How to Spend the Stimulus Windfall
As the fight against the COVID-19 pandemic winds down, another battle — yes, we can call it that — is emerging on just how the state should spend more than $5 billion in federal stimulus money coming it’s way.
Actually, there are different fronts to this conflict, the first being a large disagreement over who should control this windfall, with both Gov. Charlie Baker and the Legislature believing that they know, better than the other, how this money should be allocated.
We’re not sure either is fully qualified, but that’s another matter.
Let’s get back to the money — $5.3 billion of it, to be exact. This is the state’s share of the proceeds from the American Rescue Plan (ARP). It is, indeed, a windfall, a rare opportunity to take money with no real strings attached to it and put it to some good.
So, naturally, there has to be disagreement over who should control the money and how it should be spent — should we really expect anything else? We hope these differences of opinion can be worked out quickly (probably not, but we can hope), and that the state can commence allocating this money in ways that will create opportunity and address long-standing problems. It appears likely that the proceeds will be divided in some way, with the governor controlling a large portion and the Legislature deciding how to spend what’s left.
Already, the governor has indicated several priorities, including everything from the housing crisis to battling opioid addiction; from infrastructure work to funding the state’s announced vaccine lottery sweepstakes.
While these are worthy causes, to be sure (although we certainly believe there are better ways to spend $6.5 million than a lottery), money needs to be set aside to help the businesses of this state, many of which are still battling to fully recover from the pandemic. While many business sectors are starting to rebound, especially the hospitality industry after a brutal 15 months of stagnancy and then several levels of reopening, many individual businesses are struggling to get all the way back.
One big obstacle is workforce. Companies across all sectors are struggling to find good help, and an infusion of funds into training programs would certainly help address the ongoing labor shortages. As economic-development leaders have said for years, the problem isn’t necessarily with the numbers of people in the workforce, but the skills they possess.
Meanwhile, we share the business community’s disappointment that the governor remains opposed to allocating some of the money from the American Rescue Plan to pay for the huge deficit in the state’s unemployment insurance fund caused by the deep and very sudden job losses during the pandemic; more than 30 states have already committed to using some ARP funds for this purpose.
Baker has instead signed legislation that spreads the hike in the so-called solvency assessment over 20 years and covers $7 billion in unemployment payments tied to pandemic-related job losses.
We don’t believe that simply spreading the payments over 20 years is a real solution to this problem. The pain remains — it’s just dispersed over two decades instead of all at once. While the payments will be smaller, they will still be a burden to businesses that are, as we noted, still struggling to fully recover from the pandemic and don’t need to pay for a problem that was not of their doing.
When it comes to the ARP windfall, the phrase ‘good problem to have’ certainly comes to mind. Indeed, deciding how to allocate $5.3 billion is a test for which there are few truly wrong answers.
But it is incumbent on the governor and the Legislature to come up with the best answers, and some of these involve a business community that is far from out of the woods when it comes to this pandemic and the many challenges that remain.