Governor Deval Patrick's Budget Recommendation - House 1 Fiscal Year 2012

Governor's Budget Recommendation FY 2012

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Financial Statement Overview

Comprehensive State Spending

When considering the Governor’s recommendation for the fiscal year 2012 budget it is important to remember that the funding levels proposed in House 1 do not encompass the entire Massachusetts state spending for next year. In fact, a substantial amount of state spending every year is done “off-budget”, or through fund sources that are not subject to the annual appropriations adopted by the Legislature. The spending that is done by the state from non-operating sources falls into three general categories:

  • Federal Grants – Annually the federal government provides billions of dollars in funding to state agencies to operate programs, whether ongoing or one-time, for a variety of purposes; housing, public health, environmental health, education and public safety. State agencies are responsible under state law for notifying the Legislature and the Executive Office for Administration and Finance of their intent to apply for these funds, but are otherwise given flexibility in the timing and purpose of the expenditure of these funds. Most federal grants require rigorous reporting standards with which applicant state agencies must comply. A large portion of the spending provided to Massachusetts through the American Recovery and Reinvestment Act (ARRA) has been expended through federal grant accounts. The House 1 fiscal year 2012 recommendation provides projected spending amounts for federal grants for each department in the Appropriation Recommendations section.
  • Trust Funds – Most state agencies have established trusts to be held on their behalf by the state treasurer into which they are directed in law or through a trust document to deposit revenues made available to the agency for dedicated purposes and restrictions. In general, any unexpended funds in state agency trust funds from one fiscal year to another remain in the appropriate funds, made available in future years for further expenditures. Projected spending amounts for trust funds are listed for each department following in the Appropriations Recommendations section.
  • Capital Projects – Every year the state must spend billions of dollars to support require maintenance and improvement to its transportation infrastructure, housing developments, state parks and environmental projects, and investments in higher education institutions. While this spending is authorized by the State Legislature, the appropriations are generally in effect over a five-year period, in recognition that many capital projects must span multiple fiscal years, from project inception to completion. Most capital projects spending is funded through bond sales, which allow the state to finance large scale projects through borrowing and paying annual debt payments, much like a family would sign a mortgage loan for a house. Please see the Capital Budget section in this document for further discussion of capital projects spending.

As shown by the charts below, the annual state operating budget makes up the largest portion of annual state spending in comparison to all funding sources in any given year. Yet over 30 percent of total state spending occurs from non-budgetary sources. In the financial statements following this discussion, only the operating budgeted fund revenues and expenditures are displayed. It is important to note that, however, that there are further resources that annually available to the state and its agencies beyond those subject to the annual budgeting process.

Pie chart depicting All Funds State Spending for fiscal year 2010.  Total 45.2 billion dollars.  Operating 65%, Trust Fund 23%, Capital Spending 5%, Federal Grants 7%.

Pie chart depicting All Funds State Spending for fiscal year 2011.  Total 45.6 billion dollars.  Operating 66%, Trust Fund 21%, Capital Spending 6%, Federal Grants 7%.

Pie chart depicting All Funds State Spending, for fiscal year 2012.  Total 44.4 billion dollars.  Operating 68%, Trust Fund 20%, Capital Spending 6%, Federal Grants 6%.

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