FY2011 - FY2015 Capital Investment Plan
Appendix A - Debt Affordability Analysis - Existing Obligations and Liabilities

A&F’s debt capacity analysis includes an examination of existing Commonwealth debt service and contract assistance payment obligations. The analysis includes only the interest payments on federal grant anticipation notes (GANs); principal payments are made with grants from the Federal Highway Administration that are legally dedicated to such purpose and are not available for general budgeting purposes. Special obligation bonds secured by gas tax receipts are included in the analysis.  Special obligation bonds for the Massachusetts Convention Center Authority are not included; although these bonds are obligations of the Commonwealth, they are secured and paid directly by a pledge of dedicated tax and excise revenues related to the convention center projects financed with proceeds of the bonds.  Massachusetts Bay Transportation Authority (MBTA) and Massachusetts School Building Authority (MSBA) bonds are also not included because they are obligations of the respective authorities, and, although secured in part by a portion of the Commonwealth’s sales tax revenues, the Commonwealth is not liable for such bonds and such sales tax revenues are legally dedicated to the MBTA and MSBA.  The revenues legally dedicated for the convention center bonds and for the MBTA and MSBA bonds are not available for general budgetary purposes and are consequently not included in the budgeted revenue figures taken into account in this analysis.

The Commonwealth’s existing direct debt service obligations for fiscal years 2010 through 2015 are presented in the following table.

Table 1
Existing Direct Debt Service Obligations
Fiscal Years 2010-2015 ($000s)
Fiscal Year General Obligations Federal GANs (interest only) Special Obligations (gas tax only) Total Existing Direct Debt Service Obligations
20101,799,56445,75258,9311,904,247
20111,878,36444,95758,9321,982,253
20121,753,08436,88058,9381,848,902
20131,768,95228,93358,9221,856,807
20141,609,38116,72752,7041,678,812
20151,560,1475,64152,7011,618,489

As part of the comprehensive plan to address fiscal year 2011 budgetary challenges, the Commonwealth authorized a refinancing of up to $300 million of the $1.02 billion in principal due in fiscal year 2011.  The Administration has already refinanced $200 million of this authorized amount, primarily to smooth an unusual spike in debt service.  The remaining $100 million of restructuring debt was also issued, but it will only be applied to restructure debt later in the fall to the extent necessary based on tax revenue performance.  If deemed not to be necessary for budgetary reasons, the $100 million will be applied to fund authorized capital projects.  This analysis assumes the full $300 million in debt restructuring, the impact of which is shown in the following table.

Table 1a
Impact of Fiscal Year 2011 Debt Restructuring
($000s)
Fiscal Year Refunded Debt Service Refunding Debt Service Savings
2010000
2011308,5633,567304,996
2012010,578-10,578
2013010,578-10,578
20140101,143-101,143
20150101,099-101,099
20160101,125-101,125

Table 1b adjusts the General Obligations Existing Debt Service Obligations by reducing fiscal year 2011 debt service and increasing fiscal year 2012 through 2015 by the amount of the debt service reflected in the “Savings” column, above.

Table 1b
Existing Direct Debt Service Obligations Including Fiscal Year 2011 Restructure
Fiscal Years 2010-2015
($000s)
Fiscal Year General Obligations Including FY11 Restructure Federal GANs (interest only) Special Obligations (gas tax only) Total Existing Direct Debt Service Obligations
2010 1,799,56445,75258,9311,904,247
2011 1,573,36844,95758,9321,677,257
2012 1,763,66236,88058,9381,859,480
2013 1,779,53028,93358,9221,867,385
2014 1,710,52416,72752,7041,779,955
2015 1,661,246 5,641 52,701 1,719,588

Contract assistance obligations, including certain capital lease obligations that relate to major capital projects, were also included in the examination of existing Commonwealth obligations.[13] These obligations for fiscal years 2010 – 2015 are presented in the following table.

Table 2
Existing Contract Assistance Obligations
Fiscal Years 2010-2015
($000s)
  General Obligation Budgetary
Fiscal Year Water Pollution Abatement Trust MassDOT (Turnpike Authority) Route 3 North Transportation Improvements Association Plymouth County Correctional Facility Saltonstall Building Total Contract Assistance Obligations
201067,262125,0009,61810,2449,437221,561
201170,000125,0009,61810,2259,509224,352
201270,000125,0005,40910,2409,578220,227
201370,000125,0001,12910,2459,649216,023
201470,000125,0001,13010,2449,723216,097
201570,000125,0001,12810,2509,840216,218

Exhibit A to this Debt Affordability Analysis lists the line items in the General Appropriations Act that provide for the debt service and contract assistance payment liabilities described above.  It should be noted that the appropriated amounts may not match the amounts reflected in this Debt Affordability Analysis due to more conservative assumptions in this analysis with respect to the timing of bond issues and the resulting impact on fiscal year budgets and different assumptions regarding interest rates.


Footnotes:

[13] The analysis includes major capital lease obligations, such as lease payments that support the Route 3 North Transportation Improvements Association, the Plymouth County Correctional Facilities Corporation, and the Saltonstall Building Redevelopment Corporation Project, all of which are large-scale capital projects that were funded outside of the bond cap by prior administrations. For the Massachusetts Department of Transportation as successor to the Massachusetts Turnpike Authority, the contract assistance payment obligations reflect an increase of $100 million annually beginning in fiscal year 2010 pursuant to comprehensive transportation reform legislation. Contract assistance for infrastructure development related bonds issued by Massachusetts Development Finance Agency (MassDevelopment) are not included in this analysis as they are expected to be fully reimbursed by incremental state tax revenues resulting from the development or other sources (see Table 6). Minor capital costs, such as equipment lease purchases made by state agencies, are funded through their respective operating budgets and are not part of the state’s capital budget and, accordingly, are not included in this analysis.