Amendment ID: S2187-94

Amendment 94

Debt Service Hearing

Mr. Tarr moves to amend the bill by inserting at the end thereof the following new section:-

“On or before January 15, the secretary of administration and finance shall meet with the house and senate committees on ways and means and shall jointly develop a consensus debt service (both interest and principal) forecast on Commonwealth general obligation debt for the budget for the ensuing fiscal year which shall be agreed to by the secretary and said committees. In developing such a consensus debt service forecast, the secretary and said committees, or subcommittees of said committees, shall hold joint hearings on the economy of the commonwealth and hits impact on debt service forecasts; provided, however, that in the first year of the term of office of a governor who has not served in the preceding year; said parties shall agree to the consensus debt service forecast not later than January 31 of said year. In making its estimate, the secretary and said committees shall consider:

(1) the amount of state bonds that, during the next fiscal year:

(i) will be outstanding; and

(ii) will be authorized but unissued;

(2) the capital program prepared by the secretary of administration and finance;

(3) capital improvement and school construction needs during the next 5 fiscal years, as projected by the Massachusetts School Building Assistance Authority;

(4) projections of debt service requirements during the next 10 fiscal years;

(5) the criteria that recognized bond rating agencies use to judge the quality of issues of state bonds;

(6) any other factor that is relevant to:

(i) the ability of the state to meet its projected debt service requirements for the next 5 fiscal years; or

(ii) the marketability of state bonds;

(7) the effect of authorizations of new state debt on each of the factors in this subsection;

(8) identification of pertinent debt ratios, such as debt service to General Fund revenues, debt to personal income, debt to estimated full-value of property, and debt per capita;

(9) A comparison of the debt ratios prepared for paragraph (8) with the comparable debt ratios for the 5 other states in New England, New York and 5 other states the committee determines to offer a fair comparison to the commonwealth;

(10) A description of the percentage of the state's outstanding general obligation bonds constituting fixed rate bonds, variable rate bonds, bonds that have an effective fixed interest rate through a hedging contract, and bonds that have an effective variable interest rate through a hedging contract. The report shall also include, for each outstanding hedging contract, a description of the hedging contract, the outstanding notional amount, the effective date, the expiration date, the name and ratings of the counterparty, the rate or floating index paid by the state and the rate or floating index paid by the counterparty, and a summary of the performance of the state's hedging contracts in comparison to the objectives for which the hedging contracts were executed; and

(11) the amount of issuances, debt outstanding, and debt service requirement of other classes of commonwealth tax supported debt as well as other debt of commonwealth units.

Said consensus debt service forecast shall be included in a joint resolution and placed before the members of the general court for their consideration. Such joint resolution, if passed by both branches of the general court, shall establish the maximum amount of debt service which may be considered for the general appropriation act for the ensuing fiscal year.”