House lays out $3.65b ARPA spending plan

MASSACHUSETTS HOUSE leaders on Monday laid out their plan to spend $3.65 billion in federal aid and surplus state funds providing bonuses to essential workers, shoring up struggling hospitals, and providing economic relief to businesses. 

Lawmakers faced a difficult task in deciding how to spend an unprecedented one-time influx in federal dollars from the American Rescue Plan Act meant to help the state rebuild from the COVID-19 pandemic. Six public hearings drew requests from over 400 individuals and organizations totaling more than $30 billion. 

“Our goal is to responsibly fund priority areas that will stand the test of time and make systemic and equitable changes,” said House Speaker Ron Mariano. 

The House plan would spend the biggest chunks of money – more than $750 million each – on health and human services, workforce training, and economic development. It would spend another $600 million on housing, $350 million on environment and climate change mitigation, and $265 million on education. 

It would also offer businesses $500 million in relief by reimbursing the unemployment insurance trust fund for benefits paid out during the pandemic, which businesses would otherwise have to pay for over the coming years. 

Many of the programs would prioritize helping communities disproportionately affected by COVID-19 – generally poor communities of color. 

Rep. Bud Williams, a Springfield Democrat who chairs the Committee on Racial Equity, Civil Rights, and Inclusion, said the bill is a step toward not only in trying to repair the racial inequalities exacerbated by the pandemic, but “trying to fix a system that has been broken by many generations.” 

Because Congress is allowing ARPA money to be spent over multiple years, lawmakers can hold some money in reserve. If the plan passes as written, it would leave over $2.3 billion in ARPA money to be spent in future years. A small portion of last year’s surplus – around $340 million – is also not accounted for in the bill, although that could get used in negotiations with the Senate, if the Senate has other priorities. The bill incorporates $2.5 billion in ARPA funding and $1.15 billion in surplus money.

The House plans to consider the bill this week, and the Senate will follow suit in the next few weeks. 

House Ways and Means Chair Aaron Michlewitz and Senate Ways and Means Chair Michael Rodrigues issued a joint statement indicating that there will be many commonalities between the two plans, but the two bodies have not agreed on everything.  

“The respective House and Senate bills will focus on shared priorities in areas like housing, climate, health care, economic recovery, infrastructure, and workforce needs—all with a focus on communities disproportionately impacted by the COVID-19 pandemic and addressing economic and racial inequality,” Michlewitz and Rodrigues said. The two bodies also agree on the new premium pay program and reimbursing the unemployment insurance trust fund, they said. 

Baker has been pressuring legislators to get the money spent quickly, citing the immediate needs, whether for job training for out of work individuals or for planning to build housing and infrastructure.  

Baker, speaking after an unrelated event Monday afternoon, said little about the substance of the bill, but said he is happy the House and Senate are talking, because he hopes that means the bill will pass quickly. “The only thing I’ll be a little concerned about is the clock’s going to be ticking between now and the end of formal session, and I expect and anticipate and hope the branches will be able to see their way through to a bill they can both agree on,” he said.

Baker previously released his own plan to spend $2.9 billion in ARPA money, and the House plan adopts some of the governor’s priorities, but also includes its own initiatives. 

Similar to a typical budget process, the bill generally puts money into programs and broad categories, but would leave the distribution of that money to the administration, which would determine which specific projects or organizations actually get the funding.

The biggest new initiative is the premium pay program. Mariano said details would be worked out with administration officials. But the basic contours would be to offer bonuses of between $500 and $2,000, depending on how many workers qualify, to people who earn below 300 percent of the federal poverty level ($38,640 annually for an individual) and worked in person during the state of emergency. Unlike past state initiatives, which have focused on public sector workers, the pay would also be available to private sector workers – people like store clerks, nursing home aides, and bus drivers.  

“We want to benefit folks who stayed at their posts through the whole pandemic, who were out there every day servicing the economy when everything else around them was closing,” Mariano said. 

Baker declined to comment on the proposal saying he wants to get a better sense of the details on how it will be implemented.

Another large House initiative is $250 million that the bill would allocate for financially strained hospital systems, generally community hospitals that serve large percentages of public payers. Helping community hospitals has long been a priority of Mariano’s, and previous attempts by lawmakers to shore up community hospitals have faltered amid debates over where to find the money. Despite an influx of federal COVID relief money, hospitals, particularly community hospitals, have been hurt financially by COVID-19, as they had to care for COVID patients while performing fewer of the more lucrative elective and specialty procedures. Baker had proposed spending $50 million to shore up financially struggling hospitals. 

Mariano said the House plans to release another bill this week with health care policy changes that he said would help “stabilize the health care market in the short term while we close policy loopholes and further strengthen the health care system in the long term.” Mariano did not reveal details about what that bill will include. 

The House bill also includes $70 million for nursing homes, which have struggled financially and borne a large death toll during the pandemic. It also includes $250 million to fund behavioral health programs, with $100 million of that dedicated to workforce initiatives, like helping mental health clinicians repay student loans or paying for trainings. 

“There’s two crises that are going on in terms of health care – one is COVID-19 and the other is mental health,” said House Ways and Means vice chair Ann-Margaret Ferrante. Ferrante said she learned from testimony at the hearings how acute the problem is, whether with children in crisis spending days in the emergency room awaiting a bed, or people being unable to obtain counseling because they lacked a device to have a telehealth visit. 

The bill would also spend $150 million over three years shoring up the public health system – an area of need that was highlighted during the pandemic. The current system is fragmented, and each community has vastly different resources.  

There are areas where the governor and House bills would fund similar programs, but in differing amounts. Baker advocated for spending $1 billion on unemployment insurance relief compared to the $500 million that the House and Senate appear to have agreed on. As of June, the unemployment insurance trust fund had a $1.77 billion deficit. Business groups have been begging for the funding, arguing that businesses were forced to shut by government and should not have to bear the burden of paying for enhanced unemployment benefits that government chose to offer. Many businesses are still struggling as they emerge from the pandemic. Michlewitz said $500 million was around average among the 15 states that have used ARPA money to pay for unemployment benefits. The House plan also helps businesses by authorizing $200 million in tax relief for small businesses that paid personal income taxes on state or federal COVID relief awards. 

Baker said both he and the employer community would have liked to see more money put into the fund. “I’d like to see more there because I believe at the end of the day that’s a big hole we have to fill,” Baker said. “It will come out of the pockets of many small businesses and their employees without our help.” He called the funding a “great number to start the conversation.”

Baker wanted to spend $1 billion on housing, while the House would allocate $600 million. Both approaches would put money toward homeowner assistance programs and programs to subsidize housing production, particularly in communities disproportionately affected by the pandemic. The House puts more emphasis on affordable and public housing, while Baker also includes investments in rental housing production. 

Baker would spend $1 billion on infrastructure improvements, compared to $350 million in the House bill. Both plans would include $100 million for marine port development. House lawmakers indicated that part of the reason for their lower amount is that Congress is discussing passing an infrastructure bill, so Massachusetts could have another source of federal money for infrastructure. If additional federal money is not forthcoming, lawmakers could turn to some of the ARPA money left in reserves to bolster infrastructure.  

“If an infrastructure bill emerges, that’s a different scenario than if it does not emerge,” Michlewitz said. 

Both plans would spend money on economic development and workforce development, though in different ways. Baker would put more money into various job training programs and into downtown development. The House plan puts money into career and vocational schools, creates the premium pay program, and includes small business tax relief. Both plans would spend at least $100 million on tourism and culture. 

Baker’s bill does not include funding for K-12 schools, which have received billions of dollars directly from federal aid bills. The House bill would authorize $100 million for schools’ heating, ventilation, and air conditioning projects.  

The House bill also includes $5 million to require the inspector general’s office to create a public database to track ARPA spending. The database would show how many contracts are awarded to minority-owned companies and track whether money is being spent in minority communities.