BOSTON – House Minority Leader Bradley H. Jones Jr. (R-North Reading) and State Senator Brendan P. Crighton (D-Lynn) 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 passage in both legislative branches.
“Massachusetts competes daily with every other state to secure its share of limited federal resources to help pay for critical infrastructure projects,” Jones said. “Setting aside money that can be used as a state match will better position Massachusetts to obtain vital federal funding assistance for this purpose.”
“This legislation creates a dedicated source of funding that will give Massachusetts a competitive edge as we continue to fight for federal dollars to invest in our infrastructure and fund key projects that strengthen our communities,” Crighton said.
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 Dec. 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 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, representing 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 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 disclose details on the purpose and amount of each expenditure.
Additionally, the bill 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 Dec. 31 and June 30 until December 2026.
