ARPA and surplus spending might have to wait until 2022

The Massachusetts State House. (Jesse Costa/WBUR)
The Massachusetts State House. (Jesse Costa/WBUR)

The House and Senate will go into their mid-session recess without finalizing a plan to spend close to $4 billion in federal COVID-19 relief funding and state surplus tax dollars, giving up on the prospects for a deal Wednesday as Democrats in both branches remained too far apart to cement a compromise.

The completion of a bill to spend billions of dollars from the state's share of the American Rescue Plan Act had emerged as a major goal before the legislative break.

Leaders in both branches had expressed their desire to put a bill on Gov. Charlie Baker's desk before Thanksgiving, and the governor has been eager for months to receive a bill and begin spending federal relief dollars on housing, workforce development and climate infrastructure, among other priorities.

While leaders are not giving up on passing a bill in the coming weeks, that process becomes more fraught after Wednesday as the Legislature enters a seven-week period of informal lawmaking when there can be no roll calls and any one legislator can block a bill from advancing.

House Ways and Means Chairman Aaron Michlewitz said negotiations between the House and Senate will continue despite their inability to reach a deal Wednesday.

"Unfortunately, it doesn't look like we're going to be able to get this bill done, the ARPA spending bill, looks like we're not going to be able to get it done today," Michlewitz told the News Service outside his second-floor office shortly before the House adjourned for the night. "Obviously, it doesn't end the discussion. I think we're going to continue to negotiate beyond today because there's obviously a need to try to get this done as soon as possible."

Senate Ways and Means Chairman Michael Rodrigues expressed a similar sentiment in a statement and in an interview, though he appeared to be caught somewhat off guard by Michlewitz dashing hopes at around 5:30 p.m. for a late-night deal.

Rodrigues said the Senate had just "completed reviewing and suggesting and shooting something over."

"But, you know, it takes two to tango. You need a dance partner. So we're going to continue to roll up our sleeves and get this done as soon as possible," Rodrigues said.

Both the House and Senate have passed plans to spend roughly $3.82 billion from a combination of ARPA funds and surplus state tax dollars from fiscal year 2021 to stimulate the economy, support workers and businesses, and invest in infrastructure projects, public health and other priorities.

Before either branch debated its bill, the two sides had agreed to spend $500 million on a bonus-pay program for low-income essential workers and to invest $500 million in the state's depleted unemployment insurance trust fund, taking some of the financial burden of rebuilding that fund off employers.

The final versions of the bills, however, showed some differences in how House and Senate Democrats preferred to prioritize the federal relief and state surplus revenue.

For instance, the Senate bill proposes to spend $250.9 million on public health infrastructure, which is $100 million more than the House. It would also increase investments in water and sewer infrastructure by $75 million over the $100 million in the House bill and boost mental health spending by $150 million, to $400 million.

Meanwhile, the House proposed $40 million for youth summer and school-year jobs, $75 million for capital projects on public college and university campuses, and $20 million for special education. The Senate proposal funds none of those priorities.

Lawmakers from both branches also earmarked millions in funding for local projects.

Gov. Baker did not comment on the collapse of talks on Wednesday after expressing optimism in recent days that a bill would reach his desk. So far, the state has spent only about $394 million from its ARPA account on paid leave, emergency public health needs, a vaccine lottery and support for a handful of communities shortchanged by a federal grant program.

Michlewitz would not identify any sticking points in the negotiations, but he said there were enough differences to make it "very challenging" to iron out a compromise in three days.

The state received its $5.3 billion share of ARPA funding in May, and Baker filed a proposal to spend a portion of the funds in June. After a dispute with the governor that saw the Legislature wrest control over the appropriation of nearly all ARPA funding from the governor, legislative leaders launched a series of hearings to solicit public input that stretched into October.

Michlewitz pointed to the fact that both branches passed their respective bills unanimously as reason to be optimistic that a final bill could pass during informal sessions over the next seven weeks if a deal can be reached.

Another wrinkle brought into play by the Legislature's inability to get a deal done by Wednesday is the open question of whether the ARPA-surplus spending bills would carry over into the second year of the two year session, or if the two branches would have to start over from scratch if they can't pass a bill in informal session.

The Legislature in 1995 adopted a rules reform that allows all legislation unacted upon in the first year of the two-year session to automatically carry over into the second year, with the exception of bills "making or supplementing an appropriation for a fiscal year submitted to or returned to the General Court by the Governor, under Article LXIII of the Amendments to the Constitution."

Michlewitz said there was a "discrepancy in thought here" whether the ARPA bill would expire or carry over due to the fact that it's not a traditional annual appropriation bill, and the Legislature swept the pots of federal and state surplus tax dollars into escrow accounts earlier this year where the money could stay until allocated elsewhere.

Michlewitz said he didn't want to guess whether talks would continue for days, weeks, or months now that the self-imposed Wednesday deadline has passed.

"I wouldn't want to make any predictions," he said.



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