States need stimulus — and we need it now
State budgets, like spending plans everywhere, tend to be dry documents devoid of tantalizing headlines. But they are, fundamentally, where values meet action — a blueprint of how our representative democracy is going to support the people, ideas and initiatives that need us most.
Massachusetts, where we lead the Senate and House, wrapped up its budget last week in the form of a $46.2 billion spending plan. Even in the midst of COVID-related budget tightening around much of the country, we made targeted investments in education, housing, food security, economic development, mental health and substance use disorder services.
It wasn’t a painless process, and we had to draw from our savings while disappointing many who called on us to do more. We nonetheless made the tough calls and did our jobs. Our question now is: when is Congress going to do the same?
Like many other states, Massachusetts confronted an unprecedented fiscal situation this spring. In only a short number of weeks, we went from an estimated $1 billion surplus for fiscal 2021 to a dramatic shortfall — estimated by some to be close to $6 billion — and a reduction of nearly 7 percent in available tax revenue from the year before.
Unlike the federal government, Massachusetts does not have the option of running a deficit. As the prospect of a much needed follow-up to the CARES Act flickered and then faded, we knew we could not rely fully on help from Washington.
Whereas other states proceeded as usual when COVID-19 hit, we took the unusual step of delaying our budget process. There proved to be wisdom in waiting. By taking the time to determine what our fiscal outlook would be and using a deliberative approach, we avoided the harsh cuts that would have caused teachers, police officers, first responders, municipal employees and others to lose their jobs.
This year’s budget plan involves taking $1.7 billion of our rainy-day fund for use this year, and keeping the rest for what will undoubtedly be another difficult fiscal year next year. It also requires forgoing new deposits to this fund, along with using CARES Act money, an increased share of Medicaid costs, and an acceleration of sales tax collection. Taken together, these sources enabled us to not only fill a $3.6 billion revenue hole without cutting vital services, but to provide new spending in areas hardest hit by the crisis.
The stability of our rainy-day fund has been key. Through sound management and fiscal responsibility, Massachusetts prepared for this pandemic before we even knew it would hit. Our budget writers in both the Senate and the House, along with our governor, Charlie Baker, painstakingly built this fund up over the years, increasing its size by $2.2 billion during a three-year period of strong revenue collections — and now, when we are facing a real crisis, we have a fund of over $3.5 billion to use.
But without federal aid, protecting our most vulnerable residents, maintaining our transportation infrastructure and airports, and insulating the economy from the impact of public and private sector job losses will become far more difficult. Even a state like Massachusetts, with a significant rainy-day fund, cannot unilaterally absorb all of the pain of an unprecedented public health crisis. One-time resources have been tapped; many federal benefits have expired; and costs and caseloads continue to rise.
In fact, the Center on Budget and Policy Priorities, a national nonpartisan research and policy institute, recently warned that “if the federal government fails to provide additional fiscal stimulus, the chance that the economy could turn down again rises and another resurgence of the virus would dampen growth.” Should that occur, the Center cautioned, states like Massachusetts will have to make budgetary choices that will only hurt our recovery and extend the downturn.
As state leaders, we remain committed to doing what is necessary to responsibly manage through this downturn and put Massachusetts back on a path to growth. But states can’t do it alone. We need our partners in the federal government to act.
We implore our counterparts in Congress to remember their duty to the American people and devote their full energies to reaching a deal and passing a bill that will provide states with much-needed funds. Our constituents facing unemployment and our struggling small-business owners deserve nothing less.
Even in “true blue” Massachusetts, our respective legislative chambers sometimes have different priorities, and our governor is Republican. We don’t agree on everything all the time — nor should we in a healthy democracy. But we all agree on prioritizing the health, safety and economic security of our residents — and finding a way to work together to get things done when those things are threatened. Washington needs to do the same.
Karen E. Spilka is president of the Massachusetts State Senate. Robert A. DeLeo is Speaker of the Massachusetts House of Representatives.