Legislature Passes Bill to Maximize Federal Funding for Massachusetts

BOSTON—State Senator Jason Lewis and State Representative Kate Lipper-Garabedian joined their colleagues in the Massachusetts Legislature to pass a bill that will enable the Commonwealth to effectively compete for federal grant funding across multiple sectors, including transportation, housing, climate, economic development, and technology innovation.

An Act to provide for competitiveness and infrastructure investment in Massachusetts leverages the interest accrued on the Commonwealth’s Stabilization Fund to provide required state matching funds needed to compete for many federal funding opportunities. Through three pieces of federal legislation -- the Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA), and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act -- more than $2 trillion is being made available to states through competitive grant programs and formula allocations. With the passage of this bill, the Commonwealth will be maximizing its ability to capitalize on these substantial federal funding opportunities.

“We should do everything possible to maximize our share of federal grant opportunities that help save money for Massachusetts taxpayers,” said State Senator Jason Lewis. “Using excess interest from the Commonwealth’s Stabilization Fund to unlock these federal opportunities is a smart way to do so, and will enable the state and local municipalities to fund many important infrastructure projects in the years to come.”

“I was glad to join the full legislature in supporting this legislation to ensure Massachusetts is well-positioned to compete for federal funding opportunities,” said State Representative Kate Lipper-Garabedian. “Using the interest accumulated in our Rainy Day Fund, which has a historically high balance, we will be able to seek investments that will enhance the economic vitality and infrastructure of our communities, supporting workforce opportunities in the process.”

At its current level, the Stabilization Fund is anticipated to accumulate approximately $250 million in interest annually. This bill will allow the state to transfer interest from the Stabilization Fund to the Commonwealth Federal Matching and Debt Reduction Fund when amounts exceed 10 percent of budgeted revenues for the previous fiscal year and the balance of the fund has not decreased in the previous year. When a diversion does occur, the interest will be used for two key purposes: required matching funds for federal grants during this unique opportunity to capture federal investments; and long-term debt management strategies.

Over the coming years, this bill is expected to unlock more than $800 million in funds that will be used to cover the state or municipal match requirement for federal competitive grant opportunities, as well as planning work that will help municipalities with the process of preparing applications for federal grants. Once federal grant opportunities expire, money left in this fund will go toward reducing the Commonwealth’s long-term liabilities.

After final passage in both the House of Representatives and the Senate, Governor Maura Healey signed the bill into law on September 24, 2024.