Governor Deval Patrick's Budget Recommendation - House 2 Fiscal Year 2011

Governor's Budget Recommendation FY 2011

Capital to Operating Transfer

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Governor Patrick    FY2011 House 2 Budget Recommendation:
    Issues in Brief

    Deval L. Patrick, Governor
    Timothy P. Murray, Lt. Governor


For a number of years, personnel and other goods (paper, utilities, etc.) have been charged to capital accounts – resulting in millions of additional dollars in interest payments while reducing the amount of money available for statewide construction projects.  The practice of shifting operating costs to the capital budget was born years ago during tough economic times like those we are currently experiencing.  In 2008, the Legislature authorized the option to borrow $50 million per year to fund the acquisition of equipment on the capital budget instead of the operating budget.  The borrowing was part of Governor Patrick’s no-cost mechanism for shifting employees and other budgetary expenses off the capital budget with the goal of significantly scaling back the fiscally imprudent practice of funding these expenses with debt.

Each year, the operating budget includes purchases for the following types of equipment:

  • Computers, computer cables and two-way radios;
  • Cars, trucks and all terrain vehicles;
  • Lawnmowers, snow blowers, power tools and other equipment; and,
  • Construction supplies such as lumber and hardware.


Graph of Budgetary Equipment Spending by Fiscal Year (2008-2011).  Graph is highest for 2008, followed by 2011, 2010, and 2009.

* FY10 Estimated Spending
** FY11 Proposed Spending

Using the $50 million bond authorization, the Executive Office for Administration and Finance (A&F) will direct agencies to purchase durable goods with a life span of five years or more through the annual capital budget. The money budgeted for these durable goods in the annual operating budget will then be used to transfer existing employees paid from bond funds to the operating budget.  If a line-item funded the acquisition of durable equipment, Outside Section 26 of the Governor’s budget will allow A&F to transfer that amount to another line-item to fund the cost of personnel that would have otherwise been funded from the capital budget. With line item transferability, the Governor can ensure that the initiative is cost neutral to the operating budget while reducing the costly practice of funding employees through bond proceeds.

Outside Section 26 of the Governor's Fiscal Year 2011 budget completes the reforms started in 2008. The Administration is committed to monitoring transfers to ensure their appropriateness, while also looking for fiscally responsible ways to bring proper costs back onto the operating budget. The total amount of such transfers cannot exceed $50 million, and A&F will be required to give the Senate and House Committee on Ways and Means a schedule of all such transfers.

Prepared by Thom Dugan, Executive Office for Administration and Finance ·
For more information contact: (617) 727-2040

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