Gov. Deval Patrick last week announced that new-money borrowing for fiscal 2009, which began July 1, will decrease by $50 million to $1.57 billion to reflect lower-than-anticipated revenues.
Massachusetts limits its debt service costs to 8% of budgeted revenues. As the state has received roughly $1.1 billion less in budgeted revenues this year, officials altered its bonding plan in order to keep debt levels in line with new revenue projections. In addition, officials expect to limit new-money borrowing beyond the current year.
“Bonding capacity in subsequent years has also been reduced from previously planned levels,” according to a press release. “The administration will continue to monitor revenues and make any changes that may be necessary before the fiscal year 2010 capital budget is finalized.”
The administration also altered the current operating budget to accommodate the billion-dollar drop in revenue. In mid-October, Patrick said he would cut the $28.2 billion fiscal 2009 budget by more than $1 billion, lay off 1,000 state employees, and tap into an additional $200 million of rainy-day funds to help offset a $1.4 billion deficit.
Along with the borrowing cap announcement, the governor said that after meeting with legislators, economic experts, and business and construction industry leaders, his administration has drafted a preliminary list of certain public works projects that may receive federal funds under a proposed federal stimulus plan.
A special task force will now review the list of projects to select which initiatives could move forward within the first six months of 2009. The projects include energy efficiency and renewable energy plans for utility facilities, public universities, hospitals, and government buildings, among other projects.
Fitch Ratings and Standard & Poor’s rate Massachusetts AA. Moody’s Investors Service rates it Aa2.
