Rescue Act spending guardrails not going up until May

Boston Statehouse

BOSTON (SHNS) – State and local officials across Massachusetts know how much federal aid they can expect from the recently signed American Rescue Plan Act, but they likely won’t know until the second week of May exactly how they will be allowed to spend that money.

Bharat Ramamurti, deputy director of the National Economic Council, told lawmakers on the House Committee on Federal Stimulus and Census Oversight on Tuesday that the roughly $5.4 billion in state fiscal relief for Massachusetts and about $2.6 billion in local government fiscal aid can be spent in any of four general areas: for COVID-related expenses, to replace lost revenue, to fund water, sewer or broadband infrastructure projects, and for premium pay for essential workers.

But the nitty-gritty details of those eligible spending areas — “What constitutes a water or sewer project or broadband project?” Ramamurti asked rhetorically — are still being worked out by the U.S. Treasury Department, which is expected to issue detailed guidance on how the federal aid can be spent by May 10, 60 days after the law was signed by President Joe Biden.

“Following the issuance of that guidance, we expect there to be a back-and-forth — not just when the guidance is issued but going forward — where you might say, ‘Hey, is it OK if we can use the money for this purpose or that purpose?’ And our goal is to have a team in place so that we’re able to respond to those questions clearly and quickly,” Ramamurti, a Lexington native who previously worked for U.S. Sen. Elizabeth Warren, said. “Because the last thing we want to do is hold people up from using the money to get it to the people in need because it’s taking us a long time to respond.”

The roughly $8 billion in direct aid that the state and local governments in Massachusetts are set to receive from the latest round of federal stimulus is in addition to $1.8 billion in assistance for K-12 education and more than $1 billion dedicated for urban transit.

“The goal is for it to be flexible, you know, within reason,” Ramamurti said of the general government aid.

That flexibility, committee chairman Rep. Dan Hunt said, is going to give lawmakers a lot to think about as they prepare for the fiscal 2022 budget debate this spring and budget debates in future years, something he said House Ways and Means Chairman Rep. Aaron Michlewitz is discussing with the Senate and the executive branch.

“The level of flexibility and the amount of time that we’ll have — this is going to affect our budget on a go-forward basis out several years. So we’ll be able to kind of plug some different holes as we debate our budget,” he said. Hunt added, “One of the things that I think is important after talking to members of this committee is that while the CARES Act and other pieces had to occur in such a rapid motion, it’s the sense that I get from the administration that the idea was to give the states a lot of flexibility to really use this once-in-a-generation funding to really reshape programs.”

House Speaker Ronald Mariano and Senate President Karen Spilka have indicated a desire for the Legislature to play a more active role in appropriating the latest round of federal stimulus. Mariano said last week that the House does not plan to use any of the American Rescue Plan Act funding in the fiscal 2022 budget it will release and debate next month.

“If we bake the money into the budget, after two years the money’s gone and we’re not going to see this amount of money, at least in my time as speaker. I doubt I’ll get another bite at this apple so we’re going to make sure we spend it wisely,” Mariano said.

As the acceptable uses of the American Rescue Plan Act money become more clear, Hunt said the new House committee plans to hold hearings with the chairs of other committees to drill down into specific areas of the federal relief law and oversight hearings on previous spending bills.

Up next will be Administration and Finance Secretary Michael Heffernan, who is expected to appear before the House Committee on Federal Stimulus and Census Oversight next Thursday, April 8, at 11 a.m.

“We invited the secretary to present a detailed analysis of the programs set up by the Baker administration under the prior spending bills over the course of the last year,” Hunt said.

As of March 17, the federal government had already sent about $63.5 billion in aid to Massachusetts since the pandemic began, according to the Peter G. Peterson Foundation. Much of that money went directly to businesses, families, non-profits and public entities like regional transit authorities.

During Tuesday’s meeting of the new committee, Rep. Colleen Garry of Dracut asked when the committee plans to dive into issues around the Census, like the U.S. Census Bureau’s late February announcement that states will receive redistricting population data by Sept. 30, rather than by the traditional March 31 deadline.

“I envision after we get through this process, after the budget, that we will be bringing folks in as those numbers are available later in August and September,” Hunt said.

The aid numbers for Massachusetts cited by Ramamurti differ from the estimates used by others here since the passage of the Rescue Act, which analysts have said will steer $3.4 billion in relief funding to cities, towns, and counties and $4.5 billion directly to state government.

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