A TOP LEGISLATIVE budget writer on Tuesday accused Gov. Charlie Baker of violating state law with his plan to immediately spend $186 million of federal recovery money on health care and job training initiatives.
“It was the intent of the Legislature that $200 million was ‘break glass in case of emergency’ funds,” Senate Ways and Means chair Michael Rodrigues, a Westport Democrat, told Baker at a public hearing.
The governor responded that he believes the plan is within the uses authorized by law. “I don’t think anyone on our team felt they were outside the bounds of proper and appropriate use of the spending,” Baker said.
The dispute over the use of the money is the latest tiff between the Republican governor and the Democratic-led legislature over who gets to control approximately $5.3 billion in federal money authorized by the American Rescue Plan Act. Tuesday’s hearing was the first of several lawmakers have planned as they debate how to use the influx of federal recovery money. Baker testified for over an hour, followed by Secretary of Administration and Finance Mike Heffernan. Baker appeared virtually from Aspen, Colorado, where he is attending a meeting of the Republican Governors Association.
While the governor appeared to have strong working relationships with House and Senate leadership for most of his two terms in office, there has been growing tension, with top lawmakers criticizing Baker’s vaccine rollout and more recently, trying to limit his authority to spend federal money. The tension was palpable during the hearing as lawmakers questioned the governor’s actions.
The Baker administration received the $5.3 billion as a federal grant, which it had authority to spend. But when the money arrived in June, lawmakers decided to move it into an account where they controlled the purse strings. Baker tried to amend the bill so he could spend over half the money now, but when lawmakers rejected his proposal, Baker signed a bill that transferred almost all the money to the Legislature, leaving him with $200 million.
The current dispute surrounds a caveat the bill placed on Baker’s authority. Baker was authorized to spend the $200 million “to protect against emerging public health threats or to support new, heightened or emergency public health response efforts against the 2019 novel coronavirus and variants thereof.”
Rodrigues told Baker at the hearing that lawmakers intended it to be emergency money, so Baker could take immediate steps to address a variant or avoid nursing home outbreaks. “We wanted to ensure that we had a very liquid pool of money that you as chief executive officer could quickly and swiftly spend that money in areas of critical need,” Rodrigues said.
Baker’s plan, released Monday, spends $186 million of it on rate increases for human service workers, shoring up fiscally stressed hospitals, increasing beds at inpatient psychiatric facilities, and workforce training programs.
Rodrigues said he does not oppose the particular expenditures Baker wants to make, but he does not believe they are authorized under the law. “I question how you can use those available funds for those expenditures,” Rodrigues said. “To me it seems clear the law restricted use of those funds to very specific areas, irregardless of how beneficial and how well-meaning those expenditures are.”
Rodrigues worried what will happen if the state needs money to respond to the Delta variant. He added, “I just am concerned that when the Legislature is explicit in statute, in law, of how we would mandate that funds be spent that those mandates be followed.”
House Ways and Means chair Aaron Michlewitz, questioning Heffernan, said he “echoes the concerns around the quick usage” of the $186 million.
Baker responded that the needs he identified are emergencies. “I don’t think there’s anyone who would dispute the fact that we need to put right now significant resources as a public health matter into addiction services and psychiatric services,” Baker said. Baker said the job training money is similarly urgent, with 350,000 residents set to lose enhanced unemployment benefits in September.
Baker said he does not anticipate needing ARPA money to respond to the Delta variant, since there is other federal money to pay for testing and vaccinations. He said unlike early in the pandemic, the state has an “extraordinary amount” of personal protective equipment and has guidelines for protecting people living in congregate settings.
Baker questioned Rodrigues’ reading of the language, saying it is similar to wording in other appropriations bills, where the Legislature directed money to be spent in much the same way Baker is doing.
Heffernan clarified that a COVID-related supplemental budget bill passed in June 2020 had similar language, and included spending on a broad array of health-related priorities along with summer and youth job programs. “We’re not trying to be off the reservation,” Heffernan said.
Another indication of the dissention between the governor and lawmakers came when Senate Ways and Means vice chair Cindy Friedman questioned Baker about why he decided to give hospitals $50 million and whether that is enough, and suggested he work more closely with lawmakers. “It would be really nice if we were part of your conversations,” Friedman said. “To be able to work collaboratively so we’re not consistently going back to the well saying this isn’t right, but that we do that together before there’s a determination or announcement by the administration.”
For his part, Baker used his testimony to continue prodding the Legislature to get money out the door quickly. Under federal rules, the ARPA funding must be allocated by 2024 and spent by 2026, which gives lawmakers no immediate deadlines. But Baker has been pushing to spend money now, while legislative leaders stressed the need for a deliberative process.
Baker has laid out a $2.9 billion plan that would spend $1 billion each on housing and infrastructure, and additional money on downtown development, tourism, job training, addiction treatment, and hospitals, starting immediately. He would reserve $2 billion to spend later.
“While we’re making progress on getting back to normal, now is not the time to slow down,” Baker said.
Baker said constructing housing and improving water and sewer systems takes time, so there is a need to begin allocating the money. Initiatives like job training and boosting tourism address immediate needs.
“As you know, there is a ticking clock on how long we have to spend these resources,” Baker said. Baker reiterated repeatedly that his proposal would put money into programs that already exist, have pent-up demand, and have previously gotten legislative support. For example, a clean water trust fund got $1 billion in funding requests last year but could only award $620 million.
“The kinds of projects that are needed to address the impacts of COVID are significant in scale and time consuming. We have to start making the investments I proposed now, not months from now,” Baker said.
Experts who testified suggested there may be room for both approaches. Eileen McAnneny, president of the Massachusetts Taxpayers Foundation, suggested, similar to Baker, that lawmakers use some money now to ramp up existing programs and jumpstart the economy, while considering longer-term strategies that create transformative growth.
But Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts University, stressed the importance of a “deliberate and unhurried timeline,” similar to the Legislature. Horowitz said the economy doesn’t need short-term stimulus. “Six months from now, or perhaps a year, the economy should be in a better position to absorb new government spending – meaning that a slower and more deliberate process will actually make many ARP investments more impactful than they would be right now,” Horowitz said.
UMass Dartmouth Professor of Public Policy Michael Goodman urged lawmakers not to delay but also to resist pressure to spend all the money immediately. “There is time for careful planning and priority setting in areas where emergency intervention isn’t necessary, and the stakes are high,” Goodman said.