A bond bill is a legislative tool that allows the state government to borrow money for long-term investments in infrastructure, capital projects, and other significant public initiatives. In Massachusetts, these bills are crucial for funding projects that the state cannot afford through its annual budget. Bond bills authorize the state to issue bonds, which are essentially loans that investors can buy. The state then repays these bonds over time, typically with interest. This method enables Massachusetts to undertake substantial projects without needing immediate funding, spreading the cost over many years.
While the Department of Transportation has a separate capital plan and public comment period, the overall state capital plan does not typically include public participation in developing spending priorities or determining project timelines. Furthermore, even when a law authorizes capital spending, there's no guarantee the money will be spent on the listed projects. Additionally, the capital budget is significantly smaller than the operating budget, being roughly one-tenth its size.
Just like the operating budget, the capital budgeting process follows the state fiscal year calendar (July 1 – June 30). The work begins almost a year in advance.
On or before September 30
The Treasurer announces the total amount of debt allowed to be issued in line with the statutory direct debt limit (see below). This is limited to 5 percent above the previous year’s debt limit.
On or before December 15
The Capital Debt Affordability Committee (see below) holds meetings open to the public to review economic forecasts, the inform their advisory recommendation to the Governor and the Legislature about the total amount of debt that can be issued for the coming fiscal year.4 The committee’s estimate must be available online and visible to the public.5
Agencies develop capital plan recommendations for the Governor.
On or before January 15 (January 31 for a new Governor’s first year)
The Governor determines the total authorizations advisable for new state debt for the coming fiscal year.6
During the spring
The Executive Office of Administration and Finance and the capital agencies consolidate their recommendations for capital spending and receive approval from the Governor. The Governor, via the Executive Office of Administration and Finance, drafts a five-year Capital Investment Plan and the annual capital budget (see below).7
On or before July 1
The Governor releases the five-year Capital Investment Plan and the capital budget for the upcoming fiscal year
Bond bills have a profound impact on communities across Massachusetts. By enabling significant investments in infrastructure, these bills facilitate improvements in public transportation, educational facilities, housing, and environmental projects. For instance, improved infrastructure can lead to better connectivity and reduced commute times, while investments in schools can enhance educational outcomes for students. The benefits of these investments ripple through communities, fostering economic growth, creating jobs, and improving the quality of life for residents.
One notable example is the Massachusetts Life Sciences Center (MLSC) initiative. Through a bond bill passed in 2008, the state committed $1 billion over ten years to bolster the life sciences sector. This investment aimed to create jobs, drive innovation, and improve healthcare. As a result, Massachusetts has become a global leader in life sciences, attracting significant private investment and creating thousands of high-paying jobs. The bond bill's impact is evident in the thriving biotech hubs in Cambridge and Boston, which have spurred economic growth and positioned the state as a pioneer in medical research and development.
Bond bills are vital instruments for funding large-scale public projects in Massachusetts. They allow the state to undertake significant infrastructure improvements and capital projects that enhance communities' overall well-being. By spreading the cost of these projects over time, bond bills make it feasible to invest in critical areas such as transportation, education, and healthcare, driving economic growth and improving the quality of life for residents across the state. Through strategic investments enabled by bond bills, Massachusetts continues to build a resilient and prosperous future.
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For media questions, please contact:
Giselle Rivera-Flores, Director of Communications at giselle.riveraflores@masenate.gov
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