Governor Healey Files Legislation Unlocking $800 Million to Compete for Federal Funding
Governor Maura Healey filed legislation and signed an executive order to enhance the administration’s aggressive approach to competing for the historic amounts of federal funding made available to Massachusetts by the Biden Administration. Massachusetts has the chance to compete for and win up to $17.5 billion in federal funding through the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the CHIPS and Science Act.
To support the administration’s federal funds strategy, the Healey-Driscoll Administration is filing An Act to Provide for Competitiveness and Infrastructure in Massachusetts to create a Capital Investment and Debt Reduction Fund that will make $800 million in additional state funding available over the next three years to pursue federal grants. This money will expand the state’s capacity to allocate match funding to satisfy requirements in many federal grant programs for states to cover a portion of proposed project costs and adds to the roughly $2 billion in state matching funds that have already been identified from other funding sources, including through the FY24-FY28 Capital Investment Plan, the FY24 budget, and other appropriations.
The Governor also signed an Executive Order formally establishing the Federal Funds and Infrastructure Office (FFIO) to be led by Director of Federal Funds & Infrastructure Quentin Palfrey. It also establishes the Massachusetts Federal Funds Partnership for municipalities and tribes.
“As I’ve been saying since day one, we are here to compete and we are here to win, especially when it comes to these unprecedented federal funding opportunities made available by President Biden and our incredible Congressional delegation,” said Governor Maura Healey. “This blueprint gives our administration and municipalities the tools to compete for and bring home the funding our communities need, and put federal dollars to work advancing economic development, infrastructure and climate resiliency projects all across Massachusetts.”
“Our administration is committed to ensuring that we have federal funding to support the important work of our cities and towns,” said Lieutenant Governor Kim Driscoll. “The Massachusetts Federal Funds Partnership will play a critical role in keeping our local governments up to date on the federal funding opportunities that are relevant to them, and connecting our municipal and tribal leaders with the resources they need to secure federal dollars.”
“The Federal Funds and Infrastructure Office will be able to effectively leverage the strengths of our state agencies, municipalities, and our Team Massachusetts partners to compete for federal funds,” said Director of Federal Funds & Infrastructure Palfrey. “The tools outlined in this executive order will enable the Commonwealth to capitalize on President Biden’s historic investments of federal money and maximize its impact for Massachusetts. I look forward to continuing our work with local leaders and incredible partners in Senator Warren, Senator Markey, and our congressional delegation to put federal dollars to work all across the Commonwealth.”
The legislation would leverage interest earnings on the state’s Stabilization Fund, which currently stands at an all-time high of roughly $8 billion. By utilizing the interest on the Stabilization Fund without touching the balance of the state’s savings, the state is anticipated to generate a pool of $250 million a year that could be used to strengthen its applications for federal grants and deliver a strong return on investment that will advance infrastructure, climate and other projects around the state. The interest earnings will be combined with $50 million in Fair Share resources already committed for transportation matching funds through the Fiscal Year 2024 budget.
The state will dedicate $50 million of this new funding pool to ensuring the competitiveness of local and regional partners through municipal matching grants and a local infrastructure bank. The Fund also includes $12 million for local government technical assistance to help municipalities successfully apply for federal funding opportunities.
The legislation further proposes to make the new fund permanent, establishing a new pay-as-you-go capital fund that would be used once these federal grant opportunities expire. The Capital Investment and Debt Reduction Fund would be used moving forward to support state assets and debt management, relieving some pressure on the state’s traditional debt-financed capital plan with safety mechanisms in place should economic conditions change. This type of fund has existed previously in Massachusetts and would be a valuable tool in helping to address the backlog of deferred maintenance needs across the state.
“We want to ensure that no funding for Massachusetts is left on the table when applying to federal grant programs,” said Secretary of Administration and Finance Matthew J. Gorzkowicz. “The State Matching Funds Pool will ensure the Commonwealth is able to provide the financing necessary to unlock federal money, and immediately put awarded funds to work for our communities. It will also become a flexible tool for us in the future to address an array of needs for our state buildings and other assets without jeopardizing the safety net of our strong Stabilization Fund.”
“This is a fiscally responsible and creative way to leverage the high interest rate environment and historically high stabilization fund balance,” said State Treasurer Deborah B. Goldberg. “Providing a dedicated pool of funds will give Massachusetts an advantage when competing for critical federal funding opportunities. We can both protect the stabilization fund balance and put interest earnings to work for Massachusetts.”
The Executive Order will allow the state to maximize its ability to win federal funds through strong coordination between state agencies, municipalities, and other Massachusetts entities, and by providing additional state resources that are critical to unlocking federal dollars.
The Executive Order formally creates the Federal Funds and Infrastructure Office (FFIO), which is tasked with identifying key federal funding opportunities that will advance Healey-Driscoll Administrations priorities. Those priorities include improved infrastructure, equity, job creation, economic competitiveness, climate resiliency and decarbonization, workforce development, and more. The office is led by Director Quentin Palfrey, who was appointed in March by Governor Healey as the principal advisor on federal funding and infrastructure. FFIO is responsible for continuing bi-weekly meetings of the Advisory Council on Federal Funds and Infrastructure, chaired by Director Palfrey, which facilitates inter-agency coordination and promotes government-wide strategies for maximizing the award of federal funding. FFIO will also maintain a State Clearinghouse responsible for the internal tracking of all federal grant opportunities and agency applications.
FFIO will also be tasked with supporting the work of external partners to apply for federal funding opportunities that further the Healey-Driscoll Administration’s priorities for the Commonwealth. This will involve a coordinated approach to supporting municipalities and tribes across Massachusetts. To do this the executive order creates a working group, which will meet monthly as the Massachusetts Federal Funds Partnership, which Lieutenant Governor Driscoll announced last week. The meetings will be open to elected leaders and staff from all 351 cities and towns, as well as the leadership of Massachusetts’ federally recognized tribes. The Federal Funds Partnership will provide targeted updates on relevant federal funding opportunities and connect partners with resources for technical assistance and state matching funds. The first meeting will be kicked off by Lieutenant Governor Kim Driscoll on Wednesday, October 25th.
This proposal will power the administration’s efforts to build on the progress it has already made in securing federal funding in recent months. This includes awards of $147 million to expand broadband access in Massachusetts, $108 million towards track improvements between Springfield and Worcester to enable additional West-East passenger rail capacity, $22 million for Massachusetts municipalities to combat extreme heat through increased urban tree canopies, and $19.7 million to establish a Department of Defense Microelectronics hub which will further opportunities for advanced manufacturing and technology. The Administration also has more than $3 billion requested in applications currently pending before federal agencies to fund ongoing projects in communities across the state, including for the Cape Cod Bridges.
Policy briefs on the Capital Investment and Debt Reduction Fund can be found here. Read the Governor’s filing letter here.
Statements of Support
Adam Chapdelaine, Executive Director and CEO, Massachusetts Municipal Association:
“We’re deeply grateful for this timely proposal from the Healey-Driscoll Administration, which would ensure that the Commonwealth can maximize the historic funding available from the federal government. This initiative offers an important framework to support cities and towns in developing successful applications and providing matching funds to leverage
all opportunities.”
Phineas Baxandall, Interim President, Massachusetts Budget and Policy Center:
“This is a smart proposal that leverages the state’s strong rainy day fund to secure billions of federal grant dollars in the short-term and to address the Commonwealth’s long-term maintenance and capital needs. In the next three years, this could make the difference in obtaining game-changing federal grants for things like high-speed rail across the state and electric charging infrastructure for the next generation.”
Chrissy Lynch, President, Massachusetts AFL-CIO:
“We applaud the Healey Administration’s efforts to fully utilize historic federal funding opportunities. This Executive Order will bolster investments into the communities where working people live, into the infrastructure working people need to get around, and support the creation of union jobs at the same time.”
Rebecca Davis, Chief Operating Officer, Massachusetts Competitive Partnership:
“We congratulate the Healey-Driscoll administration on implementing these critical steps to leverage the many funding opportunities currently available from the federal government. Ensuring that Massachusetts is well positioned to capture this generational opportunity is a priority for Massachusetts business leaders. By working together, we can amplify our impact and secure the necessary resources to drive progress and innovation in the Commonwealth.”