Massachusetts Treasurer Steven Grossman has emphasized wider disclosure by his office, and in its most recent investor conference call, officials had
The state had just increased its stabilization, or rainy-day fund, by $160 million to $1.53 billion. That puts Massachusetts third in the country behind Alaska and Texas, according to data available from the National Association of State Budget Officers.
"I think having more than $1.5 billion in cash reserves should be a major signal in terms of the state's financial position and overall credit quality," said Colin MacNaught, assistant treasurer for debt management. "We're fortunate that the economy has done well, which has led to steady revenue growth. We've dealt with the structural deficits over the last three fiscal years and demonstrated the discipline to rebuild our reserves."
Massachusetts is at its highest rainy-day fund level since 2008.
Moody's Investors Service rates the state's general obligation bonds Aa1, while Fitch Ratings and Standard & Poor's assign an equivalent AA-plus. All three have stable outlooks.
Massachusetts also reported that its tax collections for fiscal 2012, totaling $21.1 billion, were the highest ever and above benchmark.
Beginning with the fiscal 2013 budget that totals $32.5 billion, Massachusetts will use tobacco settlement money to provide additional funds for its other post-employment benefits, or OPEB, liabilities.
"We're using a recurring, non-tax revenue source to chip away at a long-term obligation and that, to me, shows the long-term focus of our financial management," MacNaught said.
In fiscal 2013, Massachusetts will set aside 10% of the state's annual tobacco settlement receipts, or $27 million, for OPEB. The percentage will increase annually by 10 percentage points until 100%, or an estimated $276 million, is dedicated annually. In addition, 5% of the excess capital-gains tax revenues to be deposited in the rainy-day fund will be transferred to the state's retiree health liability trust fund.
In his investor call, Grossman and Revenue Commissioner Amy Pitter also cited the multiple revenue records the state lottery system set in fiscal 2012. The Massachusetts State Lottery had a net profit of $981 million, 18% higher than the state had budgeted.
Moody's called the lottery profit a credit positive for the state's 351 cities and towns. Under an allocation formula, poorer municipalities receive a higher proportion of lottery monies.
"The higher lottery distributions are particularly timely because state aid has steadily declined since 2008 owing to budget cuts that have stressed municipal budgets burdened by revenue constraints under Proposition 2-1/2" Moody's said, citing a voter initiative that took effect in 1982 that limits property taxes in the state's cities and towns.
Massachusetts' five-year capital plan calls for borrowing $1.88 billion through GO bond issuance, and about $489 million of additional borrowing for its accelerated bridge program, a five-year plan to repair or replace 550 structurally deficient bridges.
The pace of capital spending and the commonwealth's new disclosure calendar, as well as market conditions, will drive the GO calendar, officials said. With construction season under way, Grossman's office expects further borrowing as the state draws down and allocates proceeds from the Series 2012 bond funds.
Under Grossman, who took office in January 2011, Massachusetts has undertaken steps to expand its disclosure. It schedules regular conference calls for seven days after it updates disclosure, and plans six per year. It has scheduled its next disclosure update and conference call for Sept. 10 and Sept. 17, respectively.
