FY2011 - FY2015 Capital Investment Plan
Report - Development of the FY11-15 Capital Investment Plan

The FY11-15 Capital Investment Plan represents the fourth five-year plan since the Patrick-Murray Administration took office.  As with the prior plans, the Administration has engaged in a diligent, fiscally responsible, and comprehensive process for developing this five-year capital investment plan.  One common challenge shared by each of the previous five-year plans is the fact that demand for capital improvements far exceeds affordable funding capacity.  The inevitable consequence is that many worthy projects will not receive funding.

Development of last year’s capital budget was distinguished by the historic decline in budgeted revenues over the prior year due to the economic downturn. By all accounts, the Massachusetts economy has stabilized and is recovering faster and stronger than the rest of the nations.  Nevertheless, this year’s capital plan is constrained by a lower base of revenues this year when compared to prior year’s revenue growth expectations.  The effect of a lower revenue base is exacerbated by the fact that the vast majority of the capital budget is committed to ongoing projects, which reduces our ability to introduce new or discretionary spending.  Finally, increased cost estimates for the large transit projects associated with environmental mitigation relating to the Central Artery/Tunnel project and to which the Commonwealth is legally committed are crowding out other worthy projects. 

In order to establish the total amount of the bond-funded capital program within an affordable level, the Administration conducted a rigorous review of the Commonwealth’s debt capacity within its debt affordability policy.  The debt affordability analysis underlying the FY11-15 capital investment plan is attached as Appendix A.  As indicated in that analysis and illustrated below, the Administration has set the bond cap for fiscal year 2011 and the projected bond caps for future fiscal years at lower levels than it had previously planned in order to ensure that the amount of debt issued to fund the capital program is kept within affordable levels consistent with the Administration’s debt affordability policy.  Between the FY08-12 Plan and the FY11-15 Plan, planned bond-funded capital investments have been reduced by over $1 billion during the period covered by those plans.

chart depicting how the Administration has set the bond cap for fy11 and the projected bond caps for future fys at lower levels than it had previously planned in order to ensure that the amount of debt issued to fund the capital program is kept within affordable levels consistent with the Administration's debt affordability policy.

A full 90 percent of the bond-funded fiscal year 2011 capital budget is needed to fund “hard” commitments, including ongoing construction contracts, investments needed to generate federal matching funds, legal commitments and personnel needed to carry out capital programs.  This high level of commitments leaves limited budget capacity to start new projects in fiscal year 2011.

The entire fiscal year 2011 capital investment plan is presented in detail in Appendix C and descriptions of each project or program are included in Appendix D.  The highlights of the FY11-15 capital investment plan are provided in the discussions of investment categories below.