BOSTON – House Minority Leader Bradley H. Jones, Jr. (R-North Reading), State Representative Richard M. Haggerty (D-Woburn) and State Senator Jason M. Lewis (D-Winchester) are hailing the passage of legislation authorizing the use of interest generated by the state’s Stabilization Fund to help leverage additional federal funding for infrastructure projects across Massachusetts.
A six-member conference committee recently reached a compromise agreement on the proposal, after working for several months to reconcile the differences between earlier versions of the legislation previously approved by the House and Senate. The final bill is now on Governor Maura Healey’s desk for her review following its final passage in both legislative branches.
“Massachusetts is competing on a daily basis with every other state to try to secure its share of limited federal resources to help pay for critical infrastructure projects,” said Representative Jones. “Setting aside money that can be used as a state match will better position Massachusetts to obtain vital federal funding assistance for this purpose.”
“Maximizing our state’s ability to compete for federal dollars is crucial for Massachusetts’ future investments in infrastructure and other important initiatives,” said Representative Haggerty. “This legislation allows us to strategically use the interest from our record-high Stabilization Fund to help compete for and unlock substantial federal investments for critical projects across the Commonwealth, while demonstrating our commitment to smart fiscal management.”
“We should do everything possible to maximize our share of federal grant opportunities that help save money for Massachusetts taxpayers,” said Senator 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 important infrastructure projects.”
The final bill establishes a new Federal Matching and Debt Reduction Fund which will be credited quarterly with the interest earned on money invested in the Commonwealth Stabilization Fund. Under the bill, the Executive Office for Administration & Finance (A&F) will be allowed to expend up to $750 million from the Federal Matching and Debt Reduction Fund through December 1, 2026 to help leverage federal grant opportunities under the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, the CHIPS and Science Act, and other federal programs.
The bill establishes specific conditions that must be met before the state Comptroller can transfer the Stabilization Fund interest into the new Fund. A transfer can take place only if the balance of the Stabilization Fund has not decreased in the previous year, and only if the balance exceeds 10% of budgeted revenues for all budgeted funds for the preceding fiscal year.
The Stabilization Fund currently has a balance of $8.831 billion, which represents approximately 15.7% of the budgeted revenues for Fiscal Year 2024. Established by the Legislature in 1987, the Stabilization Fund serves as a reserve the state can draw on to preserve essential state programs and services during economic downturns and to help mitigate the impact of state budget cuts.
The bill also allows the Secretary of A&F to expend money from the Federal Matching and Debt Reduction Fund to repay, prepay, retire, and reduce the principal or interest of the Commonwealth’s indebtedness; to reduce, repay or retire portions of the Commonwealth’s long-term liabilities; and to transfer any amounts back to the Stabilization Fund. A&F must also provide 30 days’ notice before expending any funds from the new Fund and must also disclose details on the purpose and amount of each expenditure.
The bill also creates a Task Force to review and make recommendations on long-term funding for the Stabilization Fund, and to examine all capital gains disbursements, including deposits into the Stabilization Fund, State Retiree Benefits Fund, the Commonwealth’s Pension Liability Fund and other long term financial liabilities. The conference report also requires A&F to provide reports on expenditures from the new Fund which will be filed twice a year by December 31 and June 30 until December of 2026.
