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June 25, 2024 Clear | 82°F
The 193rd General Court of the Commonwealth of Massachusetts

Section 60B: Capital debt affordability committee; estimation of prudent amount of new debt each fiscal year

Section 60B. (a) In this section, the following words shall, unless the context clearly requires otherwise, have the following meanings.

''Committee'', the capital debt affordability committee established under this section.

''Tax supported debt'', direct debt, as further described and limited in the first sentence of the second paragraph of section 60A; and other forms of debt, including state agency capital leases supported in whole or part by state tax revenues and debt of the department of transportation, and other units of commonwealth government which, in the opinion of the committee, are supported directly or indirectly by state tax revenues; provided that ''tax supported debt'', shall include debt issued by the department of transportation under chapter 6C that is secured by a pledge of future federal aid from any source.

(b) This section applies only to tax supported debt. This section shall not be construed to affect the authority of the governor to submit any bills under the procedures established in Article XLII or XLIII of the Amendments to the Constitution, or the authority of the general court to continue its independent analysis of commonwealth debt affordability or to consider bills that authorize commonwealth debt or appropriations bills under said Article XLII or XLIII of the Amendments to the Constitution.

(c) There shall be within the executive office for administration and finance, but not subject to its supervision or control, a capital debt affordability committee consisting of the following voting members: the secretary of administration and finance who shall chair the committee; the treasurer; the comptroller; the secretary of transportation; 1 individual appointed by the governor who shall be an expert in public finance and who shall be a resident of the commonwealth and employed by a public or private institution of higher education; and 2 individuals appointed by the treasurer who shall be experts in state public finance, and who shall be residents of the commonwealth and not employed by state government, either as a state employee or as an independent contractor. The house and senate chairs and the ranking minority members of the committees on bonding, capital expenditures and state assets and the committees on ways and means shall be nonvoting members of the committee. Any voting member may delegate that member's appointment. Each individual appointed by the secretary or treasurer shall serve terms established by the appointing authority, but not longer than 4 years. Each appointed individual may serve a second or subsequent terms, and each appointed individual may continue to serve after the individual's term expires if desired by the appointing authority.

(d) The chairman shall call meetings of the committee as needed to perform its duties.

(e) The committee shall review on a continuing basis the size and condition of the commonwealth tax supported debt as well as other debt of any authority of the commonwealth that is determined to be a component unit of the commonwealth by the comptroller under subsection (c) of section 12 of chapter 7A. The estimate shall be made available electronically and prominently displayed on the official website of the commonwealth.

(f) On or before December 15 of each year, the committee shall submit to the governor and the general court the committee's estimate of the total amount of new commonwealth debt that prudently may be authorized for the next fiscal year. In making its estimate, the committee 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.

(g) The estimate of the committee shall be advisory, and shall not bind the governor or the general court.

(h) On or before January 15, the governor shall determine the total authorizations of the new commonwealth debt that the governor considers advisable for the next year; provided, however, that in the first year of the term of office of a governor who has not served in the preceding year, the total authorizations of the new commonwealth debt considered advisable for the next year shall be determined not later than January 31 of that year.