State Senate Seeks to Tap Rainy Day Fund Interest to Meet Fed Matching Grant Rules

Sen. Barry R. Finegold. (WHAV News photograph.)

The Massachusetts Senate last week moved to put the interest on the state’s $8.2 billion rainy day fund to use to help the state and local communities better compete for federal grants.

The bill, “An Act to provide for competitiveness and infrastructure investment in Massachusetts,” would help the state take compete for up to $17.5 billion through, what was called, “once-in-a-generation federal funding opportunities.” If also approved by the House, it would require the state comptroller to move the interest, now about $250 million annually, to the Commonwealth Federal Matching and Debt Reduction Funds.

“I was proud to vote with Senate colleagues to strengthen Massachusetts competitiveness, ensuring the Commonwealth’s fiscal security. This legislation doubles down on our state’s fiscal responsibility while tactically investing in the Commonwealth’s future,” said Sen. Barry R. Finegold.

Over the coming years, this bill is expected to unlock more than $800 million that could be used to pay for state or municipal match requirements for federal competitive grant opportunities, as well as planning work that will help communities prepare applications for federal grants. Once federal grant opportunities expire, money will go toward reducing the Commonwealth’s long-term liabilities.

More than $2 trillion in federal money is available through such programs as the Infrastructure Investment and Jobs Act, Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors Act, or CHIPS).

“Remaining competitive, equitable and affordable entails thinking creatively about our Commonwealth’s finances and funding, and that is what we accomplished today in the Senate,” said Senate President Karen E. Spilka. “We have been fiscally prudent in building up the largest rainy-day fund in Massachusetts history, and today we are doubling down on our fiscal responsibility by using the interest on that fund to compete for federal dollars that will save our Commonwealth even more in the long run.”

Sen. Michael J. Rodrigues, chair of the Senate Committee on Ways and Means, added, “The legislation that the Senate approved today provides us with a smart accounting measure that we can utilize to effectively stretch and maximize our taxpayer dollars to place the Commonwealth in the very best position to compete for these lucrative federal funds, while also ensuring we continue to protect our rainy-day reserves and adhere to sound fiscal discipline.”

The bill was originally filed by Gov. Maura Healey last October.

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