More than two months after the federal government gave Massachusetts roughly $5.3 billion to deal with the broad ramifications of the pandemic, the Legislature kicked off the public hearings that will inform its spending decisions though leaders indicated it will still be months before the money is put to use.
The state’s American Rescue Plan Act money arrived May 19 and, until Tuesday, most of the conversation around the money centered around who would get to spend it. Legislative Democrats who favor a slower approach won out but gave Gov. Charlie Baker an opportunity Tuesday to pitch his bill (H 3922) to quickly spend $2.915 billion of the state’s total.
Baker wants to put more than half of the state’s ARPA allocation to work now on housing and homeownership supports, job training, water and sewer infrastructure, addiction treatment and other areas. Speaking virtually from Aspen, Colorado on Tuesday, he pressed lawmakers on the Joint Committee on Ways and Means and the House Committee on Federal Stimulus and Census Oversight to act swiftly.
“The kinds of projects that are needed to address the impacts of COVID are significant in scale and time consuming. We have to start making the investments I proposed now, not months from now,” the governor said. “Some of these programs, especially housing and infrastructure projects, require a long implementation time. For others, time is of the essence to address urgent needs.”
The governor’s plan calls for $1 billion for housing and homeownership supports, $1 billion for infrastructure investments, $450 million for economic development, $240 million for workforce development and $225 million for health care. It comes as stakeholders across industries appeal for help from state government.
About $400 million of the state’s ARPA award has already been spoken for, including $109 million in local aid for Chelsea, Everett, Methuen and Randolph and $75 million to subsidize the state’s new COVID-19 emergency sick leave law. Baker’s proposal would leave about $2 billion in the Federal COVID-19 Response Fund that lawmakers created.
Baker added, “Some of this stuff needs to be done soon to be done well.”
The Legislature and some economists have touted the benefits of a more deliberate approach to spending the special funds over several years. On Tuesday, the three chairmen running the hearing — Reps. Aaron Michlewitz and Dan Hunt, and Sen. Michael Rodrigues — suggested the ARPA money will stay put in its segregated account for months more.
Rodrigues said he anticipates “conducting a series of hearings over the foreseeable future” and Hunt mentioned holding hearings “throughout the remainder of the summer and into the fall.”
The chairmen and the committee members did not engage Baker on the fine details of his $2.9 billion proposal and instead focused more on the process he used to assemble his bill and his thoughts on other potential uses of the ARPA money.
“I don’t want to drill down too much into the specifics of the pieces that you put in because I think we’re gonna have a number of hearings and robust discussions on those with some of your Cabinet members,” Michlewitz told Baker.
With the Legislature planning to hold ARPA hearings into the fall, the timeline for lawmakers to produce an ARPA spending bill this year tightens. The Legislature typically does not hold formal business sessions between Thanksgiving and early January, so if an ARPA spending bill is to advance this year both branches would have to debate, pass and reconcile their versions of significant legislation that is likely to attract scores of amendments before mid-to-late November.
Throughout his testimony Tuesday, Baker urged the Legislature to move quickly and said many of his planned investments are time-sensitive. On a few occasions, the governor referred to the more than 350,000 residents who are due to lose their enhanced unemployment benefits the first week of September.
“As we near the fall, it’s more urgent than ever that we have increased supports in place to help retrain people, re-credential them and connect them with job opportunities,” he said. The governor later added, “We need to make investments now to help people who’ve been laid off or unable to work find employment.”
Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts, told lawmakers Tuesday that, given how hot the economy is running right now, a delay in spending ARPA money “may be a good thing.”
“Right now, the economy doesn’t need any short-term stimulus. Outsize federal spending and low interest rates are already driving economic growth to exceptional, and possibly unsustainable levels,” he wrote in prepared testimony. He added, “In this environment, with inflation elevated and the economy facing real, short-term constraints, efforts to quickly spend federal ARP dollars are not just procedurally difficult but also economically risky, stimulating an already hyper-stimulated recovery.”
Horowitz suggested that the economy “should be in a better position to absorb new government spending” in six months to a year and that the investments would have more of an impact if made then.
But he also echoed Baker with a recommendation that any immediate spending be “tightly targeted to aid to those with the highest needs or to support efforts to expand the state’s long-term economic capacity through things like broadband subsidies and workforce training.”
Though Baker made clear that he thinks his proposed $2.915 billion investments could have been approved without as deliberate of a process as the Legislature now has underway, he agreed that there are some areas where ARPA spending should be subject to a public hearing process.
One was on pandemic pay for essential workers who kept things running last spring and summer while many people adjusted to remote work and remained at home most days.
“Part of the reason we didn’t do something specific on this was we did think this was exactly the sort of thing that would require a public process and a public discussion because figuring out who did get supplemental payment and who didn’t get supplemental payment, and how to determine the categories, and whether this should be done for certain categories of workers and not others, union versus non-union … figuring out exactly how to frame that type of a program and that type of an investment and at what level we thought was, frankly, exactly the sort of thing that would make sense to go through a more public process,” he said.
He also suggested the Legislature’s public hearing process could be beneficial when it comes to determining how to use ARPA money to help the child care sector. Rep. Ann-Margaret Ferrante asked Baker why his proposal did not address that vital part of the economy.
He said the federal government, separate from ARPA, provided $800 million for child care here — $350 million for stabilization and $450 million for further investment — that remains “in process.”
“I view that as a classic example of an area where the kind of conversation, deliberation, that you folks are pursuing makes a lot of sense because what comes next, I think, is the question that’s in front of us with respect to how to handle child care,” Baker said. He added, “If there’s a lot of people who aren’t going to be going to the office five days a week, and if the child care options that people have available have historically been ones that presume they would be in the office for five days a week, how does that work? And I think that’s one of the things that the commissioner and her team and you folks and us need to talk about and think about.”
A second hearing of the Joint Ways and Means Committee and House Committee on Federal Stimulus and Census Oversight, this one to specifically discuss how ARPA money could be used to address housing, labor and workforce development issues, is planned for July 27. No additional hearings have been announced.
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