including $109 million in local aid for Chelsea, Everett, Methuen and Randolph and $75 million to subsidize the state’s new COVID-19 emergency sick leave law. Baker’s plan would leave about $2 billion in the Federal COVID-19 Response Fund that lawmakers created.
More than a third of the total, $1 billion, would be designated for homeownership and housing priorities that the administration views as a generational opportunity to boost housing security.
The administration on Tuesday pointed out that Massachusetts has one of the largest racial homeownership gaps in the country, and said its proposal would help provide economic stability and address the systemic gap that led to more severe pandemic impacts among low-income communities and people of color.
The plan includes $300 million for policies that have proven track records of working to promote homeownership particularly among first-time buyers, like down payment assistance programs, mortgage insurance and mortgage interest rate subsidies, the Executive Office of Administration and Finance said. There’s also $200 million for MassHousing’s CommonWeath Builder Program and similar initiatives that support housing production.
Another $300 million would go towards building supportive housing for veterans and seniors, and $200 million would be earmarked by the administration to subsidize rental housing production, particularly workforce housing, the executive office said.
Since 2007, the share of renting households that pay half of their income or more towards their housing costs has been stagnant or worsening, the administration said. Baker has long advocated for increased housing production in Massachusetts and his administration said Tuesday that ARPA funding could add more than 5,000 new units of housing to the state’s goal of building 11,000 new units in five years.
Baker’s proposal includes another $1 billion for infrastructure – $400 million in water and sewer infrastructure grants, $300 million for improvements to culverts, dams and other environmentally significant infrastructure, $100 million to improve state park facilities, $100 million to increase broadband internet access and $100 million for marine port development.
The governor also proposed $240 million to fund job training programs and address skills gaps, $250 million to support regional collaborations and investments in downtowns, $175 million for addiction treatment and related behavioral health services, and more.
During Tuesday’s briefing, staff from the Executive Office of Administration and Finance said it views most of the office’s proposals as shared goals among themselves and the legislature. Lawmakers have said they do not necessarily disagree with the governor’s suggestions but want to spend the federal money only after a public hearing process similar to what takes place ahead of the annual budget debate.
“We can all agree a number of those are well conceived and worthy. We don’t deny that. We just think it’s important all 160 members of this body and 40 in our sister body have a chance to have their voice heard,” Rep. Dan Hunt, the chair of the House Committee on Federal Stimulus and Census Oversight, said about the governor’s priorities last month.
All ARPA money must be committed by the end of 2024 and spent by the end of 2026, which has led some lawmakers to suggest the money should be doled out over a number of years. Baker and his administration have favored a more rapid infusion of federal dollars, and budget managers said Tuesday that the roughly $2.9 billion they propose to put to use right away represents their estimate for how much could be put to work right away.
In addition to the federal ARPA money that Massachusetts policymakers have to dole out, the fiscal year that ended a week ago is also expected to produce a multi-billion dollar surplus.
Through mid-June, the Department of Revenue had collected at least $34.46 billion – $5.37 billion more than the Baker administration’s most recent estimate for the full 12-month fiscal year and $3.3 billion more than the pre-pandemic estimate of $31.15 billion in tax revenue for fiscal year 2021.
The Executive Office of Administration and Finance said Tuesday that June’s full-month results will show that the trend of over-benchmark collections continued through the end of the budget year. The office also said the year’s surplus means that at least $1.1 billion in state stabilization fund revenues will not be withdrawn, as originally planned.
