Massachusetts governor announces $14 billion, five-year capital plan

Massachusetts Gov. Maura Healey on Thursday announced a five-year, $14 billion capital plan that would lean on a mix of funding to carry out work across the state.

The fiscal 2024-2028 Capital Investment Plan, Healey's first capital spending proposal since taking office, includes spending for housing development, transportation, and green energy. "We're also expanding support for tried-and-true economic development programs and dedicating crucial resources to updating infrastructure across the state,"  Healey said in a press release.

Over the five years, $1.5 billion of federal formula funding and grants would go to a wide swath of work, including major overalls being carried out on bridges, rail lines, and other parts of Massachusetts's public transportation infrastructure. Another $1.8 billion in federal funds are to support maintenance and new work on state highways.

Bloomberg News

The five-year capital plan is updated annually by the governor in office, according to the preliminary official statement published for Massachusetts' next bond deal.

"Capital expenditures are primarily financed with debt proceeds and federal reimbursements," the POS says. "Authorization for capital spending requires approval by the Legislature, and the authorization to issue debt must be approved by a two-thirds roll-call vote of each house."

Healey's plan would spend $1.5 billion to tackle the state's housing crisis, with $97 million going to establish a funding program to incentivize housing development.

Toll revenue from state roads will fund another $345 million in work on transportation infrastructure.

$3 billion in funds are earmarked for green upgrades, including the electrification of commuter buses and rails continuing and state-building decarbonization projects.

$759 million in state funds are earmarked for expanding highways, $292.3 million for expanding operations of Boston-area public transit provider the Massachusetts Bay Transportation Authority, and $14.3 million for expanding rail lines.

State bond issuances will be the primary funding vehicle for the capital work, according to the governor's office, with $2.9 billion expected from general obligation bonds and $390 million from special revenue bonds. $200 million state in bonds for bridge and rail work are still pending legislative approval.

Healey's proposed bond cap for fiscal 2024 is $2.9 billion, $125 million higher than the previous limit.

The state is planning to sell$993.5 million of general obligation bonds next week in a negotiated deal with JP Morgan as book-running senior manager, UBS as co-book running senior manager, and eight co-managers.

Acacia Financial Group is municipal advisor. Mintz is bond counsel.

Final pricing is scheduled Wednesday after a retail order period Tuesday for the deal, comprised of $720 million of new money bonds and $273.5 million for refunding.

The bonds are rated AA-plus by Fitch Ratings, Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings. All assign stable outlooks.

In April, S&P raised Massachusetts' long-term GO bond rating to AA-plus from AA and upgraded bonds backed by annual appropriations from the state.

The upgrade reflected "the commonwealth's commitment to strengthen its budget management practices supported by the state's improved reserves and a strong economy will be sustained through near-term recessionary pressures," S&P said.

State reserves have grown to a record $6.9 billion and Healey expects that number to reach nearly $9 billion by the end of fiscal '24.

State lawmakers are the final stages of approving a $56 billion budget for the fiscal year 2024 that includes a large tax relief package aimed at the middle-class.