2024-02-06 00:00:00 - House Committee on Federal Stimulus and Census Oversight

2024-02-06 00:00:00 - House Committee on Federal Stimulus and Census Oversight

REP LEWIS - With the time now being a little after 10 AM, I want to call this hearing of the House Committee on Federal Stimulus and Census Oversight to order. Today, we just have one Bill before us, S 2554, an Act to provide for competitiveness and infrastructure investment in Massachusetts. None of us are strangers to hearings, but please be advised that this hearing is live on the legislature's website, and it will be recorded for review by committee members and the public. I am Jack Patrick Lewis, chair of this committee. To my left is the vice chair, Chris Hendricks. At some point over the next hour or so with very little notice, I'm going to hand over, the chariot of the committee. So be ready for that. Later today, we'll be joined by more members of the committee, but I want to actually invite the members of the committee who are here to introduce themselves at this

REP CATALDO - Thank you, Mr. Chairman, Mr. Vice Chairman. Good morning, everyone. Simon Cataldo for the 14th Middlesex District.
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LEWIS - Our ranking minority member of the committee. I know a couple of others will be joining us there, sitting in traffic. The Bill before us was filed in October by Governor Healy and amended and passed by the Senate on January 11th. As we're going to hear today from, I believe, only supporters of the Bill who have signed up to testify, arguing that we are missing opportunities to capitalize on up to $17,000,000,000 in federal funding under the Bipartisan Infrastructure Inflation Reduction Act in the CHIPS Act.

But because these funding opportunities require matching contributions, this Bill would be passed, and these conversations are thus moving forward. I'm really grateful to everyone who has submitted testimony to the committee for folks who have signed up to testify in person today and for those watching live at home, as well. While the testimony was due officially, I think yesterday, if there's something143 that comes up today during the hearing that leaves a question in your mind or that you want to clarify, please just follow up with my staff, as soon as possible. I know the Mass Taxpayers Foundation was hoping to attend and testify in favor, but were not able to, but they have definitely sent their testimony as well.
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MATTHEW GORKOWITZ - COMMONWEALTH OF MASSACHUSETTS - SB 2554 - Thank you, Chairman Lewis and Vice Chairman Hendricks, members of the committee. Before I get started, I just want to make sure we did hand out, some materials for, your review. Those are a couple of issue briefs, that we, developed, in, support of, and highlighted, some of the provisions of the Bill, we're about to, testify on today. So hopefully that answers many of your questions. It's a pleasure to be here with you today on behalf of the Healey Driscoll administration to testify in support of Senate 2482, an Act to provide for competitiveness and infrastructure investments in Massachusetts. I'm Matthew Gorkowitz, secretary for administration finance, and I'm here today with Quentin Proulffrey, our administration's director of federal funds and infrastructure.

I'd also like to take a moment to thank Treasurer Goldberg's office which worked closely with us on this legislation. We are incredibly grateful to the Senate, which earlier this year advanced, the proposal before you today, now Senate, 2552, an amended version of what the administration filed, earlier this year. This proposal would create a pool of up to $750,000,000 and new resources derived from interest on the stabilization fund over the next three years to put up a match, to put up as matching funds for federal grant applications. But we are also here to tell you why we believe the full legislation filed by Governor Healey in October is not only important but necessary to put Massachusetts in the best position to compete nationally for precedented federal funding opportunities and take advantage of the unique economic, environment to support our capital program.

With over $17,000,000,000 in federal grants out there, for us to compete for and win, we have to be aggressive. We know other states will go after the money if we don't. Alongside the work Quentin is doing to coordinate across admin the administration and with our partners in municipal government, this legislation will help separate310 Massachusetts from the rest of the nation by putting substantial, dedicated resources on the table. It will also send a clear message to317 Washington that we are serious and ready319 to move on these projects. This legislation we are filing today would leverage an interest, interest on the state stabilization fund, to establish a permanent pay-as-you-go capital fund. Together with the $50,000,000 that you have already appropriated, by this legislature in the FY 24 budget.

This capital investment and debt reduction fund would allow us to make a pool of $800,000,000 available over the next three years expand the state's capacity to allocate, matching funds to satisfy the requirements of many of the federal grant programs, and to cover a portion of those, project costs. This will354 ensure our applications are as strong and competitive as they can be. We also dedicate $50,000,000 to this new funding pool to ensure the competitiveness of local and regional partners through municipal matching grants and a local infrastructure bank. This fund also includes $12,000,000 for local technical assistance to help municipalities successfully apply for374 federal funding opportunities.

We also believe strongly that the second phase of378 the governor's proposal is critical to the state's long-term success and our ability to make needed investments and communities across the state. Once the appropriate, opportunities presented by the IIJA, the IRA, and the Chips and Science Act are gone after 2026, we propose to keep this fund in place to provide capital to support a significant backlog of deferred maintenance on our state's buildings, and facilities. This will enable the administration to advance critical projects and priorities and have, that have been authorized and supported by the legislature. But we have410 been unable to find room in our capital traditional capital program to fund many of these, important projects.

The idea of a capital fund like this is not unique, among states across the country, and in fact, it's not unique to Massachusetts. From 1997 until 2010, Massachusetts, in fact, had a PAYGo Capital Fund to support its capital program and fund many of the authorizations, authorized, by the legislature. It's not only a way to reduce the state's reliance on one of our, long-term debts, but to save money on projects, it can also help accelerate investments to avoid, construction inflation that446 oftentimes makes projects more expensive. We also want to be clear about one thing. We are not proposing to touch the balance of the state stabilization fund.

We will only spend from interest generated from that fund. In this current environment, the balance of the fund is at an all-time high of $1,000,000,000. We have a463 unique opportunity to use the interest generated from the fund to create something that will last longer than these federal grant opportunities, a legacy program, that will continue to pay dividends for years to473 come should it start raining, we have475 put safeguards in this Bill to ensure that the stabilization477 fund, will479 start to grow again and not be impacted481 by this proposal. We believe this is a prudent way to unlock capital needs, that we have known about for a long time but haven't had the resources to deal with. I'll now turn it over to Quentin Palfrey to talk to you about, other provisions of this Bill. I want to again thank you for your time.

QUENTIN PALFREY - COMMONWEALTH OF MASSACHUSETTS - SB 2554 - Thank you so much, secretary Gorkowitz, and thank you, Chairman Lewis, Vice Chairman Hendricks, and members of the committee, my name is Quentin Palfrey. I'm Governor Healy's director of federal funds and infrastructure. I'm delighted to be here with you today to share my support for this legislation, an act to provide for competitiveness and infrastructure investment in Massachusetts. The Healy Driscoll administration has adopted a whole-of-government strategy to aggressively528 pursue a once-in-a-generation investment of federal funds made possible by Congress and the Biden-Harris administration.

Our office, the office of federal funds539 and infrastructure, was created by executive order to maximize these federal grant opportunities and advance administration priorities on infrastructure, jobs, economic competitiveness, affordable housing, clean energy, decarbonization, resilience, equity, and workforce development. And so far, we've taken some big swings and we're getting big results. $19,000,000 to advance the development of microchips for defense needs. $35,000,000 to 20 communities to support strategies that will make573 our streets safer. $108,000,000575 for train carter improvements between Springfield and Worcester. $147,000,000 to expand high-speed internet, across the state in advanced digital equity. $372,000,000 towards replacing the Cape Cod Bridges.

But there's much more funding at stake. In October, the Office for Administration and Finance, along with some of our external partners, like the Mass Taxpayers Foundation, did some analysis of the opportunities created by the Bipartisan structure law, the Inflation Reduction Act, and CHIPS and Science. We estimate that there are approximately $17,000,000,000 in new resources available for the Commonwealth of Massachusetts if we sources available for the Commonwealth of Massachusetts if623 we maximize our efforts to625 pursue these funds. But to truly go after and win these awards, we need an additional $1,000,000,000 of state resources to put our money where our mouth is. We've seen time and time again that when we're working with federal government agencies,639 being able to put, state government resources on the table, aligned with645 those federal resources, has an outcome-determinative effect.

The legislation filed by the governor unlocks up to 750,000,000 in state matching funds over the next three years. Meaningfully are advancing our659 efforts to bring federal dollars home. By creating the Commonwealth Federal Matching and Debt Reduction Fund, the legislation gives us the ability to support cities, towns, tribes, and state agencies with matching funds for federal grant applications. Maximizing our competitiveness in this process.678 In doing so, Massachusetts will be poised to leverage historic investments in bridge and road safety, coastline resiliency, diversity, equity, and preparedness of our workforce, research and technology, innovation, housing affordability, and the availability of robust clean energy solutions. This Bill is smart and fiscally prudent as a use of state dollars.

Each dollar we provide in-state match enables us to multiply the federal dollars we receive in return. The matching fund and debt712 reduction fund are funded exclusively from the interest on the stabilization fund, preserving718 the core of the stabilization fund for its intended purpose, to provide stability in fiscally challenging times. Moreover, this legislation works to address a growing and critical need. Support for our cities towns and tribes who are seeking to develop these federal grants and implement successful rewards. Our office's partnership and ongoing dialogue with communities as well as with the MMA, with the RPAs, and with other groups across the Commonwealth, has helped us, to understand the need for more technical assistance for assistance for communities, to write grant applications, to gather data, and planning for these important projects.

This Bill767 provides $12,000,000 in funding so that cities and towns can better771 these kinds of resources, something we've repeatedly heard, across the Commonwealth is in need. Our office has seen that Collaboration between state and local communities works. For example, earlier this fall, the Biden-Harris administration awarded the New Bedford Port Authority $24,000,000 for the rehabilitation of the Leonard's Wharf. We backed that application with $18,000,000 in state matching funds. We believe that those state matching funds were an instrumental factor in bringing those dollars into Massachusetts. With more resources, we can scale this kind of impact across the Commonwealth. This Bill helps us make the most of this unique and potentially transformative moment. It's an essential step towards not just competing for federal funds, but winning them. So I really appreciate you considering this proposal here today.

LEWIS - Thank you both so much for that, detailed testimony. We've been joined by two other colleagues, Rep LaNashra and Rep Paulino. Thank you so much for joining us. I for I834 was remiss. I didn't thank my staff. They were kind enough not to text me that I forgot to thank them. But if you were up here, they put together a very detailed, analysis of the Bill and all of the studies that folks have put out. So really grateful to all of you. I have a couple of questions as it relates to deadlines. The Senate made several changes in their version of the Bill. As the house looks this over, I'm curious about your thoughts on some of those deadlines the Senate did, change in their Bill. A couple that stood out to me. The governor's Bill required annual reports on ways and means.

The Senate870 made that quarterly report. In another section, should the original bill be said by the end of 2026, detailed reports, this was in lines 44 through 63, needed to be submitted to Ways and Means. The Senate changed that to an annual report through 2026 as I understand it. Then the one that stood out to me, most notably, was the Senate version of amended the Bill that would require a 30-day notice to ways and means before, expending funds for this purpose. And curious if you feel those deadlines are realistic, especially the last one that would require a 30-day notice before competing for grant dollars, not knowing what that grant window might be like. Does that allow you to be as nimble as possible as necessary, for time-sensitive things?

GORKOWITZ - Sure. well, let me just say first, you know, we are very much in support of the transparency and accountability that, comes from the reporting requirements, both what we filed on the original bill as well as what's being proposed,934 by, our friends in the legislature and, you know, we can work with much of what is being proposed. I will just take each of those, one at a time. The annual reporting, you know, I think the senate moved that to quarterly reporting. I think we're fine with that. We did feel that, you know, when we filed our Bill, we wanted to, focus on two reports. We focused on an annual report so that we could identify and, again, have some transparency on what we've reported, throughout the year, and then we had a final report at the end of 26 on all of the infrastructure matchings that would have happened so that we have sort of a look back and a report card on how we did on the program as a whole.

972 The972 fact that that is then, that's been proposed by the senate to be quarterly, I think that's something we can work with and, again, support the overall efforts around greater transparency and accountability. With respect to the 30-day notification, that's something that our office is currently reviewing and working with Quentin's office on. You know, the thing about the federal legislation is that while there's a lot of opportunities out there, we sometimes get notification by federal agencies, and sometimes the turnaround is pretty quick. I think in most cases, we probably have at least 30 days. So on the surface, I think 30 days is something we could work with in terms of an advanced notification.

As long as there isn't a requirement that, you know, we need to seek permission because in some cases, I think, again, as federal agencies, send out guidance and we have to respond to that guidance, it's sometimes difficult to, to anticipate what those timelines look like. But so far, our experience has been that 30 days would be enough. Now I think we want to continue that and provide recommendations to, you all as you're considering the Bill in the house, to see if that, creates any problems for us. But being nimble and having flexibility around those, reporting deadlines will be important. The first two I mentioned, I think, are things we can work with. The 30-day notice again on its face seems to be okay, but I think we would want to take a little bit more time to deliberate on that and provide you, with more details.

LEWIS - Thank you. Is this one of those instances where if 30 were replaced with 14, you would feel you have a little bit more breathing room or is any deadline or any advance notice really the issue?

GORKOWITZ - I think that's a, we would think you said 14. I was thinking of 15 days. We were literally in half. But I so I think, yes. I think something like that does provide a little bit more flexibility and certainly fits into a window, a window that is very for1077 us in terms of making sure we can comply with,1079 the requirements that any of these federal agencies will have in their grant applications, and making sure that we can be nimble enough to put up our match when needed.

PALFREY - Yes. The only thing I would add is that you know, there's a difference between sort of making ensure that you all have the visibility that you need, to be able to perform an oversight role, in conditioning the grants on some kind of approval. One of the things that's really important for the federal government agencies, when they're considering these grant applications, is to feel confident, that we make that if we make a promise, that we're going to follow through on that. So we certainly, are would would would, would be more focused on the reporting than sort of conditioning the grants in some way.
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REP HENDRICKS - SB 2554 - Thank you, Mr. Chairman. Secretary, and director, thank you so much for being here and discussing this effort. I think we're in a very special time that, as you said, there's a lot of federal money available, and I think we're best off situating ourselves, you know, in a position of competitiveness, so I think that's great. So thank you. I had a few questions, some I may reserve for later on. Are there any type of funds currently that exist right now that the secretary of A&F has access to, like, this potential fund?

GORKOWITZ - I would say not as we've proposed it. Are you talking if you're, are you asking if we have any, money that's available to us to match? Or

HENDRICKS - Right. I mean, is there because this Bill puts a lot of power and discretion with the secretary of A&F for, you know, not only the federal granting money, but also pensions and all the other liabilities and debt? So I was just wondering if there's anything similar currently that that sec the secretary currently has, you know, a power over a fund. Something similar.

GORKOWITZ - So we don't have anything similar. I will say that the thing that closely most closely parallels what we're looking at here is our capital program, which you know is, debt-funded. So we issue a general obligation, bonds to be able to support our capital program. That is something that the administration has, authority over, and and develops plans for on an annual basis. We develop a five-year capital investment plan. So I would say that what we're proposing through this federal structure Bill, most closely resembles what the administration does on an annual basis to manage our capital investment plan. The funding sources1227 are a little bit different. The capital plan is funded through geo debt, whereas this would be funded in cash from the state's, state interest in the stabilization fund.

One of the things we've proposed in this Bill, as you know, is a permanent pay-go capital program that sits alongside our capital investment plan. So I think they most closely resemble each other, and part of the goal here was to, actually have some of that flexible pay-go capital to support our capital program, going forward. As you may know, our capital plan only grows by about $125,000,000 a year. It's a lot of constraints, and there's a lot of, demand both in terms of many of the projects that all of you have authorized in in various bond bills as well as our infrastructure needs. So trying to keep up with that is a challenge. This PAYGO capital program Sitting alongside, our, debt-funded capital program would provide a real, boost in our ability to address some of those critical needs. But in the short term, it serves as an opportunity for us to leverage that to address, federal infrastructure dollars. So I think that would be where I would draw some parallel models, comparisons, and similarities in terms of how we manage and operate those funds.

HENDRICKS - So but, certainly, the addition of, you know, the secretary's power and discretion to spend on, like the pension liabilities, kind of1302 the general types of stuff that there's nothing similar as1306 far as that side of things?

GORKOWITZ - There is some small, part of money that's been available, a debt defeasance fund that is funded through some of the gaming revenues. That fund generates roughly $25 or $30,000,000 a year. So, a smaller pot of money that allows us to work with the treasurer's office on coming up with, creative financing solutions around, debt defeasance. It's1325 a debt defeasance fund, actually. So that1327 has some similarities to it as well. But, this is, you know, so I'd say there are a couple of things on a smaller scale that, we could point to for sure.

HENDRICKS - Thank you. I'll yield back to the Chairman. Thank you.
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REP PAULINO - SB 2554 - Good morning. My question is this. We are, the revenue of the state hasn't met the benchmark. All the estimates that we have. So we have two or four. Well, let's say by the third quarter of this year, Trevor increases, so we have more money to spend. Is there anything in this Bill that will stop the usage of those Rainy-day funds? - So if I understand your question, you know, we're proposing to use the Interest generated on the stabilization fund to fund this PEGO capital. I think what I hear your question is, if revenues continue on a form or if the fund is needed. Is that are you are you concerned about the the impact of the stabilization fund?

PAULINO - My question is if our revenue improves, and meets projections. We may not need to use those funds that we have reserved. There is something on this Bill that will stop the usage of those funds because we have enough revenue now. It's because of the spending of this Bill, will go up to December 31, 2026. Let's say, two quarters from now, the revenue is meeting the benchmark. We are collecting enough money for the expenditure of the budget. Even if we just do we just do a flat budget meeting equal to what we spent the year before. Is there anything on this Bill from the Senate, from the governor that, automatically stop the need to use those funds?

GORKOWITZ - There's nothing in the original Bill that the governor filed, or in the Bill that has been sent to you from the Senate that would stop the use of these funds if revenues came in over benchmarking we were sitting on, at the end of the year, a big surplus, if that's the analogy, you're drawing. I will say that I think, you know, even in a situation where the Commonwealth was expecting, strong revenue performance and revenues were exceeding benchmarks, thus resulting in a surplus at the end of the year. We still think that an $8,000,000,000 stabilization fund balance, is an appropriate use of the interest to be able to create, some additional capital, and capacity both in the short term to deal with our infrastructure needs in terms of coming up with, matching dollars, but also to support and complement. Many of the authorizations that you as a legislature have identified are important projects that we need to get done.

So I think even with, an opportunity or an environment where we were experiencing surplus funds. We think this is an appropriate opportunity and, to take advantage of having such a healthy rainy day fund and having, an opportunity where interest rates right now actually yield, some resources that we could reinvest. By reinvesting it, what we're doing is we're sort of bending the trend on how much long-term debt we have to issue over a long period of time. Having a PAYGO capital program, we can issue less debt, and that's good for the Commonwealth and it's good for our long-term fiscal health. So even in that situation, I think we would propose that this, proposal makes sense. Therefore, there has been nothing in the Bill, the governor filed or in the senate bill that would pause this, program even in the event of, additional revenues.

PAULINO - I understand, and I agree mostly with what you just stated. But isn't the inspiration and motivation for this Bill, the shortfall in revenue that we have right now? Isn't the foundation of this Bill isn't because we are not collecting if not tax of at least what we expect will be will be collected by now? That's the question.

GORKOWITZ - I've you know, I don't think they found I think the premise behind this Bill, again, was to take advantage of, one of the highest rainy dust stabilization funds in the country. I think we have one of the third-highest balances. To take advantage of both, the interest rates that are currently, that we currently have will help generate some revenue and create a program that I think, again, addresses one of our long-term liabilities. That was really the practice.

PAULINO - Well, the problem is good. But, basically, what you're telling me right now is that we just going to even if we were collect enough revenue, we didn't have a shortfall. This program will be good just because we have money. We need to spend it. So that's what I'm getting1633 for you. I would like to1635 get an answer. If we are creating this Bill in spite of because we have a shortfall. Let's say two quarters from now, we no longer have a projected shortfall, and we don't need this Bill, although those problems are good. So you still believe we to continue spending the money, although we are collecting more revenue all the revenue we expect to collect.

PALFREY - So if I may represent, I think that part of the premise of this Bill is that we have a unique one in once in a generation opportunity that's created, by pieces of federal legislation. So, while there is, some, you know, long there's the connection with our overall fiscal health health of the Commonwealth. I think part of the argument that we're making here is that we have a historic opportunity to seize funds that the federal government has made available on a short-term basis in connection with the Bipartisan Infrastructure Law, Inflation Reduction Act, and CHIPS and Science.

During that window of opportunity, we need to be aggressive in seeking those funds. One the ways that we can be aggressive in bringing more revenue into the Commonwealth is to have, the ability to make these state matching fund commitments. So we've come up with a mechanism that allows us to sue these once-in-a-generation opportunities in an all-of-government kind of a way, that, aligns with, what we think of as our long-term fiscal health as well. So I don't think that the rationale for this Bill is solely because of what's happening in the short term, with our revenues. It's largely motivated by our desire to be really aggressive with these federal funds. - Thank you.

LEWIS - I think, it's also good to remember that the governor filed this Bill in October, Before we knew what the budget picture was looking like going to this this new year. I know some of the media have connected, this issue in this Bill with our current budget situation as relates to tax revenue, even the scheduling of this hearing. I'll just say, I don't how to procrastinate. So when the Bill came to our committee, we found the next available date, and we invited you. So, drawing any connection between the two is something I know folks are doing. But your office filed this in October. I want to just note that. The question did bring up an I bring up1781 point around only using, the interest if1785 the Rainy Day fund is at least at 10%. I know the tenant the Senate explored raising up to 15%, but didn't go down that road. Rep Cataldo, I know you had some questions on this front.
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CATALDO - Secretary. It's great to see you. Thank you so much for being here for your testimony and for answering your questions, which have already, enlightened me quite a bit about this Bill. It's really exciting and, glad that we're seizing the moment and taking steps to, be creative about these opportunities in front of us. As the Chairman alluded to, I was just, pondering, why 10% and just kind of doing the back-of-the-envelope map, it seems like that would project a very significant decrease in our Rainy Day fund if we did get to that level based on where we are now. As you as you mentioned a couple of times, we're at a historic level now. So what is it that would possibly cause us to go down that far, since this Bill, I think very wisely, is really only, using the interest on the fund? How would that happen? Thank you.

GORKOWITZ - I think a couple of points to your question. Let me just start off by saying I think we viewed, the 10%. First of all, there are two thresholds to Bill. So we do believe that we have put in appropriate guardrails to safeguard the stabilization fund in the event of a downturn, and in the event the stabilization fund would be needed. The first safeguard is the fact that we established that this program would be predicated on having a stabilization balance is at least 10% of the operating budget, which in this case is about $5,000,000,000, or $5,500,000,000. You know, I think what we believed was that that, creates a critical mass where you can have a substantial program to be able to use the interest regardless of what the interest rate is, even in1900 a low-interest rate environment, you would still have enough, interest being generated to support a PAYGO capital program that was worthwhile.

So we decided that you know, 10% of the operating budget would be a good first threshold to have a critical program, something that would be generating enough interest to fund, a capital program. The other requirement, that we worked on with the treasurer's office was to say that in any given year, if we had an economic downturn and we had to rely on the stabilization fund, then in those years, we would forego, the interest Just in that year only, until, we ended up, depositing money back into the stabilization fund.

I would also say that even in the, you know, the situation we're currently in where revenues have I've been underperforming. You know, the governor has taken swift and decisive action, earlier this year to try to, bring, revenues in line with where we thought they were going to end, and it's our goal not to, as I've mentioned in our testimony, touch the balance the stabilization fund. So we believe that both criteria of this legislation, and both guardrails will be met, and the safeguards will continue to, operate and allow us to run this program.1964

CATALDO - Thank you. Can I ask a follow-up, Mr. Chairman? Is 10% some kind of industry standard as it concerns the bond rating? Is there any or is that just a kind of intuition is that that's an appropriate and responsible level?

GORKOWITZ - A couple of things. One is, you know, 10% of the, at one point, 10%, state of the state budget was, a threshold that was, talked about in terms of having an appropriate stabilization fund balance, we're certainly well above that. Even if we were to bring it down to 10%, if you were to compare where our stabilization fund balance would be across other states, we would still be one of the top, highest stabilization funds. So again, I think our feeling was that recognizing that from time to time, there are probably legitimate situations where you would need to use the Rainy Day fund.

In those cases, we wanted to be able to put some safeguards in that made sure that a program like this could be funded in perpetuity, while also building in, the understanding that sometimes a rainy day fund is in fact needed and we have, you know, a history going over 20 years where in fact we've had economic downturn sufficient enough where using the stabilization fund would be required. So I think those were the factors that went into building it. It was really more of starting from a position of, making sure we had a sufficient balance and less about, do we have a projection for what we might need or use.
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CATALDO - Thank you. With regard to the 750,000,000, under what circumstances would we be able to achieve that amount in terms of the funding of, the federal matching in debt reduction fund? So for instance, if we were just going off of interest. Is there any economic environment in which that's feasible? Or does 750,000,000 kind of presume that there would be further appropriations down the line into the fund?

GORKOWITZ - It does not assume any further appropriations. We believe this will be supported entirely by the interest in the stabilization fund. In fact, we're insulating ourselves from the need2084 of having to do any other, appropriations and also insulating ourselves, from having the capital budget be able to, have to pick up a lot of these matching requirements, which would put much, really, undue burden on the capital program and create an additional strain for an already, pressured budget. We think that based on last year's, interest earnings, we believe that the projections that we have are appropriate for, sizing this. If the interest ends up being, you know, less or more, we'll, you know, we'll work and adjust the program accordingly. But, we believe that these are our best estimates based on what's happened historically and in the past year.
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REP SMOLA - SB 2554 - Thank you very much, Mr. Chairman, and thank you for your testimony here today. We appreciate it. Certainly, I think, Echoing the sentiments2131 of some of my colleagues this morning. Tomorrow, as we kick off Ways and Means hearing, we're watching, an issue like this much more closely than we did a few months ago when it was filed. So I understand that the circumstances were extremely different than what the financial picture looks like now. Obviously, we're extremely concerned about those numbers.

I think that most of my colleagues would agree any time we can pursue federal dollars, that come into the coffers of Massachusetts is a good opportunity. But we're talking about three federal legislative initiatives primarily, about $1,400,000,000,000, I think is what was said, and we've identified about 17,500,000,000 for Massachusetts. Can you tell us a little bit about that 17 $15,500,000,000 figure, and how you came up with it? Is it stuff unique to the Commonwealth of Massachusetts? Is it what we feel our best pursuit of federal2179 matching funds is? Can you give us a little sense of where that figure came from2183 an overall pool that's 1,400,000,000,000?
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GORKOWITZ - Well, I can, you know, we basically went through, the IIJA, the CHIPS and Science Act, and the IRA Act? And program by program, we identified, what was available. We worked with our executive branch agencies to identify what would be, appropriate. Some of it is formulaic driven, so we know that as a as percentage in terms of what, we received through other federal, federal dollars that we can anticipate as that, $17,000,000,000 flowing to Massachusetts.

So in the first instance, you know, we did an analysis based on what we typically get, in Massachusetts based on programs like that have been done in the past, and then we went systematically through each of the Bills and worked with our agencies to identify within that certain programs that we believe, would be, programs that we would want to go after, and that would have a benefit to Massachusetts. We size this program based on what we think is reasonable.

PALFREY - Yes. Now I will say that the estimates that we've developed internally are consistent with some of what, our external partners have I've suggested may be available, but as Secretary Gorkowitz, said, there are, you know, a number of different programs. Some of them are formulaic. Some of them are competitive discretionary programs. One of the places, where we think having additional state matches, will be extremely helpful, not only for the Commonwealth, but also for municipalities, is being able to sweeten the pot, and, punch above our weight in those programs. There also are significant, tax incentives, that are, in connection with the inflation reduction Act, that we can optimize, through the use of some of this programming.

But we do, this is a full program of activities that involves, a whole of2292 government strategy of competing, for these funds and being really aggressive in identifying these opportunities, it's a program that involves supporting our and making sure that as your communities are thinking about your,2306 needs and how you can tap into these federal sources that we're there every step of the way as a partner, providing both technical assistance and financial support for those applications. So we should think about this not just as the Commonwealth, as an entity of state government, but as Team Massachusetts, as your communities, our universities, our businesses, our workforce, benefiting from these resources. We certainly don't limit our analysis, to the state, resources, and those benefitting.

SMOLA - I appreciate you saying that. I'm glad to see that our new rural director is here, my former colleague from the central and western parts of the state. But that's one of the reasons that I've gone down this path is because, particularly, if we're looking for local municipalities, smaller communities to have skin in the game, which, you know, we embrace in terms of matching resources and opportunity to pursue. We want to make sure that we have time to get them into the mindset as2362 well of some of these programs that we may be targeting2364 as a commonwealth, but that ultimately trickle down to the local cities and towns that we represent. So, I think the opportunity is great. Obviously, we're looking bottom line extremely carefully because of the financial picture in the Commonwealth. But is it safe to say that that $17,500,000,000 figure could conceivably be more based upon these three parts of money that are out there?

PALFREY - I think that it's the analysis that we've come up with and that our external partners have, I've suggested maybe a reasonable target for us, and it is, by the way, the ambitious. That's what we're aiming for, and what we think these resources may allow us to accomplish, but certainly, some of these tax incentives in particular have a very high upper bound in that way. I do want to underscore, something that I think you, highlighted which is the importance and I'm thrilled to have our director of rural affairs here, former senator Anne Govey has been a key partner in this effort. But one of the things that we're very focused on is making sure that the whole Commonwealth gets the benefit of these, federal opportunities.

One of the things that we've done throughout the course of this administration, and the lieutenant governor's done listening tours in a number of your communities. We have worked with MMA, to hear from communities, and we've recently launched this federal funds Partnership. One of the things we hear from communities across the Commonwealth is, that2448 they hear that these opportunities are exciting. They want to know more, but they need more support, in doing this. So we want to provide them with technical support. We want to support and provide them with state-matching funds.2459 We2459 also, want to give them good2461 information, actionable information about these opportunities that go along. The other thing you mentioned in terms of the financial moment we find ourselves in.

I just want to underscore one piece of, what we're proposing here. We are not proposing to spend this money except under circumstances where the federal government is putting, money in. So what we're doing is we're leveraging the interest on the state Randy Day Fund to create, opportunities for us to pursue federal resources that we can bring into Massachusetts. So the time when the money actually goes out the door is going to be under circumstances where the federal, funds are flowing into Massachusetts. So this is a very fiscally responsible, mechanism because we're leveraging the interest. We don't actually spend the money unless we're bringing in federal dollars. So this is going to be net positive for our revenue situation, rather than a burden on the state's

SMOLA - I think putting that out is extremely important again because of the change in the financial picture, but the guardrails that you had mentioned, previously, I think are going to be important to a lot of members, of this legislature. So thank you for your testimony today. I appreciate it.

PALFREY - Thank you.

LEWIS - Thank you. We're going to need enough advance notice to get one of those giant checks That will fit all the zeros for 17.5. So speaking of deadlines, we've been introducing, Anne Goby. So I just want to thank you so much for joining us. I'm sure we'll have follow-up questions. If you have additional things for us, please send them our way.
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ANNE GOBI - COMMONWEALTH OF MASSACHUSETTS - SB 2554 - We have a lot of history, and I want to thank you, Mr. Chairman, and vice chair, and the members of the committee. I'm very pleased to be here to testify in support of s 2554. For the record, I am Anne Goby, director of Royal Affairs. I want to thank Quentin and Secretary Gorkowitz for giving such a wonderful overview and answering all the hard questions. So that makes it easier for me. I also appreciate that, the focus the governor and lieutenant governor have placed on the 181 rural communities. In fact, just on this Committee, 11 of those communities Rep you have one, I believe in Carlisle. Representative, Tara has, 33. But you get the jackpot, Representative Smola. His entire district is part, is all rural communities, the seven towns that, the rep represents so well.

He knows specifically and I know our other rural legislators do too. In our rural communities, when you go into the town halls, what do you see? It's mainly part-time staff of volunteers doing every aspect of municipal government. I bet if I asked you how many of them have a dedicated grant writer, they probably don't. It's unheard of. That's what makes this so important, that one section of this Bill would allow for matching funds. Because so often we2665 hear and I'm sure you've heard it too, that you hear from these small towns, like, we'd love to apply for that grant, but we2671 don't even have the 20,000 or 25,000 or whatever it is to even go after that, this allows them this gives a pathway to allow rural communities to apply for grants that they normally would not.

It's going to increase their competitiveness in the federal grant2687 process and bring the resources necessary to develop and implement those grants. That ability to do that, to have that match can be absolutely transformative for our rural communities. So I know that you will consider this. I appreciate the support that this committee has given to our rural communities and the legislature as a whole, but this gives you an opportunity to really kind of, put the stamp on that, that that you support our rural communities. So I thank you and I respectfully request that the Bill be discharged favorably.
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LEWIS - I can't speak for the larger committee, but I only have one. The Senate proposed an amendment that sought to direct A&F to prioritize projects that promoted economic development in2735 distressed areas

GOBI - Mhmm.

LEWIS - Or economically distressed areas. That amendment didn't go forward. But just curious about your thoughts as The director of royal affairs.

GOBI - So, you know, I think one of the things as we look in what was already mentioned, that part of what this Bill will do is to make sure that every corner of the Commonwealth benefits. That it's not just the larger areas. It's not just, the gateway cities. Rural communities will not be forgotten within this Bill.
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SMOLA - Thank you. Director, thank you very much for your testimony here today. I'm so happy that the governor made the selection that she did for this new position because of your background.
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SMOLA- As a matter of fact. But, You know, working with, with you in the legislature for all these years, but your background for the 27 or 20 communities that you represented in rural territory, I think really does make a difference. But I can't stress enough, the the comments that you just made relative to the smaller municipalities in Massachusetts, that as much as we have great grant programs, we have great support infrastructure in the state of Massachusetts. It's awesome.

But when you have a small resource that a municipality can't even put up matching funds, $5,000, $6,000 for a program and say, sorry. We just can't do it. That's pretty disheartening, and it's easy to see how small rural communities get discouraged. So I think there's hope in in this legislative proposal as we work through it. I like to see the focus on rural communities as a component of their stay true throughout, this process from start to finish. I2838 appreciate your testimony and hope we really stick hard and fight for that component.

GOBI - Thank you, and I appreciate your support.
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CASEY BOWERS - ELM - SB 2554 - Chair Henricks, Chair Lewis, and members of the committee, thank you for allowing me to testify today. I'm here to also add our strong support and urge a favorable and quick report on S, 2554. I think you've heard quite a bit about the details of the Bill, so I'll focus on why you're hearing from ELM. For the record, I am Casey Bowers, the executive of the action fund for the Environmental League of Massachusetts. Meeting our 2050 and 2030 Climate and clean energy goals while placing Massachusetts on the path towards an economy-wide decarbonization by 2050 is going to require significant public investment.

Modernizing and, electrifying our transportation system, building and connecting renewable energy infrastructure, reducing emissions from our built environment, and rapidly, increasing the size of our electric grid offer a lot of benefits from creating good paying jobs, improving public health, and reducing disparities among communities, we can make Massachusetts a more attractive place to live and work. But the upfront costs of this net zero transition pale in comparison to the astronomical cost avoided cost of inaction on climate. So making these time-limited opportunities to invest federal funds in our green infrastructure, close to home is really critical.

While we know that the federal funding cannot, facilitate the Commonwealth's net zero transition completely, the state climate chief estimates these three federal bills alone could fund up to 30% of the state's spending, and needs for decarbonization. It's important to recognize that this funding will not be available indefinitely and time is of the essence with many important programs authorized under these federal laws. For example, the $27,000,000,000 Greenhouse Gas Reduction Fund created by the IRA2978 and managed by the EPA is entirely distributed through competitive grants and managed, and only available through September 30th this year.

Most of the transportation programs are only available through September 2026. Advancing, passing, and finalizing2995 this must occur as quickly as possible knowing all that you have on your plates, but this will allow the state to be able to take advantage of utilizing these funds and allow capital planning that occurs on multi-year timelines to be done most3010 efficiently. So we really urge your quick consideration, and thank you3014 again, for test for allowing me to testify.

HENDRICKS - Thank you, executive director Bowers. I appreciate your testimony.
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PAULINO - Good morning. Like, two months ago, we have we had to vote for we voted for, the supplemental budget, and we use I think we have prepared a couple of $100,000,000 from the interest of the rainfall that we have. I'm grateful that we have those funds. We have the interest so we can, in time of emergency, use it. But implementing this program, this Bill. I'm3064 afraid if we run into a real downfall, in revenue, something will happen. We don't have access to those instances. We already have plans for them. So my question is, how do you think we can, work In regards, to that, in time, if we ever need, like, a supplemental budget and we need $150,300,000,000? And we don't have those available because we're using them already. How does the stabilization fund destabilize the tool that we have to have extra fund where needed?

BOWERS - I think what some of the administration officials really focused on is that this is for the three-year period and beyond that, it's only used when we are not using the stabilization fund. So when it is raining and we have to use the stabilization fund, these3124 extra dollars that we're using off3126 of interest won't be available. But I would also say from the perspective of ELM we have all these daunting environmental costs hanging over our heads. We've seen worse storms. We've seen flood damage. You know, the cost of not doing anything on climate and not taking advantage particularly when we can leverage all these federal funds to take advantage of programs that we need to start addressing in Massachusetts, it would be a real shame and we think it would be a lost opportunity.

So while I respect that the, you3158 know, the economy has taken a little bit of a slowdown. I think there are clear, safeguards in this Bill that would protect the rainy day fund and protect, you know, the leverage that the state has to address, issues that should arise if the economy does not continue. But I would also urge us to think that, as I kind of mentioned, these three federal Bills will only be available for a short amount of time, and we'll be leaving funding on the table that will address critical infrastructure needs, climate needs that will save us money in the future. So I would recommend that this is a good use of our funds and that there are plenty of safeguards in place.
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LEWIS - I know on the Senate side, there were a couple of amendments that would require that sustainability be prioritized in the spending of these funds. Again, like other amendments, they weren't incorporated in the final. In your position with your expertise, do you feel that the Bill as written adequately will allow the state to address issues around sustainability in climate change?

BOWERS - I do think as it stands that it is, prepared to take advantage of the federal funds. I would say that the need for flexibility and to go the funds that make the most sense considering how competitive, the structure is. Right now, the state is getting3243 about 3% of all climate funds from the federal Bills, and part of that is, you know, that Massachusetts hasn't been as competitive. So I think providing the most flexibility to go after the grants that make the most sense, is the critical need at this point. There are, clear guidelines in those Bills, and I would point out Justice 40 as one that would really ensure equity around the environmental justice communities. So I think that there is most important at this point.
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HENDRICKS - It's fair to say you wouldn't be opposed to any amendment that outlined any sustainability.

BOWERS - When have you known ELM to be against sustainability? So no, for the record, I would not oppose anything, but I do think that it's really well done.
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NORMAN ABBOT - MARPA - SB 2554 - Good morning, Chair Lewis, Chair Hendricks, and members of the committee. Thank you for a chance to offer testimony in support of S 2554, a Bill that will provide the Commonwealth with matching funds that can make our federal grant applications more competitive in some cases, possible. I'm here today on behalf of the Massachusetts Association of Regional Planning Agencies or MARPA, the organization representing our 13 regional agencies that provide support to all 351 municipalities in Massachusetts. We serve as the premier advocate for cities and towns to program federal transportation and economic development resources, innovate the delivery of municipal public services, collaborate across regional boundaries, and adopt planning best practices.

There's currently a once-in-a-generation opportunity to access federal funding and billions of dollars are available to help address issues as disparate as Colbert repair and semiconductor shortages. However, it's difficult for many3359 of our municipalities to access these funds because of matching requirements that can be as high as 50%. Each of the 13 regional planning agencies works with municipalities to bring these critical federal funds to our communities via DLTAA, funds provided by the budget. These funds allow RPA to help municipalities understand the federal opportunities available and apply for them. While other states have county governments and other regional mechanisms to help fund projects and apply on behalf of municipalities.

We do not. These DLTAA funds have the capacity of RPAs to better serve our cities and towns and help them compete for federal funding. Swift action is needed to ensure that we do not miss out on the potential that could fund the electrification of the commuter rail, microgrids, and crucial projects in EJ communities. While funding for many programs will remain available into 2031, other opportunities will conclude as early as this year. Without matching funds, we'll lose a chance at winning millions of federal dollars. Additionally, while the BIL provides unseen levels of structure funding, authorization concludes at the end of this federal fiscal year 26, with some opportunities concluding even before then.

S 2554 constructs an impactful solution to problems by creating a fund to assist the Commonwealth municipalities3428 with many of these opportunities without having to raise additional taxes or make cuts to programs. This will be done by leveraging interest for earnings on the state stabilization fund, which generates $250,000,000 a year to support federal applications. Failure to pass this legislation means for growing crucial investments that many of our municipalities need. Leaving this money on the table could result in municipalities footing the entire bill themselves in years ahead, which could put them in a similar position when the next major federal funding bill comes around. Thanks for, your attention to this important matter, and I welcome any questions the committee may have. Thank you.

HENDRICKS - Mr. Abbott, thank you for your testimony. I do have one quick question. From a municipality standpoint, is there anything in this Bill that could be that jumps out at you that we could either put in or amend to make it easier for cities in towns, in this effort?

ABBOTT - I think it makes a lot of sense, right now. And I think that it's structured in an impactful way. I think that one of the things that makes the most sense is sort of, you know, just getting it done as quickly as possible because, you know, I think as a lot of folks have highlighted, that these resources are running out, and we want to make sure that folks, can access it. I think similarly, making sure that, you know, we can sort of change that narrative. Think a lot of folks have sought, specifically in the rural communities, have said, you know, we just don't have the capacity. No more folks. Please don't send them to us. So as soon as this can pass and get out there we can sort of change that narrative that this funding is available. I think we'll see a lot of, really good results with the Commonwealth vice chairs.
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CATALDO - Thank you, Mr. Acting Chairman. It's really great to see a fellow Concord Carlisle High School graduate, testifying today. The very first meeting that I had with the town manager in Carlisle was exactly this topic. When Kyle, my legislative aide, and I sat down with him, he was walking us through all of the great opportunities that were out there that Carlisle didn't have the resources to pursue. So just really excited to see that this is part of the Bill, and I'm wondering if you can kind of unpack a little bit how What is the mechanism by which the smaller or more rural municipalities would be able to pursue these funds. Is it that, there is funding that's coming to the community to give them resources to work on grants like this, or would it be, the state bureaucracy that's actually doing, the grant application itself.

ABBOTT - So MAPC and the other RPAs all have funding that, the legislature here, and the governor made available through the budget to to help with this process. So they can reach out directly either to me or to any of their RP or their relative PAs to make sure that they're getting in touch with the correct folks to help with that application. I know coming from the federal side previously, you saw a lot of folks, you know, saying you know, we'd speak with them saying these opportunities are available. They're just like, we can't do it. So one of the nice things that the, RPAs3607 can do is they can actually come in and work with them on these applications, but also sort of make, regional applications as well, which might make some of these rural applications even more competitive. So we've done a lot of work both in the MAPC region, and I know a lot of our partners have sought to do that work as well elsewhere in the Commonwealth.

CATALDO - Thank you for mentioning regionalization because that was the second point that Carlisle raised was, how much more competitive they thought that their pursuit of funding would be if they could regionalize certain, applications and services. Thank you again.
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LEWIS - Thank you so much. As you're talking, Rep Cataldo, I'm remembering similar conversations in Ashland, especially around the regional competitiveness, and communities that don't have the capacity to hire a full-time grant writer.

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PHINEAS BAXANDALL - MASS BUDGET & POLICY CENTRE - SB 2554 - Thank you all for having me here, Chair, Chair Lewis, Vice Chair Hendricks, and distinguished members of the committee, thank you for the opportunity to give Testimony here today in support of Senate Bill 2554. I'm, the president of Mass Budget, a think tank that has conducted analysis for over 35 years, to improve public policy in Massachusetts. I want to speak, specifically about the long-term financial prudence of, Senate Bill 2554. The Bill both protects the strength of the Commonwealth Stabilization Fund and leverages its funding for further growth and stability. It does not shrink the fund, only decelerates its further growth when the fund has swollen to already adequate levels. If the fund is sufficient, it is an extra level of caution, to strict the funds from the excess capital gains. Most of my comments are about the excess capital gains and redirection.

It is an extra level of caution to restrict the use of debt reduction. A use that improves the soundness and resilience of, state finances without creating new obligations or operational needs. Similarly, making funds available to match and pursue the state-federal grants with the interest, would enable us to3773 be more nimble in pursuing opportunities for federal funds as folks here have already, spoken about. Just for, context according to the National Association of State Budget Off Officials, NASBO, only California and Texas, much larger States, have, rainy day funds larger than Massachusetts. The current balance has swollen to $8,270,000,000, which is an unprecedented level and, over 14% of the, FY 24 budget.

Looking back at past research, the Boston Federal Reserve from 2014, concluded that Massachusetts, specifically Massachusetts, finances the rainy day funds required to protect spending without the need for a tax increase or cuts in the face of a median recession, would be, 5.5% of state expenditures, and 10.2% for a maximum recession need. Without policy adjustments, it may be3846 the case that our stabilization fund will just continue to grow and claim larger parts of our budget each year. You know, some of our stabilization funds being so large is due to the unprecedented, pandemic aid. But, in so far as a major source of it is the capital gains, there are larger term secular trends that we can more speculatively point to as perhaps a source of this change.

You know, one reason is that a large body of research from the Federal Reserve and elsewhere shows that wealth in the United States has become more and more concentrated in the hands of a few, tax filers. These wealthy tax, filers receive a much larger portion of their income in the form of capital gains. So to the extent that more income is going to highly wealthy people. There is more income in the economy going to capital gains and hence, more excess capital gains. This has there has been a longer-term trend towards greater capital gains as a portion of the economy. Maybe it's the concentration of wealth. Maybe it's financialization in the economy.

But it's not unrealistic to think that this may be part of a long-term kind of swelling of the stabilization fund that this Bill would be, responsive to. But the benefits of this Bill do not depend on that being the case, it's not that if that's all wrong, what I just said in the last 30 seconds, there's no harm because none of the effects takes place unless it's over 10%. Right? So it is we're protected against that. The policy triggers will revert to the old status quo if the case comes that we get back to under 10%. So, the Bill also just reinforces that the Bill never reduces the stabilization fund, but just adjusts its growth mechanisms depending on its size. So I urge passage of this Bill and thank you for your time.

LEWIS - Thank you so much. As we discussed earlier, are you also comfortable with the 10% number?

BAXANDALL - Yes.

LEWIS - Like fiscally sound in your opinion?

BAXANDALL - I think it's certainly fiscally talented. I think, you know, if you ask, if you ask someone, sort of, would it be safer to require three fire, alarms in each room of a house? I think, you know, there's probably an argument that the answer3995 is yes. It would be nice to have a 50% of the budget, stabilization fund. But it's also at some point, you know, there are also other opportunity costs.

LEWIS - A direct question. You talked about the capital gain allocation and and changes the Senate made there. Comparing and contrasting the governor's original Bill and the Senate version as it relates to this, do you have an opinion about which is more fiscally sound or suggestions to edit either of them?

BAXANDALL - No. I mean, I think one of the things of note is just the, focus on the pensions and the OPEB, when, you know, the larger the stabilization fund gets as a portion of the budget. The more right now in the status quo, it's 5%, and that grows under the Bill. I think this is certainly a suitable place for it to go, you know, bond markets. If a state has a disastrous, pension fund or OPEB fund, that is a kind of dark cloud against its fiscal strength, and it's certainly, you know, the state is stronger if those things are under, and it's not creating So new needs to do so. I wouldn't say that those funds are necessarily uniquely suited for it. You know, as, the speaker from ELM was talking about, we definitely are going to have the need, for more climate investments. So if somebody wanted to make the case say that, you know, money should go to to climate resilience. There'd be an argument for that, for instance.
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DAVE KAUFMAN - MMA - SB 2554 - Thank you, Mr. Chair and Chair Lewis and, vice Chair Hendricks and members of the committee. I think I really appreciate all your Tension on this essential issue for, certainly, the Commonwealth's competitiveness, as well as making sure we can Leverage once-in-lifetime resources for cities and towns across Massachusetts, all 351. I'm Dave Kaufman, as the chair mentioned, the senior executive and legislative director at the MMA. I will, I know there was a lot already covered, I think, in terms of how we want to make this universally applicable to cities and towns, in every corner, in every region.

Necessary. I will just mention, you know, these are federal opportunities. This is talking about, and if innovations are talking about resilient infrastructure as well as a lot of, us also on the front lines, on dealing with climate change. So this is really, well positioned and really well appreciated for the swift action that this committee is doing to take a look at this and consider it, for the house. You know, one, I want also to thank, certainly, the Healy Driscoll Administration for filing this form for their leadership, for Director Palfrey's leadership, also, of course, Director Gobi, who we work with very closely as well, for their work and really dealing with this creating a state infrastructure. Right? The executive order that created, the the federal funds office really positions this type of legislative effort.

I think it's something that over the last four-plus months, we've had regular calls, regular conversations, and I'll echo what I think has come up in some of the questions of the committee but is as we talk about the once-in-generation, once in a life aspect of these funds. We're often responded to by many of our local officials. What does that mean for me? Right? It's a fair question. Oftentimes, it's a difficult answer because a lot of it does depend. That's not from I'm not an attorney, so I can't really say that with that much confidence. But It really does depend. I think the infrastructure of creating, the Massachusetts office and with director Paul Freeh's leadership and his great team is essential to that. Right? We're talking about the type of technical support.

In many4268 cases, just trying to troubleshoot a long list of potential opportunities for the community to be like, okay. Where am I well positioned? And how can I then move forward? Because of potential federal funding. You had us at hello in that kind of moment. So this is where I think the state use utilizing this one-time, process through the legislation the underlying legislation before you is, I think, not just well timed, but really also incredibly urgent. I know some of the timeline was already mentioned by some of the other presenters, earlier today. So, I really urge your urge your consideration. We certainly urge this committee to push this Bill favorably, and we thank you for all your support for cities and towns, both in the past and certainly, in your ongoing support. So thank you for your time. Happy to answer any questions.

LEWIS - Thank you so much. The MMA Bank in October published an article in favor of the governor's Bill. I think noting, is it 12,000,000 to support local municipalities in order to compete for these federal dollars, can you unpack that a little and just help us better understand?

KAUFMAN - No. I appreciate the question, chair. I think it does get into Some of what we're talking about, I4334 know, in the conversation really related to our rural communities, it was focused on not4338 having existing grant writing staff. There also is is part in partnership with, the regional planning agencies in different regions. So how can one get good information? Right? And I believe director Palfrey mentioned that. Making sure that they get good information on where they can be well positioned, knowing that, you know, my perspective. Right? I may be overly, conservative in in what I say, it could be a good opportunity, but having the expertise of the state office part in partnering with, the great expertise at the regional planning agencies is the best way to leverage that. Certainly, I'm helping with grants and helping with really identifying a really, vast landscape, of these issues. I think that's really what that funding is for, and I think that will be well needed.

LEWIS - No. That's very helpful. I think the same article mentioned, 50,000,000 for a proposed local infrastructure bank. Bank. Yes. I think the Senate may have cut in their final Bill. I don't think anyone else has had a chance to talk about that yet.

KAUFMAN - Sure.

LEWIS - Curious Sort of what your thoughts are about not only the proposed $50,000,000 bank but also the idea that it would be cut

KAUFMAN - Yes. My understanding, Mr. Chair is that there is some change in the language. Absolutely. But what we're mostly focused on is that there's still dedicated funding specifically for municipalities and I know other, other, political subdivisions. But municipalities that would be able to have matching grant funding loans that fit and would be able to, in partnership with the state office, of federal funds, help, really leverage these different grants. My understanding is that there's still a mechanism there. It may not be exactly as worded. We're still working through that. But certainly, having something that would be dedicated, I think, at least $50,000,000 as part of this is absolutely essential. I think we'll be, well, utilized fairly quickly based on, some of the funding on the table.

LEWIS - Oh, so the technical mechanism isn't as important as making sure that the funds are available.

KAUFMAN - Yes.

LEWIS - And easily accessible. That's helpful and if in the days ahead, after giving you more reflection, you have.

KAUFMAN - Sure.

LEWIS - Any proposals, in language there, or some additional thoughts, please please reach out to us.

KAUFMAN - I appreciate it.

LEWIS - You understand this work, and you work with all of our municipalities and we're grateful for that.
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PAULINO - I just want to4473 make4473 a point, like, by all means, I agree with investment to bring federal money to get invest in Massachusetts. Part of what I have been reading is that they haven't identified yet which program they will pursue. We'll have the we don't have the total number. So, basically, we are marketing our financial stability to stay for to pursue something that we don't know which problem and how they will benefit the whole Commonwealth, you know, in and I would love to have more information. Which program are we talking4516 about? We're talking about CHIPS, market CHIPS. So that means that most of this money will go to private companies. We'll go where those companies will go.

So I would like to have more information. I don't see that here. But I agree. We should pursue further money, but we need to just feel responsible as well. Just because we go to the mall and we see a lot of discounts doesn't mean that we need to buy it. If we don't have the resources to responsibly spend it, just because they are at a discount price, it doesn't mean that we need to buy them as a person. You know, as a state, I think we need to be, also responsible. That's my job to ask a question for my community, and I would like to have more information on which program are we talking about and where those funds will go.

KAUFMAN - Absolutely. Representative, I appreciate your question. I think it does get into, certainly, concerns over, and again, any decision that you would make in terms of expanding funds for a specific purpose. I think this is reflective of a lot of the other testimony you've seen today, it does talk about, again, the urgency of the federal funds. And, yes, you can make a decision on whether this will be able to pursue or not. I'd say without this type of mechanism, I think we'd have, still some some significant work on federal grants, but it would not be as universal as we need. Maybe it would just help some municipalities.

Maybe those that may just be well positioned at their capacity to have it, to have the grant writing staff. Certainly for the MMA that supports all cities and towns, that's why this type of, structure is in partnership with the Healey Driscoll administration and their team, and obviously, our federal delegation. I think that's why you need all aspects of this to be able to be positioned to maximize the amount of funding there. That way, we're able to get the most and really try to hit every single corner of the Commonwealth. So respectfully, I understand the concern over, something that may still need to be developed.

I'll say our communities are focused on pursuing it. They're positioned on their need. They know the needs. Right? We can talk about I didn't even mention proposition 2A to us. But I think it reflects with this type of funding, with the type of support with both, RPAs in partnership with the state, that will actually maximize us and that'll make sure that every single city and town can have at least the ability to be positioned on it. I think that's why, this is your unique situation that requires this type of, this type of infrastructure. I'd appreciate it.
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THOMAS RYAN - A BETTER CITY - SB 2554 - Thank you, Mr Chairman, thank you to the members of the committee. My name is Tom Ryan. I am a senior advisor at A Better City. We are a business organization that focuses on transportation, energy, and infrastructure issues, primarily in Greater Boston, but, also for the whole Commonwealth. I'm here to testify because this Bill is a really big deal. I'm very grateful for the committee having this hearing today and for the governor for putting this forward. Because it will help ensure Massachusetts can take advantage4738 of the federal infrastructure grants that can improve our transportation system,4742 address climate challenges, and improve our economy. I do want to emphasize that as we're dealing with the federal government legislation, many parts of the bipartisan infrastructure Bill are sometimes called the IIJA, which is really unfortunate.
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RYAN - Exactly. So the Bipartisan Infrastructure Bill is structured for competitive grants. So it is a nationwide competition, and this Bill will help Massachusetts in our ability to win these these competitive grants. The bipartisan infrastructure bill is a little over two years old. The Inflation Reduction Act is almost a year old, and these competitive grants are worth hundreds of millions of dollars to states, and potentially billions of dollars. We can see from the first year how Massachusetts we have some data on how Massachusetts is doing with the bipartisan infrastructure Bill and competitive grants, and primarily, look at something called the mega grant program. The mega projects, the big ones. Massachusetts would apply for something like the Cape Cod Bridges or I 90 Austin, multimodal project.

And the Department of Transportation looked at the application and said, MassDOT, quote, does not have one or more stable, dependable sources of non-federal funding and financing4827 to construct, operate, and maintain this project or cover any cost increases. So they look at our application and say, Massachusetts doesn't have the match. We get deducted points, Money goes4840 to other states. This Bill would help change that and this bill is worth hundreds of millions of dollars to4848 Massachusetts. We now know there's a little bit things have changed a little bit in the last year. This was from year one in the application under the governor's leadership and through Quentin Palfrey and his team. Massachusetts did win a big $372,000,000 award for the Cape Cod Bridges just a couple of weeks ago.

Credit to them. This, Bill will help for the applications that are going on through the Inflation Reduction Act and the bipartisan infrastructure bill grants that are ongoing for the next couple of years. My final point is I do want to say that the administration deserves credit because it helped pursue the big awards, but also for the municipal awards. It's hard to apply for these these projects. So I give the governor a lot of credit for dedicating funds to municipalities to help generate better applications that will lead to new investments, and show Massachusetts is ready to partner with the Biden-Harris administration on infrastructure projects that can benefit the region for decades to come. Thank you.
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LEWIS - Thank you. Again, I wanted to thank everyone for taking the time today to come to testify on this Bill. A reminder, if you have thoughts that come to you later in the day, that you wish you would have said, please shoot us a quick email. If in the days ahead you have concrete suggestions on ways any language could be strengthened, please also send that along. Special thank you to my vice chair, and the larger committee for so many of you showing up today on a Tuesday morning.

To my staff for doing all the behind-the-scenes work and putting together again the most detailed briefing book I have ever seen. The members of the committee, if I know MTF, Mass taxpayers, really wanted to be here. Pages 29 through 46, the analysis is so helpful, especially Rep Smola in breaking down the projections of how do we get this $17,500,000,000 number. It's not on your bedside table. Put it there and, definitely be in touch if you have any questions. Again, so grateful to everyone. With that, I will officially end our hearing.
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