With a major new injection of federal stimulus on the horizon, Massachusetts officials are slowly emerging from crisis mode and looking ahead to the state’s economic recovery.
The $1.9 trillion stimulus bill, on track to become law this week, is expected to deliver Massachusetts roughly $8 billion in funds over which state and local leaders will have wide discretion, as well as billions more earmarked for specific priorities, including reopening schools, extending jobless benefits, and bolstering public transit.
Massachusetts has already received tens of billions of dollars in two rounds of federal stimulus enacted by Congress in the pandemic’s wake, but most of that money has been pegged to specific initiatives. The timing of this new cash infusion — as the state’s vaccine rollout continues to pick up — and the flexibility of the funds mean policy makers can look to the future, rather than focusing only on the immediate crisis.
Where last year’s federal stimulus money was spent “stopping the bleeding,” the latest federal influx will allow legislators to “take a breath and game-plan,” said state Representative Aaron Michlewitz, who chairs the House Ways and Means Committee.
“We’re in a different part of the pandemic now, more on the back nine of it, and hopefully as the vaccine rollout continues to improve, we’ll be more about the recovery of the economy,” he said. “We’re going to be able to be much more strategic.”
Those federal dollars will be a “lifeline,” Michlewitz said, but it’s too early to say exactly how they’ll be spent. That’s not just a reflection of lingering uncertainty at the federal level, but also a sign that the state is entering a more hopeful chapter of the pandemic.
The stimulus package requires a last round of approval from the House and President Biden’s signature before it becomes law, but Democrats say they’re confident in that outcome.
“There’s light at the end of the tunnel, although we still have some tunnel to go through,” said state Senator Michael Rodrigues, who chairs the Ways and Means Committee on the Senate side. “Now it’s: How do we ensure that these billions of dollars are invested in such a way that we have a fair and equitable recovery from the pandemic recession?”
“At the end of the day, it’s a good problem to have,” he added. “It’s a lot of zeroes.”
With the cash infusion may come a shift in who decides how those federal funds are spent.
When the pandemic first hit, it was the Baker administration that divvied up federal funds, flexibility that made sense given the immediacy of the crisis, state lawmakers said.
Now that the Legislature has put in place a “trust fund” for federal stimulus funds, state lawmakers expect to take the reins in determining how to spend it.
“It’ll be different this time,” Rodrigues said. “We are the appropriating entity in the state. And we are going to take that responsibility very, very seriously.”
Baker’s administration did not answer questions about how the flexible stimulus funds will be spent. A spokesman for the Executive Office for Administration and Finance said state leaders will “continue to ensure that resources are utilized in a responsible manner which optimizes their usage and helps preserve financial reserves for the future.”
Along with the larger pot of money that policy makers can spend largely how they see fit, Massachusetts is in line to receive nearly $2.7 billion in education aid and more than $1 billion in transit assistance. And millions of residents will receive stimulus checks of up to $1,400, along with other financial assistance targeted to low-income Americans — all of which should boost to the state economy.
Kimberly Lyle, director of strategy and development for the Dorchester Bay Economic Development Corporation, said it’s critical that the state ensures the latest round of federal dollars serves the state’s most vulnerable: communities of color, immigrants, and low-income individuals who have borne the brunt of the pandemic. Massachusetts has to do “both and,” she said, addressing immediate crises while planning a recovery that will benefit all residents.
“How do we respond to the acute needs, but how do we also build a state that is far more equitable than it has been?” she said. “Any sustainable, equitable recovery is going to require that Black and brown and Indigenous and other marginalized folks are at the table.”
For some, answers on how the federal dollars will be spent can’t come soon enough.
“We need a plan, as soon as the bill passes, for how the state intends to spend its money,” said Marc Draisen, executive director of the Metropolitan Area Planning Council, the regional planning agency for the Boston area. “Just give us a plan, with actual numbers next to it, and then be open to input from cities and towns and other stakeholders.”
The spending package headed toward Biden’s desk is more than twice the size of a stimulus package passed in the early days of the Obama administration. Many economists believe that 2009 legislation was too small to kickstart the economy in the wake of the 2008 financial crisis.
“Policy makers have learned a lot of lessons from the Great Recession,” said Michael Goodman, professor of public policy at the University of Massachusetts Dartmouth. The hefty price tag is appropriate given the scale of the crisis, he added: “This primes the pump in a way that positions the Commonwealth and the nation well.”
About $3.4 billion of the $8 billion is expected to be allocated for direct aid to local governments. That money will be critical for cities and towns facing revenue downturns, especially because this latest stimulus package gives local officials more flexibility on how to spend their federal dollars and more time to do so, said Geoff Beckwith, executive director of the Massachusetts Municipal Association.
Coronavirus relief funds distributed last year through the $2 trillion CARES Act, which Congress passed in March 2020, could not be spent to plug revenue holes in local budgets. But this latest stimulus package will allow local leaders to make up for gaps in revenue, renew lagging downtown areas, and invest in water, sewer, and broadband infrastructure, Beckwith said.
The new stimulus funding comes as millions of dollars from last year’s federal injections remain unspent in state and local coffers. State officials say they will spend all available federal funds by the deadline, which for some pots of money is the end of 2021.
“The fact that some communities haven’t spent all the money does not speak to the need. There is a dramatic, major need for this investment,” Beckwith said. “This is about reweaving our economy.”