Watchdogs cite ‘immediate’ needs with federal funds
State sitting on surplus dollars
Three months after state lawmakers began debating how best to spend nearly $5.3 billion in federal coronavirus aid, budget watchdogs are urging “immediate” spending in some key areas in a new report.
“The challenge to lawmakers in deciding how to maximize the use of the (fiscal recovery) funds is striking the right balance between immediate investments that will maintain the momentum of the economic recovery with more transformational efforts that make systemic change,” the Massachusetts Taxpayers Foundation report points out.
The 10-page document outlines four “vital recovery priorities” — pandemic recovery, barriers to prosperity, workforce and infrastructure — that budget watchdogs say need “immediate investment.”
The MTF recommendations line up in several instances with those of Gov. Charlie Baker.
The Republican governor has been pushing his own plan that would immediately invest $2.9 billion of the remaining cash. The plan includes a billion-dollar investment in housing and homeownership opportunities and nearly a half a billion in workforce development, which are listed among the MTF recommendations.
High on the list is addressing the state’s massive unemployment trust fund deficit.
Many states are moving to plug their stressed unemployment insurance accounts with American Rescue Plan dollars after 18 months of unprecedented unemployment benefit payouts to the nation’s jobless drained their unemployment funds.
Massachusetts borrowed $2.3 billion from the feds to keep up with payments amid the pandemic — money that will be repaid through unemployment insurance rate hikes on employers over the next 20 years unless the Legislature acts.
Greg Sullivan, research director for the Pioneer Institute, said it’s unfair to leave small businesses “on the hook” to pay for the “mountain of debt” racked up after the government shut workplaces down.
“It’s a crisis and nobody’s talking about it,” Sullivan said.
Baker has also proposed spending $1 billion of the state’s roughly $5 billion budget surplus from the previous fiscal year to cover some of the unemployment debt.
MTF President Eileen McAnneny praised the Legislature’s take-it-slow approach to developing a spending plan during the first hearing.
The Wednesday report highlights the need to address areas of immediate concern while also setting aside funds for developing “transformative initiatives” that could reshape Massachusetts society.
A Herald review of how states are spending ARPA dollars revealed Massachusetts is in the bottom 20 in terms of cash committed so far, with less than 8% of $5.3 billion allocated to the state spent.
State Rep. Aaron Michlewitz, D-Boston, said the large surplus of about $5 billion thanks to excess tax revenue collections in the last fiscal year “have given us some pause to be able to think about this a little more deeply.”