STATE HOUSE, BOSTON, MAY 20, 2014….With tax collections running over original estimates by $524 million and mid-year spending levels down, this year’s state budget is in “good shape,” according to the Patrick administration’s director of finance, who says he expects the state Senate this week to add spending to next year’s proposed $36.25 billion annual budget.
During an investor conference call Monday ahead of planned state borrowings, Executive Office of Administration and Finance Director of Finance Rob Dolan described state budgeting efforts for fiscal 2015 as “boilerplate” compared to last spring’s debate over new taxes and transportation investments.
Gov. Deval Patrick’s proposed fiscal 2015 budget totals $36.37 billion, a 4.9 percent increase in spending. The House-approved plan calls for $36.32 billion in spending and the Senate Ways and Means Committee has offered a $36.25 billion bill, which senators plan to begin debating on Wednesday.
“We do expect them to add additional spending on the floor,” said Dolan.
After noting the similar bottom lines on the three budgets, Dolan said, “This year is much more boilerplate. From a bottom line perspective there is not that much of a difference.”
The House, Senate and Patrick generally agree on increased funding levels for education and local aid next year, as well as investments of $140 million in transportation and $163 million to reduce the state’s unfunded public pension liability, Dolan said.
With less than two months left in fiscal 2014, Patrick and the Legislature have so far agreed to $208 million in mid-year spending, with a $145 million supplemental budget nearing the governor’s desk.
Dolan said the $353 million in supplemental fiscal 2014 spending to date is a “little below” previous years – $441 million in fiscal 2013 and $540 million in fiscal 2012 – but served notice that another mid-year spending bill is in the works.
“We do typically file a year-end supplemental bill that takes care of any year-end bill paying needs. So we’re probably going to be teeing that up in the next month or so,” he said.
Dolan identified casino revenues as an example of non-tax revenues that state officials are monitoring. State officials originally forecast $83 million in casino licensing fees being available this fiscal year, but are now assuming that two resort casino licenses will be awarded in fiscal 2015, which begins July 1.
One significant unsettled budget issue involves the handling of larger, one-time tax settlements. Patrick and Senate leaders support a change in state law that would make $200 million in settlement funds available this fiscal year while the House supports making that change in fiscal 2015. Under current law, $421 million in tax settlement funds this fiscal year will be steered to the rainy day fund, Dolan said.
Documents made available in connection with the investor call show the state’s stabilization fund balance fell from $2.335 billion in fiscal 2007 to $670 million in fiscal 2010 before hitting a recent high of $1.65 billion in fiscal 2012 and then dipping to a projected balance of $1.36 billion on June 30, 2014.
According to deputy assistant treasurer Drew Smith, the Massachusetts Treasury expects to have issued $2.2 billion in new money bonds in fiscal 2014, $800 million in revenue anticipation notes and $628 million in refunding bonds. The Treasury on Wednesday is scheduled to price $200 million in federally taxable general obligation bonds and has a $500 million general obligation bond sale targeted for June 11.
Nolin Greene, senior debt analyst at the Treasury, said per capita income growth in Massachusetts from 2012 to 2013 was 2.4 percent, a growth rate that was “about in the middle” among states keeping per capita income here – $56,923 – at 128 percent of the national average. North Dakota passed Massachusetts, pushing the Bay State down to third among states for per capita income.
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