Patrick-Murray Administration Announces $116 Million Surplus to End FY12
BOSTON – October 31, 2012 – The Executive Office for Administration and Finance announced today that the Commonwealth ended Fiscal Year 2012 with a surplus of $116 million that will be deposited to the Commonwealth’s Stabilization Fund, otherwise known as the “Rainy Day” fund.
"This report is welcome news for the Commonwealth," said Governor Patrick. "Through our smart management of the Commonwealth's finances we are able to protect core services and continue to make key investments in innovation, education and infrastructure to build a brighter Commonwealth for the next generation."
“In recent months, the Commonwealth has benefitted from some of the lowest borrowing rates offered to any state in the country, a clear sign that the investor community likes what it sees in terms of our fiscal management,” said Treasurer Steven Grossman. “This deposit into the Rainy Day Fund is another example of Massachusetts leading by example when it comes to strong and disciplined fiscal stewardship.”
The deposit is highlighted in the Statutory Basis Financial Report (SBFR) issued by the Office of the State Comptroller this week.
“Thanks to the new fiscal policies and proactive fiscal management of the Patrick-Murray Administration and the legislature, the Commonwealth is once again ending the fiscal year with a surplus and with one of the highest rainy day fund balances in the country,” said Secretary of Administration and Finance Jay Gonzalez. “Not only will these positive results help us maintain the state’s highest-ever credit ratings, they will put us in a better position to responsibly manage the fiscal challenges that we continue to face.”
This is the third year in a row that the Rainy Day Fund balance has increased over the prior year’s closing balance as a result of the prudent fiscal policies and strong fiscal management by the Patrick-Murray Administration and the legislature. After accounting for the year-end-deposit, the Rainy Day Fund balance increased from $1.379 billion at the end of FY11 to $1.652 billion at the end of FY12, marking a net deposit of almost $273 million.
“In recent fiscal years our careful and thoughtful consideration of spending has paid off,” said Stephen M. Brewer, Chair of the Senate Committee on Ways and Means. “By exercising fiscal conservancy, and looking at ways to increase our efficiency, we have been able to maintain investments that support the growth of our economy. We are moving in the right direction and our current position is good; however, we must continue to exercise caution in spending. As slower than expected tax revenues in recent months have shown, we are not out of the woods yet. This deposit to the rainy day fund is a testament to the hard work that has been done here. In order to keep this forward motion, we must remain diligent in our efforts.”
“The FY12 surplus is the result of the continuous effort of the Legislature and the Administration to manage the Commonwealth’s finances while keeping our state budget in balance,” said Brian S. Dempsey, Chair of the House Committee on Ways and Means. “While this surplus to our Rainy Day Fund is welcome news as we close the books on FY12, we as a Legislature will continue to make responsible choices as we progress through FY13 and the upcoming budget process.”
The FY12 estimates released by the National Association of State Budget Officers (NASBO) in June 2011, together with the results reported in the SBFR, indicate that Massachusetts’s Stabilization Fund balance of $1.652 billion is estimated to be the third highest reserve fund balance in the nation in absolute size. The only two states with a higher reserve fund balance are Alaska and Texas due to billions of dollars of oil tax revenues which those states collect and deposit in their reserve funds.
Earlier this month Secretary Gonzalez certified that projected revenues continue to be sufficient to meet projected expenditures for FY13. However, there are a number of potential risks to the current revenue estimate, and the Secretary has imposed FTE-caps, tightened spending controls and initiated a contingency planning process in the event that mid-year budget reductions are necessary. The contribution of the FY12 surplus to the Rainy Day Fund will help the Commonwealth manage any such future challenges in a way that mitigates the impact on programs and services.