The Massachusetts Constitution empowers the State Legislature to borrow money on the credit of the Commonwealth. This authority to borrow is delegated to the Massachusetts State Treasurer & Receiver General pursuant to Chapter 29 of the Massachusetts General Laws. As a department within the Treasurer's Office, the Debt Management department is authorized to conduct such borrowing for the Commonwealth.

The following is a summary of the constitutional and statutory provisions governing the sale of Commonwealth Debt:





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Last Updated: 10/27/2009

Disclaimer: The information is provided for quick reference only and is not an exhaustive compilation of information for any particular bond issue. It does not purport to present full and fair disclosure with respect to Commonwealth of Massachusetts debt within the meaning of applicable securities laws.


Constitution of the Commonwealth (Article 62 of the Amendments):

Section 1. The Commonwealth may give, loan or pledge its credit only by a vote, taken by the yeas and nays, of two-thirds of each house of the general court present and voting thereon. The credit of the Commonwealth shall not in any manner be given or loaned to or in aid of any individual, or any private association, or of any corporation which is privately owned and managed.

Section 2. The Commonwealth may borrow money to repel invasion, suppress insurrection, defend the Commonwealth, or to assist the United States in case of war, and may also borrow money in anticipation of receipts from taxes and other sources, such loan to be paid out of the revenue of the year in which it was created.

Section 3. In addition to the loans which may be contracted as before provided, the Commonwealth may borrow money by a vote, taken by the yeas and nays, of two-thirds of each house of the general court present and voting hereon. The governor shall recommend to the general court the term for which any loan shall be contracted.

Section 4. Borrowed money shall not be expended for any other purpose than that for which it was borrowed or for the reduction or discharge of the principal of the loan.

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Massachusetts General Laws (State Finance Law - Chapter 29):

Section 47. authorizes the State Treasurer to issue revenue anticipation notes, which must be repaid before the close of the fiscal year in which they are issued.

Section 48. identifies the state officials who must sign and approve debt instruments of the Commonwealth.

Section 48B. requires certain disclosures to be made to prospective purchasers of Commonwealth debt.

Section 49. is the primary statute governing the issuance of Commonwealth debt and contains numerous provisions:

The first paragraph authorizes the State Treasurer to establish sinking funds for the payment of maturing obligations and identifies the securities which may be purchased as investments in such funds. Section 53A (see below) makes these provisions applicable to escrow funds established in connection with the issuance of refunding bonds.

The second paragraph permits bonds to be issued as registered or bearer bonds and to bear interest at fixed or variable rates.

The third paragraph permits book-entry bonds.

The fourth paragraph requires the Governor to recommend the term of Commonwealth bonds and the Legislature to enact a "terms bill" before bonds or notes can be issued and before moneys can be expended from the state treasury for bond-financed projects.

The fifth paragraph permits the State Treasurer to determine the denomination of bonds.

The sixth paragraph authorizes the State Treasurer to consolidate into a single bond issue bonds authorized under a variety of separate authorization statutes and also permits the State Treasurer to allocate the proceeds of a bond issue to particular projects either at the time the bonds are issued or later.

The seventh paragraph permits bonds within the same bond issue to bear different interest rates.

The eighth paragraph permits the Commonwealth to sell bonds subject to call for redemption prior to maturity.

The ninth paragraph permits the State Treasurer to sell bonds at par, premium or discount and to sell bonds that accrete in value over time. The State Treasurer may use bond premium to pay financing costs.

The tenth paragraph authorized the State Treasurer to covenant with bondholders that the Commonwealth will comply with the provisions of the federal Internal Revenue Code governing the issuance of federally tax exempt bonds.

The eleventh paragraph authorizes the State Treasurer to issue bond anticipation notes.

Section 49B. authorizes the State Treasurer to enter into lines and letters of credit with financial institutions to secure bonds and notes, and also authorizes the State Treasurer to enter into agreements with brokers to place commercial paper issued by the Commonwealth.

Section 49C. authorizes a particular type of bonds issued under the "U.Plan" program administered by the Massachusetts Educational Financing Authority.

Section 53 requires the State Treasurer to sell bonds or notes with maturities longer than three years at competitive, public sale, unless the Finance Advisory Board waives the requirement.

Section 53A requires the State Treasurer, upon the request of the Governor, to issue refunding bonds either to produce debt service savings (computed on a present value basis) or to substitute fixed-rate bonds for variable-rate bonds or one form of variable-rate bonds for another.

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Special Acts (authorizing bonds for specific purposes):

Chapter 303 of the Acts of 2008 is an example of a bond authorization statute (often called a "capital outlay bill") which authorizes a specific amount of bonds for identified purposes and projects. There are dozens of such statutes in operation at any particular time.

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Terms Bills:

Chapter 360 of the Acts of 2008 is an example of a "terms bill" that sets the terms for a variety of bond authorizations.

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Special Obligation Dedicated Tax Revenue Bonds: Chapter 152 of the Acts of 1997 authorizes the State Treasurer to issue special obligation secured by certain pledged revenues for the construction and renovation of three convention centers and exhibition centers in Boston, Springfield and Worcester, Massachusetts.

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Special Obligation Revenue Bonds: Section 2O of Chapter 29 of the Massachusetts General Laws (MGL's) authorizes the State Treasurer to issue special obligation revenue bonds to finance the costs of certain highway projects in the Commonwealth. The principal and interest on such bonds are payable and secured by a pledge of a portion of the excise tax imposed by the Commonwealth on gasoline under chapter 64A of the MGL's.

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Federal Highway Grant Anticipation Notes: Sections 9 through 10D of Chapter 11 of the Acts of 1997, as amended, authorizes the State Treasurer to issue bonds payable and secured by Federal Highway Reimbursements paid to the Commonwealth from revenues collected by the U.S. Treasury and deposited into the federal Highway Trust Fund for distribution, subject to Congressional appropriation.

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