Malden legislators announce passage of bill to maximize federal funding for Massachusetts

Advocate Staff Report

On September 19, 2024, State Senator Jason Lewis and State Representatives Paul Donato, Steve Ultrino and Kate Lipper-Garabedian joined their colleagues in the Massachusetts Legislature to enact a bill that will enable the Commonwealth to effectively compete for federal grant funding across multiple sectors, including transportation, housing, climate, economic development and technology innovation. Early in 2024 the bill had been passed by the House and Senate, and a Conference Committee was appointed to resolve the differences in their two bills. Governor Maura Healey signed the bill into law on September 24, 2024, as Chapter 214 of the Acts of 2024.

An Act to provide for competitiveness and infrastructure investment in Massachusetts leverages the interest accrued on the Commonwealth’s Stabilization Fund to provide required state matching funds needed to compete for many federal funding opportunities. 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 – more than $2 trillion is being made available to states through competitive grant programs and formula allocations. With the passage of this bill, the Commonwealth will be maximizing its ability to capitalize on these substantial federal funding opportunities.

“We should do everything possible to maximize our share of federal grant opportunities that help save money for Massachusetts taxpayers,” said Senator Lewis. “Using excess interest from the Commonwealth’s Stabilization Fund to unlock these federal opportunities is a smart way to do so, and will enable the state and local municipalities to fund many important infrastructure projects in the years to come.”

“I am delighted to see the passage of this transformative legislation, as we commit to increasing our competitiveness and investments into vital infrastructure for the Commonwealth,” said Representative Donato. “We are now able to strategically position ourselves to compete for federal grants that can be used to increase funding for essential services. Also, with the help of the Stabilization Fund, its excess interest can help assist in the long-term prosperity of Massachusetts.”

“This piece of legislation allows Massachusetts to keep our competitive edge in obtaining federal grant dollars so we can continue to support the growth of our cities and towns,” said Representative Ultrino. “This agreement will not only save taxpayer dollars but allow us to extend funding to further invest in transportation, infrastructure, climate resiliency, and job creation to create a better future for our Commonwealth.”

“I was glad to join the full legislature in supporting this legislation to ensure Massachusetts is well-positioned to compete for federal funding opportunities,” said Representative Lipper-Garabedian. “Using the interest accumulated in our Rainy Day Fund, which has a historically high balance, we will be able to seek investments that will enhance the economic vitality and infrastructure of our communities, supporting workforce opportunities in the process.”

At its current level, the Stabilization Fund is anticipated to accumulate approximately $250 million in interest annually. This bill will allow the state to transfer interest from the Stabilization Fund to the Commonwealth Federal Matching and Debt Reduction Fund when amounts exceed 10 percent of budgeted revenues for 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: required matching funds for federal grants during this unique opportunity to capture 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 cover 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 left in this fund will go toward reducing the Commonwealth’s long-term liabilities.