Public Meeting Notice  October 24, 2025 Capital Debt Affordability Committee Meeting

Meeting ID: 831 9630 8872

Passcode: 211006

Teleconference line: 1-309-205-3325; Phone Conference code: 211006#

The meeting was called to order at 1:03 pm

Board members comprising a quorum: 

Kaitlyn Connors, Chair, Executive Office for Administration & Finance

Martin Benison, Appointee of the Treasurer

Pauline Lieu, Office of the Comptroller

Sue Perez, Office of the Treasurer and Receiver-General

Michelle Scott, Massachusetts Department of Transportation

Catherine Walsh, Appointee of the Governor

Others in attendance:

Representative Michael Finn, Chair of Bonding, Capital Expenditures, and State Assets Joint Committee Senator Paul Mark, Vice Chair of Bonding, Capital Expenditures, and State Assets Joint Committee

Aidan Bettencourt, Office of State Representative Michael Finn

Joshua Tavares, Office of Senator Ryan Fattman

Thomas Skehill, Office of Senator Patrick O’Connor

Gita Swamy, Office of Senator Paul Mark

Cory Bannon, Office of the Treasurer and Receiver-General

Daniel Aldridge, Office of the Treasurer and Receiver-General

Timur Kaya Yontar, Executive Office for Administration and Finance

Minutes:

Ms. Connors called the meeting to order and conducted the roll to establish quorum.  She then moved to the first item of business which was approval of the minutes from October 17, 2025, committee meeting.  Upon a motion moved by Ms. Scott, and duly seconded by Ms. Walsh, the minutes were approved unanimously.

The Committee moved on to the next agenda item, where Dr. Kazim Ozyurt from the Department of Revenue provided a revenue and economic update. He began his presentation with an overview of MA State tax collections year-over-year changes by month from July 2007 through September 2024, noting that tax growth in recent history has generally been positive, with a few exceptions, including the pandemic, filing deadline extensions and tax law changes.  

Dr. Ozyurt then provided a recap of tax revenue performance in fiscal year (FY) 2025. He explained that total revenue came in at $43.7 billion, which was a 7.1% increase over FY 2024  revenue and 5.1% above benchmark. He noted that in FY 2025 the Commonwealth saw increases in non-withheld and withholding income tax, which were partially offset by decreases in sales and use tax, corporate & business tax, and “all other” tax. He reported that capital gains tax collections totaled $2.4 billion, which was higher than both FY 2024 actuals and FY 2025 threshold. 

Dr. Ozyurt then went over the FY 2026 year to date tax collections, noting that current year-to-date collections as of September 30, 2025, are approximately $10 billion, which is a 3.2% increase over prior year collections, but is slightly below benchmark (-0.6%).  Dr. Ozyurt noted that the negative performance verses benchmarks is attributable to withholding tax and corporate & business tax. This negative performance was partially offset by positive performance in the non-withholding income, sales, and “all other” tax categories. He noted that it is still relatively early in the fiscal year and that DOR would continue to monitor performance. 

Dr. Ozyurt ended his presentation with a discussion on the near-term economic outlook.  He presented charts that outline economic projections and forecasts from economic vendors Moody’s and IHS for FY 2026 and FY 2027.  In general economists expect: (1)  annual GDP growth to be roughly 2% over the next two years; (2) the Federal Reserve will cut the federal funds rate such that rates will be somewhere in the 3 – 3.25% range by then end of 2026; (3) employment growth will be slow; and (4) CPI [MS1] inflation will be in the 3 – 3.5% range.  He noted that uncertainties related to geopolitical issues, like events in Israel and Ukraine, and the impacts of the federal fiscal policy decisions could impact actual economic outcomes. 

Ms. Connors asked how often the vendors update their projections and whether Dr. Ozyurt anticipated vendor projections significantly changing over the next couple of months.  Dr. Ozyurt replied projections are usually updated monthly and that he did not expect them to significantly change over the coming months, assuming economy remains relatively steady.  

Mr. Benison asked how recently enacted changes to federal tax laws may impact tax revenue projections.  Dr. Ozyurt replied DOR analysis shows a negative impact of more than $600 million  and that DOR will continue to monitor impacts.  He also noted that surtax is performing well and could potentially offset some of the impact.

Ms. Lieu asked about surtax performance over the past 2 years and how it compares to capital gains.  Dr. Ozyurt replied in fiscal 2025 surtax collections were approximately $2.4 billion and in fiscal 2026 collections increased to more than $2.9 billion.  He noted that surtax and capital gains shared similar patterns and that DOR continues to closely monitor performance.

Ms. Connors asked the last question which related to the Committees use of the CAGR method for projecting revenues for modeling purposes.  Mr. Ozyurt confirmed that the CAGR approach the Committee was taking still made sense, noting that it is a generally accepted method for those who model, and that DOR often uses that approach, noting it helps account for business cycles. 

The Committee moved on to the next agenda item which was an overview of the FY 2026 Capital Investment Plan (CIP). Mr. Yontar, from the Executive Office for Administration & Finance, provided an overview of the second Healey-Driscoll CIP, which was published in June 2025. 

Mr. Yontar provided an overview of the CIP and the development process. He noted the current FY 2026 CIP’s bond cap budget is $3.2 billion, which aligned with the Committee’s FY 2026 recommendation. MassDOT, DCAMM and HLC receive the highest allocation of bond cap and represent more than 70% of the total CIP.  Mr. Yontar pointed out that this year’s CIP focused on key themes and priorities including: (1) Housing & Communities; (2) Competitiveness & Equity; (2) Supporting Municipalities; (3) Climate & Environment; (4) and Asset Protection & Preservation

Mr. Yontar then walked the committee through a high-level overview of FY 2026 CIP programming which included a breakout of the bond cap budget by agency, as well as a description of the different types of capital projects that are funded under each agency.  He then highlighted key programs that aligned with key CIP priorities. 

Lastly, Mr. Yontar reviewed construction cost escalation.  He provided a recap of recent construction cost escalation trends and reminded the Committee that in recent years construction cost escalation had been high, outpacing CIP growth and eroding? overall purchasing power.  However, he noted that construction escalation has softened nationally, with current national level around 4% which has come down since the high of 14% in 2022.  Mr. Yontar ended his presentation by noting that if the Committee followed the same methodology for adjusting for escalation it used last year, the adjustment would be about $62 M.  

Ms. Connors asked the Committee if there were any questions. 

Representative Finn and Senator Mark thanked Mr. Yontar for acknowledging and supporting key capital projects in western Massachusetts, notably the West-East Rail project, and emphasized the importance of geographic equity when it comes to capital planning and investments.

On a motion made by Mr. Benison and duly seconded by Ms. Perez, the meeting was adjourned at approximately 1:50 pm. 

1. Administrative Matters
   1. Introductions
   2. Adoption of meeting minutes from October 17, 2025 (Vote)
2. Department of Revenue (DOR) Update
3. FY2026 Commonwealth Capital Investment Plan (CIP) Update
4. Adjournment