Overview of State Spending
Comprehensive State Spending
When considering the Governor’s recommendation for the FY
2013 budget it is important to remember that the funding levels proposed do not
encompass the entire Massachusetts state spending for next year. In fact, a
meaningful 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 (ANF) 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. The FY 2013 budget recommendation provides projected spending
amounts for federal grants for each department in the Appropriation
Recommendations section. Under the FY 2012 budget reform that created the
Office of Commonwealth Performance, Accountability and Transparency
(CPAT), oversight and central coordination of federal grant management was
designated to CPAT to help maximize federal funding opportunities and link
federal resources with Administration funding priorities.
- 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 the state budgetary line-items in
the Appropriations Recommendations section.
- Capital Projects – Every year the state must spend
billions of dollars to support required 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.
The following charts show that the state operating budget
makes up the largest portion of state spending in comparison to all funding
sources in any given year. Yet over 30% 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 there are further resources that are annually available
to the state and its agencies beyond those subject to the annual budgeting
process.