BOSTON — Low-income workers who toiled in hospitals, grocery stores and other frontline businesses during the pandemic could be getting cash bonuses under a legislative plan to spend billions of dollars in federal relief and surplus funds.

The plan, rolled out by House Democrats on Monday, calls for spending $3.65 billion to make “once-in-a-generation” investments in housing, workforce development, safety-net hospitals, schools and the health care system to help buoy workers, businesses and communities hard-hit by the COVID-19 pandemic.

“The spending of this money is critical to getting Massachusetts back to better than before,” House Speaker Ron Mariano, D-Quincy, told reporters at a briefing. “Our goal is to responsibly fund priority areas that will stand the test of time and make systemic and equitable changes.”

A centerpiece of the relief package calls for spending $500 million on “premium pay” for “essential” frontline workers who stayed on the job during the pandemic.

Details of the worker relief program weren’t released Monday, but legislative leaders said the bonuses would range from $500 to $2,000. Also, they would be limited to workers who earned up to 300% of the federal poverty level and remained on the job during the COVID-19 state of emergency last year.

The spending plan

Overall, the spending plan calls for tapping into about $2.5 billion from the state’s share of American Rescue Plan Act funds, with the remainder, about $1.15 billion, coming from surplus revenues. It would leave about half of the $4.8 billion in unspent ARPA funds in an escrow account controlled by the Legislature.

A sizable chunk of the relief package, roughly $600 million, would be devoted to addressing a shortage of housing. The funds would be divided between existing programs to boost market rate and affordable housing production, first-time homeowner mortgage assistance and improving public housing maintenance.

At least $500 million would be devoted to reducing a massive deficit in the state’s Unemployment Trust Fund that employers are required to pay into.

That’s significantly less than the $1 billion business leaders and Gov. Charlie Baker had called for to pay down the deficit, which is nearly $3 billion in the hole. The fund’s deficit is driving up insurance rates paid by employers, many of whom are still struggling amid the ongoing financial impact of the pandemic.

“That small allocation will barely cover a fraction of the $7 billion deficit employers are being forced to pay,” said Chris Carlozzi, state director of the Massachusetts chapter of the National Federation of Independent Businesses. “In fact, $500 million may not even be enough to offset the estimated expense of overpayments and fraud within the UI system.”

Under the plan, at least $200 million will be devoted to relief for small business owners who paid personal income tax on state and federal relief grants.

The plan also calls for spending $350 million on environmental infrastructure, climate change resiliency, and clean energy, with a focus on Gateway cities and “environmental justice” communities that are disproportionately impacted by the state’s reliance on fossil fuels.

Of that, at least $100 million would be earmarked for upgrading water and sewer infrastructure, with a focus on combined sewer overflows that spew partially or untreated sewage into rivers from aging culverts during major rain events.

Meanwhile, another $250 million would be directed to financially stressed hospitals with a focus on improving behavioral and mental health services.

Rep. Ann-Margaret Ferrante, D-Gloucester, vice chairwoman of the Ways and Means Committee, said the additional funding will be crucial to dealing with a mental health crisis that has been exacerbated by the pandemic.

A portion of the funds will devoted to boosting staffing and beds in mental health facilities to reduce emergency room “boarding” of psychiatric patients seeking care, she said.

“There’s two crises going on in health care: One is COVID-19 and the other is mental health,” Ferrante said Monday. “We’ve heard a lot of testimony from parents whose children are in emergency rooms day after day until a bed becomes open.”

Senate, Baker plans

The spending plan was hammered out in private talks between members of the Legislature’s Joint Ways and Means Committee and House Committee on Federal Stimulus and Census Oversight over the past several months. The committees held several virtual public hearings to solicit input as part of the deliberations.

The state Senate is expected to release its plans for spending ARPA and surplus funds in coming weeks, but both chambers issued a statement saying that they agreed on major provisions of the House plan.

Massachusetts has received about $5.3 billion from the $1.9 trillion stimulus package signed by President Joe Biden.

Baker has been quarreling with legislative leaders over control of the money. He initially proposed spending $2.8 billion, leaving lawmakers to distribute the rest. But lawmakers rejected his plan and swept most of the money into a fund controlled by the Legislature.

Baker responded with legislation calling for $2.9 billion in spending on housing, water and sewer infrastructure, substance abuse and other priorities.

Rep. Aaron Michlewitz, D-Boston, who chairs the House Ways and Means Committee, said the spending plan rolled out Monday targets the communities and individuals most impacted by the pandemic.

“These communities were hit hardest by COVID and it’s only appropriate that the lens in which we view these funds be tilted towards filling the needs of these communities,” he said.

For more details of the House proposal, visit https://malegislature.gov/Bills/192/H4219

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@northofboston.com.

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