Robust rainy day fund to the rescue

Putting up some money will help the state make more money, apparently.

House lawmakers held a hearing yesterday over a plan to leverage the interest made off the state’s well-stuffed “Rainy Day” fund against attempts to compete for billions in federal grant money, when they learned their window of opportunity won’t remain open forever.

An Act to provide competitiveness and infrastructure investment in Massachusetts will give the state an edge when the federal government decides where to dole out funds already authorized under federal law, the Committee on Federal Stimulus and Census Oversight learned.

“With over $17 billion in federal grants out there for us to compete for and win, we have to be aggressive. We know other states will go after the money if we don’t,” Administration and Finance Secretary Matthew Gorzkowicz told the committee.

Under the proposal, the state could use up to $750 million in interest made on the Commonwealth Stabilization Fund as the matching funds required in order for municipalities or other organizations to go after available grants.

The state Senate passed a version of the bill earlier this year, after Gov. Maura Healey floated the idea last October.

The Stabilization fund is flush with cash at present — holding around $8.2 billion — and only California

and Texas keep more money under their mattresses, according to Phineas Baxandall of the Massachusetts Budget and Policy Center.

Offering up the interest made on that money while we compete against the other states is a matter of “financial prudence,” Baxandall said. The bill would not shrink the balance of the Rainy Day fund, only slow its continued growth when it is already quite full, he explained.

“The bill both protects the strength of the Commonwealth

Stabilization Fund and leverages its funding for further growth and stability,” he said.

Methuen state Rep. Francisco Paulino questioned the wisdom of spending money in light of recent tax revenue shortfalls. Just because something is on sale, Paulino noted, doesn’t mean you spend money you don’t have.

However, the $1.4 trillion made available to states, municipalities, tribal governments, nonprofits and businesses by the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act represent more than just a sale, lawmakers were told.

“We have a unique, once-in-a-generation opportunity that’s created by pieces of federal legislation,” Federal Funds and Infrastructure Director Quentin Palfrey told the committee. “We have a historic opportunity to seize funds that the federal government has made available on a short-term basis.”