Senate President Karen Spilka and House Speaker Ronald Mariano chat before a bill-signing ceremony on Jan. 7, 2021. Photo by Sam Doran | State House News Service
After wading through hours of debate and considering hundreds of amendments, the state Senate late Wednesday night unanimously approved a $3.82 billion package to steer special federal relief funds and surplus state budget revenues into virtually every corner of the state.
All three Senate Republicans, who unsuccessfully sought to double the amount of unemployment relief for businesses and implement a two-week state sales tax holiday in the bill, joined Democrats to vote 38-0 in favor of the massive spending proposal (S.2564) that carves up about half of the state’s American Rescue Plan Act relief funding.
Now the arguably harder part – negotiating a final bill between the two branches after the House and Senate versions diverged on many specifics – begins.
Legislative leaders agreed to two cornerstones of the bill, a $500 million payment toward the state’s unemployment insurance trust fund and a $500 million program to offer one-time bonuses to low-income essential workers who continued to provide in-person services during the COVID-19 crisis, before rolling out the House and Senate proposals.
But that leaves more than $2.6 billion in allocations, and scores of earmarked spending projects, not yet negotiated. Although both branches approved roughly similar bottom lines and spending strategies, the House and Senate each took different approaches to areas such as public health infrastructure, water and sewer infrastructure, mental health investments, youth jobs, and higher education capital projects.
If lawmakers want to meet their publicly stated goal of getting the legislation on Gov. Charlie Baker’s desk before Beacon Hill slows down for the holiday recess, they will need to resolve differences at a rapid clip.
House and Senate leaders could also opt to deliberate informally without appointing negotiators. Also, with roughly $2.5 billion in funds left untouched by the original proposals, they may view increasing the bill’s bottom line as a path of least resistance. The eventual compromise bill, whenever it is reached, is unlikely to draw opposition since both branches adopted their bills unanimously. The House approved its version of a $3.82 billion bill on Oct. 29.
Before the addition of amendments, the Senate’s spending bill proposed spending $400 million on mental and behavioral health supports, $250.9 million on local and regional public health infrastructure, $200 million on acute hospitals serving communities hit hard by COVID-19, $600 million for housing initiatives such as homeownership support and workforce rental housing production and $450 million on combating climate change.
Extra UI Money Pitched to Aid Businesses
One of the most sizable changes senators rejected would have doubled a payment into the state’s unemployment insurance trust fund from $500 million to $1 billion.
A wave of pandemic-era joblessness drained the account, which Bay State businesses fund via taxes, and Baker and the Legislature approved up to $7 billion in borrowing to replenish it. Employers remain on the hook to pay back that borrowing over 20 years.
Senate Minority Leader Bruce Tarr, who filed the amendment, said businesses may find it difficult to bring on new employees while coping with the added costs of repaying trust fund bonds.
“It was not possible to plan for a global pandemic that would cost $7 billion in the cost of the unemployment insurance trust fund,” Tarr said during the Senate’s debate. “They’re going to say, ‘Can I afford that new employee, can I afford that new group of employees, when I have my share of this $7 billion mortgage?’ It’s hard enough. We don’t need that additional obstacle to be any higher than it has to be.”
In a separate closeout budget bill he filed in August, Baker proposed a $1 billion transfer into the UI trust fund to help reduce the burden on businesses and keep the system stable.
Dispute Over Fund’s Status
Urging her colleagues to reject the proposal, Labor and Workforce Development Committee Chair Sen. Patricia Jehlen said the trust fund that pays unemployment benefits has rebounded strongly since last year, when a wave of joblessness during the COVID-19 pandemic left the fund financed by employer assessments with “essentially $0.”
Jehlen suggested that the account’s health may eliminate the need for the $7 billion in bonding that the legislature and Baker authorized to preserve its fiscal health.
“At this point, we don’t even know if or when the administration will issue any of the $7 billion in debt we authorized,” Jehlen said. “We have sufficient reserves right now to pay off the federal debt from the pandemic and we may not need any of those bonds.”
The Baker administration has not published a monthly summary of the unemployment fund’s status since June, but Jehlen said data the state reported to the U.S. Treasury indicate the account has a balance of about $3 billion.
However, a Baker administration official, who agreed to communicate on background only, said that it was “not accurate” to state that the fund is in a position to pay back federal advances while continuing to pay benefits without additional stabilization funding.
The Treasury report, the official said, does not factor in over $2 billion the state borrowed from the federal government in order to pay benefits last year, which is currently outstanding, and also does not account for credits owed back to employers who overpaid their UI rates during the first quarter of 2021 before the passage of a law reducing UI payments for many employers.
State House News Service staff writer Michael P. Norton contributed reporting.
