The Senate budget debate next week could determine how competitive Gateway Cities will be in the post-pandemic economy. At a key moment when housing and transportation investments could help make these communities more attractive for an age of remote work, the danger of missing out on the opening and backsliding is real.

Housing: Housing Development Incentive Program
MassINC and economic development leaders have been banging the drum for years now that Gateway Cities are ready and able to build much of the housing supply that our state needs to stabilize prices. However, the only tool designed to unlock that investment is the Housing Development Incentive Program (HDIP), which is woefully underfunded and has a six-year backlog.

Sen. Eric Lesser has filed amendments #212 and #213 to address the issue. The first would triple the annual cap for the program from $10 million to $30 million, something that Gov. Baker has already proposed in his economic development bill. It would also raise the per-project limit from $2 million to $3 million to take into account rising costs since the program was established. Lesser’s second amendment would allocate $57 million in operating funds to address the existing backlog of HDIP projects waiting to be built.

Gateway City legislators made a valiant effort to pass similar amendments in the House budget debate, but unfortunately, they did not prevail. This may be because the House intends to follow Gov. Baker’s lead and take the issue up in the economic development bill. However, the budget is a more favorable vehicle because it would increase the cap for FY 23, whereas changes in the economic development bill would not be effective until FY 24.

Fully funding the HDIP backlog would pump over $700 million in project investment into Gateway Cities even before accounting for permanent jobs, residents, and positive impact on local businesses. MassINC estimates that tripling the program on an ongoing basis would generate over 10,000 units of housing and nearly $4 billion in private investment over 10 years.

Transportation: Regional Transit
Gov. Baker’s budget level-funds the regional transit authorities (RTAs) at $94 million, which in this inflationary environment means a significant cut. The problem is exacerbated when accounting for the driver shortage that has already forced service reductions at many agencies. The RTA Advocacy Coalition (RTAAC) recommends providing at least $7 million in additional base funding to compensate for the effects of inflation and provide the hiring incentives and workforce training needed to deliver full service.

Unfortunately, the House Ways and Means budget mirrored the Governor’s proposal. And despite more than half of the chamber signing on to amendments to boost the bottom line, they were not adopted in the final House budget.

That means it’s up to the Senate to avoid a precarious situation for Gateway Cities, where bus ridership has remained strong because of essential workers and transit-dependent households. Senate budget amendments #885 and #886 filed by Sen. Harriette Chandler would increase funding for RTAs in the FY 23 Senate budget to $104 million to support service, address the driver shortage, and allow RTAs to continue engaging in fare pilots that make service more affordable for riders.

Additionally, Amendment #857 by Sen. Adam Hinds would meet a recommendation in the 2019 Report on RTA Performance and Funding to create a dedicated source of revenue for RTAs by carving out a portion of the proceeds from corporate excise taxes—perhaps it’s the ultimate solution to this annual dance.