State House News Service 

Boston, February 3, 1999--One of the Legislature's top experts on debt issues
today said the state should spend $300 million of this year's anticipated
budget surplus on local road and bridge projects that some on Beacon Hill
say are being squeezed out by the Big Dig.

According to House Long-Term Debt Committee vice-chairman Frank Hynes, the state is deep in debt - even though it's expected to end the year with a large cash surplus.  Currently, the state issues $1 billion in bonds
annually.  The $10.8 billion Central Artery/Tunnel is consuming an increasing portion of those borrowed funds.

Combine that pressure with a drastic drop in federal transportation aid and
the state will have all the makings of a brand-new fiscal crisis, Hynes said today. 

"We're still borrowing but we have obligations for each of the next five Years," Hynes said.  "Instead of waiting five years, we should now recognize that and use the surplus."

Massachusetts currently has the third-largest per capita debt load in the
country, behind only Connecticut and Hawaii.  State officials are planning
to issue new bonds that will put the state on the hook for the Big Dig until 2015, 10 years longer than originally promised.

Hynes (D-Marshfield) and committee chairwoman Patricia Walrath (D-Stow) say the high level of debt stems from the state's need to rebuild and repave roads and bridges neglected during the fiscal crisis of the late 1980s and early 90s.  As the state pays for those projects, it must also fund its share of the mammoth Central Artery/Tunnel project. 

Their comments came after a presentation this morning by the Massachusetts Taxpayers Foundation warning that the state's capital budget is "reaching the breaking point."  According to MTF president Michael Widmer, the state must cut back on capital projects or spend surplus dollars so it can remain within its voluntary $1 billion annual bond cap.

Capital projects like roads, schools and libraries are usually paid for with bonds, which help spread out the costs over several decades. 

Widmer said the state is caught between keeping its promises to stick to
the $1 billion bond cap and to pay for the Big Dig.  Compounding the
problem is a sharp drop in federal aid, which had been set at about $800
million for the last few years.  Under a plan crafted last year in Washington, Massachusetts will only get about $500 million annually, even though the Big Dig is entering its most expensive phase. 

Big Dig payments will cost the state $131 million this fiscal year with payments jumping to $225 million next year and $200 million in 2001.

Last month, Cellucci said he would recommend using cash from the operating budget to pay for worthy capital projects.  This afternoon, Hynes said he was pleased the governor had changed his mind. 

"That's good news if we don't have to fight," Hynes said.  Last summer,
Hynes criticized Cellucci for vetoing parts of a $200 million supplemental
budget that used budget surpluses to pay for capital projects.  "The time
has come to put this together.  You cannot consider the surplus in isolation." 

Cellucci's call for a major income tax cut rings hollow when considered
along with the capital needs, Hynes said.  "Our credit cards are maxed
out," he said.  "To reduce our revenue stream and not address the deficit
in your capital budget will create a crisis."

Senate Transportation Committee chairman Robert Havern (D-Arlington) thinks using surplus money to pay for road and bridge projects makes sense. He said moves by the Legislature and the administration to phase out
automobile registration fees were "kind of dumb."  Abolishing registry and
license fees will cost the state about $100 million annually when fully phased in.

Havern gave a similar Big Dig cost presentation to Senate Democrats last
week, and recommended the surplus diversion as one solution.  He added that he expects Cellucci to file a transportation bond bill in a few weeks, with an eye to fast-track approval. 

"When you take all those (capital) needs and line them up, then you get to
the reality that we don't have enough revenues coming in to pay for the
needs going out," Havern said.  "The identification of the problem is
monolithic.  I'd be lying if I said there was a consensus on what we're
going to do."
 

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