Governor Deval Patrick's Budget Recommendation - House 2 Fiscal Year 2009

Governor's Budget Recommendation FY 2009

Bay State Competitiveness Investments

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Governor Patrick    FY09 House 2 Budget Recommendation:
    Issues in Brief

    Deval L. Patrick, Governor
    Timothy P. Murray, Lt. Governor



The Governor's FY09 budget recommendation intends to build off of key investments by the Legislature in the FY08 GAA by making permanent an annual funding stream for vital State programs and investments. In FY08, the Legislature established the Bay State Competitiveness Investment Fund (BSCIF), which was funded using the first $100 million of FY07 consolidated net surplus. The $100 million was then transferred to various funds in order to allow for the State to fund programs and projects in the life sciences industry, affordable housing, clean energy, cultural facilities, and other areas.

In FY09 the Governor proposes to use the first $100 million of the FY08 consolidated net surplus to "re-capitalize" the BSCIF and provide funding to State funds for targeted investments. The $100 million transfer to the BSCIF would be made annually under the Governor's proposal, which would provide a steady and stable funding source for programs identified in the Governor's recommendation. The chart below outlines the proposal for the BSCIF in the H.2 recommendation. A further summary is provided below for each of the seven major State initiatives supported with funding from the BSCIF. These initiatives support state wide programs focused on areas such as economic development, housing, energy, and workforce development.

This illustration shows the FY09 H.2 Bay State Competitiveness Investment Fund Proposal.  Beginning with the FY2008 year-end surplus, transfer of first $100 million to the Trust fund.  Then a transfer of the first $25 million to the Life Sciences Investment Fund.  The reaming $75 million will be transferred to 6 state initiates.  Alternative and Clean Energy Trust Fund, $20 million; Workforce Competitiveness Trust Fund, $15 million; Affordable Housing Trust Fund, $15 million; Heating Assistance Trust Fund, $15 million; Cultural Facilities Fund, $7 million; Regional Efficiency Grants Trust Fund. $3 million.

The H.2 budget proposal requires that the first $25 million of any funding transferred to the BSCIF would be made available for the Life Sciences Investment Fund, a key funding source for targeted investments in research and innovation in the life sciences industry. The remaining balance of the BSCIF, up to $75 million, would be annually transferred to the following: Alternative and Clean Energy Trust Fund ($20 million); Workforce Competitiveness Trust Fund ($15 million); Affordable Housing Trust Fund ($15 million); Heating Assistance Trust Fund ($15 million); Cultural Facilities Fund ($7 million); and the Regional Efficiency Grants Trust Fund ($3 million). If less than $75 million is available annually in the BSCIF annually after the life sciences transfer, then the remaining transfers would be reduced proportionately to the total funding available in the BSCIF.

The following paragraphs summarize each of the major programs or initiatives funded through the H.2 BSCIF proposal.

Life Sciences

In July of 2007, the Governor filed legislation that would build off the successes of the State to attract world leading researchers and life sciences companies, providing $1 billion over 10 years in tax incentives for job growth, grants for research and innovation, and investments in infrastructure necessary to further discovery and broaden opportunities for commercialization. The H.2 recommendation provides $25 million in FY09 funding to support research and innovation grants awarded by the Massachusetts Life Sciences Sector. These grants, in combination with targeted tax incentives for job creation and capital investments, will build on the Governor's efforts to spur growth across the State in the Life Sciences industries.

Alternative and Clean Energy Trust Fund

In FY09, Governor Patrick recommends $20 million for the Massachusetts Alternative and Clean Energy Investment Trust Fund to stimulate the clean energy economy in Massachusetts ( Outside Section 5). This fund will focus on two main priorities: Biofuels and Green Communities. The Administration has estimated that nearly 3,000 clean energy jobs would be created by developing an advanced biofuels industry here in the Commonwealth, which will be supported through the Fund's investments. The fund will also focus on implementing the Green Communities program envisioned by the comprehensive energy reform legislation passed by the House and Senate. The program will ensure that municipalities maximize energy efficiency and renewable energy opportunities that cut energy costs, reduce pollution and create new jobs. Strategic investments from this fund will be used to help cities and towns develop plans to meet the aggressive goals set forth in the landmark energy legislation.

Affordable Housing Trust Fund

The Governor's H.2 recommendation would provide $15 million in FY09 to fund investments from the Massachusetts Affordable Housing Trust Fund (AHTF), which makes resources available for the creation or preservation of affordable housing throughout the state. AHTF program funds are provided for households whose incomes are not more than 110% of median income and are available for rental, home ownership and mixed-use projects as well as housing for the disabled and homeless, provided that they are only applied to affordable units. AHTF funds primarily support private housing projects include the acquisition, construction or preservation of affordable housing. MassHousing and the Department of Housing and Community Development (DHCD) jointly administer AHTF.

Low Income Home Energy Assistance Program (LIHEAP)

The LIHEAP or Fuel Assistance program is a key federal program which supports those low income Massachusetts households which face mounting heating bills during the winter and often struggle to choose between paying the rent and heating their house or apartment. As the price of energy across the state rises, and the federal budget does not keep up with the cost of home heating, State funding to supplement the assistance provided under the federal program becomes that much more essential. The Governor's H.2 recommendation provides $15 million in the State supplemental to LIHEAP, which would provide resources for LIHEAP to be made available in the winter of 2008-09.

Workforce Competitiveness Trust Fund (WCTF)

The WCTF was established in the economic stimulus legislation of 2006 to provide resources for industry-specific employment and training programs developed in a collaborative fashion between regional and community-based organizations, industry, labor organizations, and State and local government agencies. The program, which is administered by the Commonwealth Corporation, has proven to be remarkably successful, awarding competitive 3-year grants for projects to train or re-train workers across the State, building on the strengths of the Massachusetts workforce. Grant funding represents a key resource for workforce development across the Commonwealth to leverage their employment programs and initiatives with State dollars, while ensuring balanced economic development and growth.

Massachusetts Cultural Facilities Fund (CFF)

CFF grants, which are awarded by the board of the Mass Development Finance Agency, are selected on a competitive basis to provide essential funding to non-profit cultural organizations, municipalities, and institutions of higher education to support their efforts to preserve and maintain cultural facilities. This program, initially created in 2006 by the Massachusetts Legislature, is a vital tool in providing investments in cultural and historical attractions across the state. Grant awards are based on a variety factors including community and financial need, benefit to the local and regional tourism market, and local support for the project. All grants from the Fund must be matched with cash contributions from the private or public sector.

Regional Efficiency Grants Program

The H.2 budget would provide an annual transfer of $3 million for a new Regional Efficiency Grants Program, which would be administered by the Division of Local Services with the Department of Revenue. This program would fund grants to encourage and help municipalities to implement regional approaches to delivering services, in an effort to improve service delivery while containing or reducing costs.

Bay State Competitiveness Investment Fund Transfers
Summary of New Investments
Life Sciences Investment Fund$25,000,000
Clean and Alternative Energy Fund$20,000,000
Heating Assistance Fund/LIHEAP$15,000,000
Affordable Housing Trust Fund$15,000,000
Workforce Competiveness Trust Fund$15,000,000
Cultural Facilities Fund$7,000,000
Regional Efficiencies Grants$3,000,000
Governor's Proposal$100,000,000

Prepared by the Executive Office for Administration and Finance • Rooms 373 & 272 • State House
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