There are direct payments of up to $1,400 to income-eligible residents, and enhanced unemployment benefits that will add $300 a week to checks for those still out of work through the first week of September.
Many parents will qualify for increased child tax credits and deductions for the cost of child care. And the federal earned income tax credit for seniors and low-income individuals without kids will grow.
And then there are the billions and billions of dollars expected to flow to Massachusetts for schools, vaccination efforts, rental assistance, restaurant relief and general government funding that will add up to well over 10 percent of the total state budget.
With Congress on the verge of passing an economic stimulus bill more than twice the size of the recovery bill used to help America claw out of the Great Recession, Massachusetts is bracing for a massive windfall, and with it the inevitable debate over how it gets spent.
“We are, like everyone, still figuring out what this means and what this means for Massachusetts, but it’s pretty apparent that this is going to have a pretty significant impact on a number of areas in the state and on the state budget,” said Doug Howgate, executive vice president of the Massachusetts Taxpayers Foundation.
A week after the House passed a version of President Joe Biden’s $1.9 trillion COVID-19 relief package, the U.S. Senate on Saturday voted for a slightly altered package that includes $350 billion for state and local government, $170 billion for schools, and $20 billion for vaccine administration and distribution.
The House will vote on the new version Tuesday, and Biden is expected to sign the stimulus bill before the end of the week, when enhanced unemployment benefits are otherwise set to expire.
“This package will also help get more Americans vaccinated, including providing our state and cities $350 billion to distribute the vaccine, balance their budgets and keep teachers, firefighters and bus drivers on the job,” U.S. Sen. Ed Markey said during a news conference Sunday.
$7.96 billion projected in direct aid
The latest estimate from the House Oversight Committee projects that Massachusetts state government and municipalities will receive more than $7.96 billion in direct government aid, including almost $4.55 billion for the state.
The aid comes with challenges: making sure it gets spent responsibly and in ways that are needed most, and ensuring that it doesn’t bloat government budgets with one-time money, which could create problems in out years.
Senate Ways and Means Chairman Michael Rodrigues told the Baker administration last week that he wanted the Legislature to play a “highly constructive and meaningful role” in determining how billions in potential new federal stimulus money gets spent.
“With the American Rescue Plan on the brink of becoming law, we need to think carefully how to best use additional federal assistance to continue supporting our residents during the public health emergency and position our Commonwealth for long-term success,” Rodrigues said in a statement to the News Service on Monday.
Late last year, Gov. Charlie Baker tried to amend a section of the state budget that created a new federal COVID-19 response fund in order to retain control over how future nonearmarked federal relief for Massachusetts got spent, but he was overridden by the Legislature.
Rodrigues said that law was intended to “increase transparency on the use of federal COVID-19 relief funds.”
“Working with the Senate President and our partners in the House, I look forward to building off of those efforts and ensuring that the Legislature plays a more meaningful and direct role in determining the fate of these additional federal resources,” Rodrigues said.
The timing of the latest federal relief effort comes at the start of the fiscal 2022 budget process on Beacon Hill, but one House official recently told the News Service that the Legislature might look to put the annual budget and stimulus spending on separate tracks, especially considering that the budget might not be resolved until at least July.
The administration did not say if or when it planned to file a separate budget bill seeking legislative authority to spend any of the federal stimulus money headed its way, but with past COVID-19 relief bills, the administration has exercised broad discretion in how federal money gets used.
For instance, last year the governor leveraged Coronavirus Relief Fund aid to create a $668 million business recovery grant program.
Eye on ‘rainy day’ fund
Administration and Finance Secretary Michael Heffernan has said that one priority the administration has for federal aid is to use it to reduce the state’s reliance on its “rainy day” fund to balance the budget. The administration has estimated that it will need $1.35 billion in fiscal 2021 and $1.6 billion in fiscal 2022 from the stabilization account, though tax collections continue to outperform expectations.
The state’s education system also is in line for a big infusion of federal assistance at the exact time Baker and Education Commission Jeff Riley are amplifying the pressure on schools to return to in-person learning.
The stimulus bill includes $170 billion for education, including $125.8 billion for K-12 schools, $40 billion for colleges and universities and $2.75 billion for governors to share with private schools.
The K-12 school money, according to the Alliance for Excellent Education, will be distributed based on relative Title 1 funding for states, which could put Massachusetts in line to receive nearly $1.9 billion in additional money for elementary and secondary education.
The Senate bill requires that at least 87.5 percent of a state’s allotment go straight to local districts, with 20 percent required to be spent on programming, including summer school, to address learning loss over the course of the coronavirus pandemic.
The bill also includes $7 billion for a program created by Markey to help equip students with the technology they need to connect to the internet and learn from home.
“We don’t know how long it’s going to take for every child to be back in class every day, so that’s why this is critical funding,” Markey said.
The federal package also includes $30.5 billion for transit, though transit officials said Monday they don’t yet know how much the cash-strapped Massachusetts Bay Transportation Authority will receive, and $25 billion for restaurants and bars that will be administered as grants through the Small Business Administration.
The direct payments of $1,400 will be coming to individuals earning up to $75,000 and married couples earning $150,000. The benefit will be phased out for individuals earning more than $80,000 and couples earning more $160,000 a year.
The child tax credit will increase from $2,000 to $3,000 for minors ages 6 to 17 and $3,600 for children younger than 6, and the maximum deduction for child care will climb to 50 percent of qualifying expenses up to $4,000 for one child, or $8,000 for two or more children, and make families at higher income levels eligible.
Current law allows for a credit of up to 35 percent of child care expenses of $3,000 for one child or $6,000 for multiple children.
The Senate bill also sets aside $86 billion for about 185 multi-employer pension funds that are at risk of collapse, which has been a priority for U.S. Rep. Richard Neal, D-Springfield, and likely would wind up supporting the retirements of some Teamsters unionized truck drivers, warehouse workers, roofers and New Bedford fishermen in Massachusetts.