WASHINGTON — As the House of Representatives was voting to pass a deal to avert a debt limit crisis late last month, lawmakers representing Massachusetts in Congress received a warning: The state had just days to commit $80 million to projects or lose it all.
Clawing back unspent and uncommitted COVID-era funds was a critical part of an agreement between President Biden and Republicans to avert a catastrophic default on the nation’s debt, and Massachusetts was at risk of losing more than half its allocation of flexible highway funds from a 2020 COVID relief package, according to a Federal Highway Administration document obtained by The Boston Globe.
In a matter of days, after Governor Maura Healey received the message, the state Department of Transportation assigned the money, ensuring all but 3 percent of the original funds were safe from being reclaimed, officials told the Globe.
State officials chose to split the unspent funds among four projects already underway, officials with the Massachusetts Department of Transportation said, but they would not specify how much each project would receive. The projects are in different stages of development and with costs ranging from roughly $70 million to nearly $400 million. All four were identified in 2022 as major priorities in MassDOT’s Capital Investments Plan.
Those involved in the effort to save the funds hailed the sprint as an example of efficient and cooperative government. But the episode highlighted just how much money the federal government pumped into states during the pandemic that couldn’t be spent immediately despite the great need that existed. And it showed another truism for state budgeting: Congress can always change its mind.
“Federal promises are not done until the check is written,” said Adie Tomer, a senior fellow at the left-leaning think tank Brookings. “It’s easy to act fast, it takes more patience to be thoughtful about spending — but one always has to have a plan B in place in case Congress changes its mood.”
Massachusetts was one of only three states to have assigned less than half of its funds, along with Michigan and Louisiana, and had the seventh-highest dollar amount outstanding at $81.2 million. Thirty-five states had already spent 90 percent or more of their funds.
The funds were targeted as part of the debt ceiling negotiations, in which Republicans insisted on spending cuts to go with raising the nation’s borrowing limit. Biden agreed to Republicans’ demands to pull back all unassigned funds from a number of COVID-era programs, some of which had ended. That included more than $2 billion from highway programs, according to a White House document obtained by NPR, and the rescissions took effect immediately once the bill was signed.
As lawmakers drew near a vote on the deal, the Federal Highway Administration sent a chart of funds at risk of being returned to federal coffers to contacts in Congress, where it was quickly circulated by lawmakers ahead of the approaching deadline. That included at least four Massachusetts lawmakers, whose offices immediately forwarded the information to Healey.
Republicans were unhappy but unsurprised to hear that the funds they had targeted were protected at the urging of the Biden administration.
“The entire agreement was a sham, anyway, so can you violate a sham?” said Wisconsin Senator Ron Johnson, who voted against the deal.
South Dakota Senator Mike Rounds, who voted for the agreement, said the original plan to redirect unspent funds was “reasonable,” and this episode could make further negotiations more difficult. But he also said it was to be expected.
“It’s unfortunate, but that’s the way the game is played,” Rounds said. “We can make the rules, but they play the game.”
The state’s budget chief, Matthew Gorzkowicz, acknowledged the recent spend “came down to the wire.” But he said Congress originally designated the funds to last until fall 2024, and the state had planned based on that timeline to make sure each project met federal eligibility requirements.
The four chosen projects happened to be far enough along in the design process to meet the requirements in the original bill for using the funds.
“I think it’s pretty good given the fact that it was throwing us off our game plan,” he said. “We were put on our heels a little bit, and we’ve had to scramble.”
State and federal lawmakers echoed the sentiment.
Democratic state Representative Carole Fiola, whose Fall River district includes one of the projects getting an infusion of money, said putting dollars toward existing projects was “a very positive way to take advantage of using those funds.”
Democrat Representative Jake Auchincloss of Newton, whose district includes Fall River, hailed the money coming to a project there to redevelop the waterfront as an investment that “significantly moves the project forward.”
“This is Team Massachusetts in action,” he said of the congressional delegation’s effort to alert the state and then MassDOT’s ability to respond.
In Fall River, funds will go to a project to improve the Route 79-Davol Street corridor and connect it to the Taunton Riverfront. The estimated $125 million project is just beginning construction after a construction firm was selected last year.
Auchincloss said the project will ultimately mean more affordable housing and lifestyle improvements in the area.
On the Lawrence and Andover border, a $160 million project that’s out to bid will widen and improve the Interstate 495 bridge over Route 28. Representative Lori Trahan, a Democrat from Westford whose Merrimack Valley district will benefit from the project, called the span “a critical corridor” and said the project “will improve safety and traffic congestion for drivers.”
The federal dollars also touch a longtime project on the Charlton and Oxford border, where a 2015 head-on collision prompted the state to address the dangerous curves on parts of Route 20, among other fixes.
State Representative Paul Frost, whose district includes the project, applauded the state for expeditiously allocating the money.
“It would be a shame that Congress would pull the rug out from underneath our state without any sort of fair warning,” the Auburn Republican said. “If we lost the $81 million, that would have hurt.”
In the Hopkinton and Westborough area, the funds will contribute to a nearly $400 million project aimed at taking on the notoriously dangerous Interstate 90 and Interstate 495 interchange — “one of the worst traffic nightmares in the Commonwealth,” said state Senator Jamie Eldridge, a Marlborough Democrat. The junction handles approximately half of all trucking entering Eastern Massachusetts, according to MassDOT, and the current design has resulted in crashes at rates twice the statewide average.
The state has spent or obligated at least $124.5 billion out of $126.8 billion in COVID money it was given by Congress, according to a tracker maintained by the nonpartisan think tank Committee for a Responsible Federal Budget.
The highway money in question was originally approved in late 2020, with Massachusetts getting $150.8 million to spend through September 2024. Tomer said Congress chose a particularly flexible program of highway funding in which to put the major COVID-relief investment, which may have been one reason Massachusetts decided to hang on to most of it rather than spend it immediately.
But the sudden alert from Washington that the debt deal would significantly move up the deadline to commit the funds forced Massachusetts’ hand earlier.
The state said it had developed a portfolio of projects with the 2024 expiration date in mind, but shifted plans when the debt limit agreement was reached.
“MassDOT pivoted to obligate those funds immediately,” a spokesperson for the agency, Jacqueline Goddard, said in a statement.
Phineas Baxandall, policy director at the left-leaning think tank Massachusetts Budget and Policy Center, said there are likely “reasonable” explanations for why the state hadn’t tapped the funds yet.
“But it’s something how a deadline could move folks,” he said. “It would be interesting to know how long it would have taken if not for this deadline.”
Auchincloss said the state needed to wait because during the pandemic, a workforce shortage, and supply chain constraints meant the state would have risked increasing the cost of its own projects by bidding too many against each other.
“Most of the time in public works, you’ve got a shortage of money and a surplus of projects. ...During the depths of the pandemic, we actually had a surplus of money and a deficit of workable projects,” Auchincloss said. “It was literally not possible to spend all the money at once.”