In The News: Capital

The out-of-pocket costs of retiring debt are reflected in Gov. Baker's fiscal 2019 budget, which sets aside $2.66 billion to make debt service payments over 12 months, a $49 million increase from this fiscal year's projected debt service spending, according to the Massachusetts Taxpayers Foundation.

"Theoretically, with low interest rates, sure it's a good time to borrow in a vacuum," Andrew Bagley, vice president for policy and research at MTF, told the News Service. "But we're up against the debt limit, we have an operating budget from which we just had to carve out $650 million in FY16, there are concerns about whether revenues will show up and we have debt service costs that go up every year." At $2.64 billion, the fiscal 2017 debt service allocation is up $640 million -- or 30 percent -- over fiscal 2008, according to MTF. "It's a hard time to argue that we really should be borrowing more, even though we sure do have enormous capital needs," Bagley said.

Michael Widmer, president of the nonpartisan Massachusetts Taxpayers Foundation, a business-backed fiscal watchdog group, said it is not unusual for long-term debt to grow. The state usually spends about $1.5 billion to $2 billion annually on capital projects such as highways and schools, he said.

"I think the concern we have with the film tax credit has been the cost which has been upwards of $100 million a year," said Michael Widmer, executive director for the Massachusetts Taxpayers Foundation. "The key test here for Massachusetts is, do you get enough bang for the buck?"

Andrew C. Bagley, director of research and public affairs for the Massachusetts Taxpayers Foundation, a business-backed group, said the latest credit reports amount to a validation that state government is not burying its head in the sand; it is dealing with the budget, and may well save $10 million to $15 million a year.

Andrew Bagley, director of research for the Massachusetts Taxpayers Foundation, said state operating budgets across the board have suffered "huge losses" over the past two years. By the time an infrastructure project is completed, its operating budget could have been slashed, he said.

At least one independent analysis, by the Massachusetts Taxpayers Foundation, has concluded that the health care law had put minimal additional strain on the state budget.

"They always pass these authorizations with a lot of fanfare as if they are going to spend the money immediately, but a lot of these bond bills are over five or ten years," Widmer said. "There is the issue of giving false expectations that they'll be spent in the near term." Widmer said the level of authorized borrowing, while unusual, doesn't pose a fiscal risk to the state in part because of a self-imposed cap on the amount of bonds the state can issue in a single year.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, said use of more than $75 million a year would be ill-advised.

Budget watchdog Michael Widmer, president of the Massachusetts Taxpayers Foundation, also blasted the administration's plan.

"This is one of the most irresponsible proposals I have seen seriously considered by the Legislature in my 16 years," said Widmer, whose organization is backed by business. "We are just heading off a cliff, Thelma and Louise, with a smile on our face."

Widmer called for a gas-tax increase and new tolls to help the Turnpike Authority meet the terms of its Big Dig-related debts.