Massachusetts does not expect to draw on the state's rainy-day budget to fill a $311 million revenue gap for fiscal 2016, a commonwealth budget official told investors.
"We have identified solutions to address the revenue shortfall by reducing spending and other measures," assistant secretary for capital finance Jennifer Sullivan said on a Tuesday afternoon conference call, two days before Massachusetts' planned competitive $500 million sale of fixed-rate, tax-exempt general obligation bonds in two series.
Those measures, she said, include spending restrictions, payroll caps, transfers to the general fund of unneeded trust funds and acceleration of departmental and revenue collections.
Should additional shortfalls emerge, Sullivan said, Administration and Finance Secretary Kristen Lepore could "pursue additional measures."
State revenue Commissioner Michael Heffernan said Friday that fiscal 2016 revenue collections were $311 million below year-to-date benchmarks.
Principal reasons, according to Sullivan, were lower-than-anticipated investment-related income for businesses and individuals, and a relatively weak bonus season for high-end wage earners at the end of calendar year 2015.
"It's a recent phenomenon," said Kazin ...zyurt, chief economist and director of the commonwealth's Office of Tax Policy and Analysis.
Senate and House leaders, meanwhile, have scheduled concurrence meetings to finalize a fiscal 2017 spending plan to forward to Gov. Charlie Baker. The House in April approved a $39.5 billion budget, while the Senate last month, after adding some spending during floor debate, approved a slightly higher $39.6 billion plan.
Both anticipate a $206 million deposit into the stabilization, or rainy-day fund, where the balance was $1.26 billion as of May 31, according to state officials.
The commonwealth's five-year capital plan through 2012 provides for nearly $11 billion in bond cap spending over five years, or $2.2 billion per year. The fiscal 2017 bond cap is a $65 million, or 3% increase, over the bond cap established for the previous fiscal year. Debt service under the capital plan may not exceed 8% of budgeted revenues.
Acacia Financial Group is the financial advisor for Thursday's bond sale, which will feature $50 million of Series 2016D bonds, with maturities from 2022 through 2026, and $450 million of Series 2016E bonds, with maturities from 2033 to 2046. Proceeds will help fund various capital projects.
All three major bond rating agencies affirmed their ratings. Fitch Ratings and S&P Global Ratings assign AA-plus ratings to Massachusetts GOs, while Moody's Investors Service rates them Aa1.
Baker and state Treasurer Deborah Goldberg visited the rating agencies in New York last week, Goldberg told investors.
"We place a heavy emphasis on the maintenance of our ratings," she said.
S&P assigns a negative outlook. Moody's and Fitch assign stable outlooks.
"S&P Global Ratings believes the commonwealth's high debt burden and high unfunded pension and other postemployment benefit [OPEB] liabilities are offsetting considerations to the current rating," S&P said in its presale report. "Although we view Massachusetts' total postretirement liabilities as relatively high, we believe the commonwealth has been actively managing these liabilities with a focus on cost control and reform in recent years."
