The Commonwealth Stabilization Fund is established in
Chapter 29, section 2H of the General Laws as a reserve of surplus
revenues to be used for the purposes of: (1) covering revenue shortfalls,
(2) covering state or local losses of federal funds, or (3) for any event
which threatens the health, safety or welfare of the people or the fiscal
stability of the Commonwealth or any of its political subdivisions. The
fund is sometimes referred to as the state's "rainy day fund," serving as
a source of financial support for the state budget in times of slow or
declining revenue growth and as the primary source of protection against
having to make drastic cuts in state services in periods of economic
downturns. There are a number of different ways monies can be deposited to
the fund including but not limited to: the statutorily required deposit of
1/2 of 1 per cent of state tax revenue in a fiscal year, any capital gains
revenue above and beyond $1 billion in a given fiscal year and ad hoc
deposits as authorized by the state Legislature. |