FY2011 - FY2015 Capital Investment Plan
Appendix A - Debt Affordability Analysis - Statutory Debt Limits

Legislation enacted in December 1989 restricts the amount of the Commonwealth’s outstanding direct debt.[4] This legislation imposed a “statutory debt limit” of $6.8 billion in fiscal year 1991 and set the limit for each subsequent year at 105% of the previous fiscal year’s limit.  The statutory debt limit is calculated according to certain rules[5] and excludes several direct and contingent obligations of the Commonwealth.[6] The statutory debt limit on “direct” debt during fiscal year 2010 was approximately $17.2 billion, and the Commonwealth’s outstanding direct debt subject to that limit was $14.7 billion.[7]

Legislation enacted in January 1990 imposes a limit on debt service appropriations in Commonwealth operating budgets.[8] No more than 10% of total budgeted appropriations may be spent on debt service (both interest and principal) on Commonwealth general obligation debt in any fiscal year.  Payments on debt not subject to the statutory debt limit described above are also excluded from the debt service limit.  As of June 30, 2009, budgeted debt service on debt subject to this limit was approximately $1.58 billion, representing 5.2% of total budgeted expenditures, which were approximately $30.6 billion.[9]


[4] M.G.L. Chapter 29, Section 60A.

[5] The statutory debt limit is calculated under the statutory basis of accounting, which, unlike GAAP, measures debt net of underwriters’ discount, costs of issuance, and other financing costs.  In addition, the statutory debt limit excludes bonds that are refunded by the proceeds of Commonwealth refunding bonds once those refunding bonds have been issued.

[6] Debt not counted in the calculation of the statutory debt limit includes: certain Commonwealth refunding and restructuring bonds issued in 1991, federal grant anticipation notes, special obligation bonds, debt issued by certain counties that has been assumed by the Commonwealth, bonds issued to pay operating notes of the Massachusetts Bay Transportation Authority or to reimburse the Commonwealth for advances to the Massachusetts Bay Transportation Authority, certain debt issued to fund costs of the Central Artery/Tunnel project, bonds issued to finance the Massachusetts School Building Authority and bonds and notes issued to finance the accelerated bridge program.  Contract assistance payments, lease payments, and contingent liabilities are also excluded.

[7] Commonwealth of Massachusetts Information Statement, June 8, 2010.

[8] M.G.L. Chapter 29, Section 60B.

[9] Commonwealth of Massachusetts Information Statement, June 8, 2010.