- Budget Development
- Financial Statements
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- Appropriation Recommendations
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Overview of State Spending
When considering the Governor’s recommendation for the FY 2015 budget, it is important to remember that the funding levels proposed do not encompass the entirety of Massachusetts’s state spending for the next fiscal year. In fact, a meaningful amount of state spending every year is done “off-budget” or through fund sources that are not subject to the annual appropriations adopted by the Legislature. The spending that is done by the state from non-budgetary sources falls into three general categories:
- Federal Grants – Annually, the federal government provides billions of dollars in funding to state agencies to operate programs, whether ongoing or one-time, for a variety of purposes including housing, public health, environmental health, education and public safety. State agencies are responsible under state law for notifying the Legislature and the Executive Office for Administration and Finance (A&F) of their intent to apply for these funds, but are otherwise given flexibility in the timing and purpose of the expenditure of these funds. Most federal grants require rigorous reporting standards with which applicant state agencies must comply. The FY 2015 budget recommendation provides projected spending amounts for federal grants for each department in the Appropriation Recommendations section. Under the FY 2012 budget reform that created the Office of Commonwealth Performance, Accountability and Transparency (CPAT), oversight and central coordination of federal grant management was designated to CPAT to help maximize federal funding opportunities and link federal resources with Administration funding priorities.
- Trust Funds – Most state agencies have established trusts, to be held on their behalf by the state treasurer, into which they are directed in law or through a trust document to deposit revenues made available to the agency for dedicated purposes and restrictions. In general, any unexpended funds in state agency trust funds remain available from one fiscal year to another for further expenditures. Projected spending amounts for trust funds are listed for each department following the state budgetary line-items in the Appropriations Recommendations section.
- Capital Projects – Every year the state must spend billions of dollars to support required maintenance and improvement to its transportation infrastructure, housing developments, state parks, environmental projects and investments in higher education institutions. While this spending is authorized by the Legislature, the appropriations are generally in effect over a five-year period in recognition that many capital projects must span multiple fiscal years from project inception to completion. Most capital project spending is funded through bond sales, which allow the state to finance large-scale projects through borrowing and annual debt payments. Please see the Capital Budget section in this document for further discussion of capital project spending.
The following charts show that the state operating budget makes up the largest portion of state spending in comparison to all other funding sources in any given year. Yet over 23% of total state spending occurs from non-budgetary sources. In the financial statements following this discussion, only the operating budgeted fund revenues and expenditures are displayed. It is important to note that there are further resources that are annually available to the state and its agencies beyond those subject to the annual budgeting process.
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