- Budget Development
- Financial Statements
- Budget Recommendations
- H.1 Revisions
- Local Aid Overview
- Local Aid - Section 3
- Outside Sections
- Account Listing
- Capital Budget
- Tax Expenditure Budget
- Budget Downloads
- Navigation Guide
- Budget Glossary
- Related Legislation
- Site Map
Capital to Operating Transfer
[ index ]
FY2010 House 1 Budget Recommendation:
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
Section 34 of the Governor's fiscal year 2010 budget authorizes a no-cost mechanism for removing hundreds of employees and other budgetary expenses from the capital budget with the goal of significantly scaling back the fiscally imprudent practice of funding these expenses with debt. For every dollar the state spends on the capital budget, an additional $0.60 is added in interest costs.
For a number of years personnel and other goods (paper, utilities, etc.) have been charged to capital accounts - resulting in millions of additional dollars in interest payments while reducing the amount of money available for statewide construction projects. The practice of shifting operating costs to the capital budget was born years ago during tough economic times like those we are currently experiencing. Over the past two years, capital improvement initiatives for roads, higher education, public housing, parks and state facilities required additional staff on the capital budget to complete projects. However, the Administration is committed to monitoring expenditures and additional employees assigned the capital budget to ensure their appropriateness, while also seeking fiscally responsible ways to bring proper costs back onto the operating budget. This transition will also allow for a more transparent view of the employee levels in our agencies.
In 2008, the Legislature authorized the borrowing of $50 million per year to fund the acquisition of equipment on the capital budget instead of the operating budget. This effort was the first component of Governor Patrick's no-cost mechanism for taking hundreds of employees and other budgetary expenses off the capital budget with the goal of significantly scaling back the fiscally imprudent practice of funding these expenses with debt. Types of eligible equipment include:
- Computers, computer cables and two-way radios;
- Cars, trucks and all terrain vehicles;
- Construction supplies such as lumber, hardware and power tools; and
- Office furnishings, including desks and furniture.
With this bond authorization, up to $50 million in the operating budget will no longer be needed to fund these types of equipment purchases. Financial resources will be freed within the operating budget to fund up to $50 million of personnel and operating-related expenses currently being paid for with borrowed funds on the capital budget.
However, to fully implement the Governor's proposal the Executive Office for Administration and Finance (A&F) must have the authority to transfer money between line items in the operating budget. If a line-item funded the acquisition of durable equipment, Outside Section 34 of the Governor's budget would allow A&F to transfer that amount to another line-item to fund the cost of personnel that would have otherwise been funded from the capital budget. With line item transferability, the Governor can ensure that the initiative is cost neutral.
The Administration is committed to monitoring transfers to ensure their appropriateness, while also looking for fiscally responsible ways to bring proper costs back onto the operating budget. The total amount of such transfers cannot exceed $50 million, and A&F will give the Senate and House Committee on Ways and Means a schedule and opportunity to review all transfers. To implement the proposed transfer of personnel from the capital budget to the operating budget, Outside Section 34 of the Governor's budget is required.
Prepared by the Executive Office for Administration and Finance · Rooms 373 & 272 · State House
For more information contact:
Thomas Dugan (firstname.lastname@example.org)
top of page