Report Analyzes How Massachusetts Can Maximize Benefit of American Rescue Plan

Center for State Policy Analysis at Tufts University’s Tisch College describes key principles for spending billions in federal aid
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April 27, 2021

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A report released today by the Center for State Policy Analysis (cSPA) at Tufts University’s Tisch College describes the unique opportunities — and potential pitfalls — of the massive federal coronavirus relief package known as the American Rescue Plan (ARP), and how it could impact the people, municipalities and businesses in Massachusetts.

The state of Massachusetts — along with its cities and towns — is slated to receive nearly $8 billion in direct federal aid, along with billions more in targeted funds for areas like education, transit, and affordable housing.

Making the most of the ARP funding requires a challenging mix of quick and thoughtful planning across all levels of state and local government.

The report finds that:

  • ARP money is best suited for one-time investments, because it is only available for a limited period. Examples of one-time investments include broadband, school building upgrades, transportation maintenance, state IT systems and public health infrastructure.
     
  • There may be creative ways to use one-time ARP funding to support longer-term needs, whether by covering large startup costs, or by establishing endowments and loan programs.
     
  • One-time ARP money might also be used to introduce new programs, like universal pre-K, but their long-term viability would depend on the continuing strength of state tax revenues or future tax increases, such as the proposed Massachusetts millionaires’ tax.
     
  • The legislature may need to establish a separate budget process that fits better with ARP’s focus on investments and its unique, multiyear timeframe which requires funds to be spent by the end of 2024.
     
  • Given the different funding streams associated with ARP, some central oversight or information-sharing may be essential. This would ensure transparent use of public money and keep state and local decision-makers from working at cross-purposes.

Read the full report here.

“This is really a once-in-a-generation opportunity for Massachusetts," said Evan Horowitz, executive director of cSPA. "With the right investments, we could expand economic opportunities across the state. However, there are real challenges ahead, because we don’t have a ready process for choosing investments, coordinating decisions across regions, or ensuring the transparent use of ARP funds.”

cSPA provides expert, nonpartisan analysis of legislative proposals and ballot questions in Massachusetts. It is governed by Tufts University and guided by a bipartisan advisory group. cSPA is largely funded by Tisch College; it also has a diverse group of smaller funding sources from across the political spectrum. These funders have no involvement in cSPA’s research.