FY2011 - FY2015 Capital Investment Plan
Appendix A - Debt Affordability Analysis - Self-Supporting Project Financings

Unlike past practice in Commonwealth capital budgeting, the Patrick-Murray Administration is taking all debt service and debt-like payment obligations into account in determining the appropriate level of annual borrowing pursuant to the policy set forth in this report.  The Administration recognizes, however, that exceptions to this policy may be justified in limited circumstances where a project financed with debt payable by the Commonwealth directly or indirectly generates new state revenue or budgetary savings that is targeted to the payment of such debt.  In these limited circumstances, the Administration will exclude the debt from the annual bond cap and will exclude such debt service payment obligations, and the related new revenue used to pay such obligations, from the analysis set forth herein for purposes of determining the annual bond cap. 

There are three examples of debt the Administration will exclude from the annual bond cap and debt affordability analysis.  The first is debt that the Massachusetts Development Finance Agency issues for public infrastructure improvements necessary to support significant new private development, pursuant to the infrastructure investment incentive program known as “I-Cubed”.  This debt will be excluded because the Commonwealth will ultimately be responsible for funding only the portion of the related debt service that is supported by new state tax revenue generated from the related private development.  The second example of debt that will be excluded from the debt affordability analysis is debt the Administration issues to fund fire training facility projects as legislation authorizes the Commonwealth to raise the amounts needed to fund the related debt service costs for such projects through assessments on property insurance policies.  The third example is debt associated with the Clean Energy Investment Program initiated by the Governor in January 2010 in which the Commonwealth issues general obligation bonds to fund energy efficiency and renewable energy projects at state facilities.  These projects will result in energy cost savings from less energy use and a portion of the related budgetary savings will be used to cover the debt service associated with the general obligation bonds issued to finance the projects.  The table below shows the amounts of incremental tax revenue, assessments, and captured energy savings projected to be applied in fiscal year 2010 and the subsequent five fiscal years to pay debt service on bonds issued to fund the construction of the infrastructure development projects, fire training facilities and energy efficiency projects, respectively.

Table 6
Self-Supporting Project Financings
Fiscal Years 2010-2015
($000s)
Fiscal Year Infrastructure Development Projects Debt Service DFS Insurance Assessments Energy Efficiency Projects Debt Service Total Self-Supporting Debt Service
2010 01,64801,648
2011 2,6022,2881,1005,989
20126,5762,6467,22216,443
20139,4792,90114,94327,323
201412,6803,07222,66438,416
201515,8733,09230,38549,350

Table 8 excludes such amounts from both the debt service and the budgeted revenue estimates.