#1The Commonwealth of Massachusetts Bond Financing Programs October 14th, 2022 Commonwealth Credit Review TENSIS CHUSETT 407 VSSVW SIGILLUM REPUBLICA#2Replay Information Please note that a replay of the investor broadcast associated with the following slides is available. The replay can be accessed by following the link below and will remain available until October 14, 2023. http://munios.com/live/MACommonwealth Oct2022 The full slide deck for this call is found in the pages below. These slides as well as those of prior investor calls may also be accessed by visiting the Investor and Rating Agency Presentation Archive on the Commonwealth's investor website at: www.massbondholder.com For audio, participants are asked to dial in using the following information: Dial-in: +1-800-343-5172 Passcode: MASSCR# 2 SIGILLUM REIPUBLICA#3Disclaimer This presentation has been prepared by The Commonwealth of Massachusetts to provide summary information relative to the general obligation credit of The Commonwealth. The presentation is incomplete. The presentation is not part of the Commonwealth's Information Statement (Information Statement) and is qualified in all respects by reference to the most recently updated Information Statement that has been filed with the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access (EMMA) system. Investment decisions relating to Commonwealth general obligation bonds and notes should be based only upon the most recently updated Information Statement and the Official Statement of the Commonwealth relating to such bonds or notes. The provision of access to this presentation does not constitute an offer to sell or the solicitation of an offer to buy any bonds or notes that may be described or mentioned in the presentation. Commonwealth bonds and notes are sold only by means of an Official Statement and through registered broker-dealers. The information set forth herein includes information obtained from non-Commonwealth sources that are believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Commonwealth. All information and expressions of opinion herein are subject to change without notice. The Commonwealth undertakes no obligation to provide any additional information or to update any of the information or the conclusions contained herein or to correct any inaccuracies that may become apparent. This presentation contains certain forward-looking statements that are subject to a variety of risks and uncertainties that could cause actual results to differ from the projected results, including without limitation general economic and business conditions, conditions in the financial markets, the financial condition of the Commonwealth and various state agencies and authorities, receipt of federal grants, litigation, arbitration, force majeure events and various other factors that are beyond the control of the Commonwealth and its various agencies and authorities. Because of the inability to predict all factors that may affect future decisions, actions, events or financial circumstances, what actually happens may be different from what is set forth in such forward-looking statements. Forward-looking statements are indicated by use of such words as “may,” “will,” “should,” “intends," "expects," "believes," "anticipates," "estimates" and other similar words. 3 SIGILLUM REIPUBLICA#4TREASURER DEBORAH B. GOLDBERG 4 SIGILLUM REIPUBLICA#5GOVERNOR CHARLES D. BAKER 5 SIGILLUM REIPUBLICA#6Department of Revenue Dr. Kazim P. Özyurt Chief Economist, Director, Office of Tax Analysis 6 SIGILLUM REIPUBLICA#7($2,400) ($1,900) ($1,400) ($900) ($400) $100 Jul-07 $600 $1,100 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 $1,600 $2,100 Jul-09- Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11, Jan-12 Apr-12 Monthly year-over-year changes in collections Jul-12- Oct-12 Jan-13 Apr-13- Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 MA State Tax Collections Year-Over-Year Changes by Month July 2007 September 2022 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16- Jan-17 Apr-17 PUBLICASSACH Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 pr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22- Jul-22#8FY22 Revenue Breakdown by Tax Type 8 FY22 Collections of $41.105B Other 7% Corp. & Bus. 12% Income Sales & Use 21% 60% Income Tax and Sales & Use Taxes combined accounted for 81% of tax revenues. SIGILLUM REIPUBLICE#9FY22 Revenue Performance FY22 revenue totaled $41.105 billion: $3.438 billion more than the benchmark and 20.5% more than FY21 collections. Total Income 8,111 Sales & Use 8,765 4,442 Corp. & Bus. 5,069 2,832 Other 2,934 9 FY22 Benchmark vs Actuals ($Millions) Benchmark Actual 37,667 41,105 +3,438M 22,280 24,337 DOR preliminary collections for FY22. +2,057M +654M +626M +102M MASSACHUSENENSIS SIGILLUM REIPUBLICE#10FY23 Revenue as of September '22 FY23 YTD Revenue as of September '22 totaled $9.194 billion, $443 million or 5.1% more than collections in the same period of FY22 and $224 million, or 2.5% above FY23 YTD benchmark. Preliminary as of October 5, 2022 Month of September FY23 YTD as of September 09/22 Actual Collections 09/22 v. 09/21 $ 09/22 v. 09/21 Fav/(Unfav) % Fav/(Unfav) 09/22 Actual vs 09/22 Actual vs Benchmark $ Benchmark % Fav/(Unfav) Fav/(Unfav) 09/22 YTD Actual Collections 09/22 YTD v. 09/22 YTD v. 09/21 YTD $ 09/21 YTD % Fav/(Unfav) Fav/(Unfav) 09/22 YTD Actual vs Benchmark $ Fav/(Unfav) 09/22 YTD Actual vs Benchmark % Fav/(Unfav) Income Income Withholding 1,280 90 +7.6% 36 +2.9% 3,820 186 +5.1% 39 +1.0% Income Est. Payments 871 65 +8.1% 107 +13.9% 980 87 +9.7% 107 +12.2% Income Returns/Bills 166 78 +88.0% (46) -21.8% 306 107 +53.8% (49) -13.7% Income Refunds Net (outflow) (122) (81) -196.4% 35 +22.3% (196) (107) -121.6% 35 +15.2% Subtotal Non-withheld Income 915 62 +7.3% 95 +11.6% 1,091 87 +8.6% 93 +9.3% Subtotal Income 2,195 152 +7.4% 131 +6.4% 4,911 272 +5.9% 132 +2.8% Sales & Use Sales - Regular Sales Meals 529 50 +10.5% 55 +11.6% 1,659 136 +8.9% 54 +3.4% 131 11 +9.6% 18 +16.4% 398 46 +13.1% 19 +5.1% Sales Motor Vehicles 105 8 +7.8% 7 +7.6% 289 18 +6.7% 7 +2.6% Subtotal Sales & Use 766 70 +10.0% 81 +11.8% 2,346 200 +9.3% 81 +3.6% Corporate & Business - Total 973 (30) -3.0% 28 +3.0% 1,162 (64) -5.2% 29 +2.5% All Other 254 2 +0.9% (16) -6.1% 776 35 +4.7% (17) -2.2% Total Tax Collections 10 SIGILLUM 4,187 194 +4.9% 224 +5.7% 9,194 443 +5.1% 224 +2.5% REIPUBLIC#11Executive Office for Administration & Finance (A&F) Michael Heffernan Secretary Kaitlyn Connors Assistant Secretary for Capital Catharine Hornby Undersecretary Bran Shim Assistant Secretary for Budget 11 SIGILLUM REIPUBLICA#12SIGILLUM REIPUBL 12 . • • Financial Update • • Overview . Fiscal responsibility has been a cornerstone of the Baker-Polito Administration, and we are proud of the work that has been done over the last seven years to bring the budget into structural balance and build up reserves. A key budget objective has been working with the legislature to develop spending plans that sustain critical supports for the Commonwealth's communities, families, and workers, without losing sight of the need to keep spending in line with revenue growth. As a result, the Commonwealth was able to leverage existing resources - including significant federal aid to deliver critical services and tackle unprecedented challenges over the past 2 years, and still emerge from the pandemic on strong financial footing. The strength of the Commonwealth's financial position, will help the state manage economic volatility and ensure the continuity of vital government services in the long-term. Fiscal Year 2022 Review • At the end of fiscal year 2022, the state's budget stabilization fund balance stood at $6.9 billion a nearly 50% increase over the year's prior balance of $4.6 billion. The budget, as approved by the Governor on July 16, 2021, included approximately $47.6 billion in authorized spending, excluding transfers to the Medical Assistance Trust Fund, a $250 million supplemental transfer to the Pension Liability Fund, a one-time $350 million transfer to a new Student Opportunity Act Investment Fund, and other interfund transfers. It also incorporated an increased $34.350 billion tax revenue forecast before various tax initiatives, which represents an increase of $4.230 billion over the fiscal 2022 consensus tax revenue estimate of $30.120 billion announced in January 2021, due to better than-expected actual tax collections in recent months. ENSIS ASSACHUSE#13Financial Update (cont) Chapter 62F • Stronger than anticipated state tax revenues led to a major surplus for Fiscal Year 2022. • As a result, on September 15, 2022 the State Auditor certified that Fiscal Year 2022 state tax revenues exceeded allowable revenues per Chapter 62F by $2.941 billion. • In accordance with the statute, the $2.941 billion will be returned to eligible taxpayers by the Department of Revenue in proportion to personal income tax liability in Massachusetts incurred by taxpayers in the immediately preceding taxable year . ⚫ In total, $41.812 billion was collected in FY22, representing overall revenue growth of more than 20% above Fiscal Year 2021. • After accounting for the Chapter 62F refunds and the $840 million final FY22 supplemental budget, a surplus of $1.5 billion remains available. 13 SIGILLUM REIPUBLICA#14Fiscal Year 2023 Budget FY23 Consensus Revenue Estimates • On January 14, 2022, a fiscal 2023 consensus tax revenue estimate of $36.915 billion was agreed upon by the Secretary of Administration and Finance and the chairs of the House and Senate Committees on Ways and Means. In addition to conferring with each other, the Secretary and Chairs held a public hearing on December 21, 2021 to receive testimony from the Department of Revenue, the State Treasurer's Office, and independent, local economists from area foundations and universities on tax revenue. The fiscal 2023 consensus estimate reflects a projection of 2.7% tax revenue growth over the revised projected fiscal 2022 tax revenue figure of $35.948 billion. • After accounting for statutorily required transfers for pensions, and to the MBTA, the MSBA and the Workforce Training Fund, the Secretary and Committee chairs agreed that $29.783 billion would be the maximum amount of tax revenue available for the fiscal 2023 budget. 14 SIGILLUM REIPUBLICA#15Fiscal Year 2023 Budget (cont.) • • • The fiscal 2023 budget, as approved by the Governor on July 28, 2022, includes approximately $52.7 billion in authorized spending, excluding transfers to the Medical Assistance Trust Fund. It also incorporates an increased $39.576 billion tax revenue forecast before various tax initiatives, which represents an increase of $2.660 billion over the fiscal 2023 consensus tax revenue estimate of $36.915 billion announced in January 2022, due to better than-expected actual tax collections in recent months. This reflects approximately 9.3% growth in authorized spending over fiscal 2022. The revenue upgrade incorporated into the budget supports a number of substantial one-time transfers and reserves in FY23, including: • • • $266 million reserve to support MBTA safety and workforce initiatives $175 million transfer to a new trust fund dedicated to supporting high-quality early education & care $150 million transfer to the Student Opportunity Act Investment Fund $100 million supplemental transfer to the Commonwealth's Pension Liability Fund • • • $100 million transfer to the State Retiree Benefits Trust Fund The fiscal 2023 budget as enacted sets aside $315 million for future tax reductions, and is in structural balance, with no planned Stabilization Fund withdrawal. As enacted, the budget anticipates a deposit into the Stabilization Fund of nearly $1.5 billion, which would increase the balance of the fund from an already historic high of $6.9 billion to $8.4 billion. This would represent a $7.3 billion increase in the balance of the Stabilization Fund since the Baker-Polito Administration came into office in 2015. • 15 SIGILLUM REIPUBLICE#16Office of the State Treasurer Economic Overview Debt / Capital Presentation Sue Perez Deputy Treasurer 16 SIGILLUM REIPUBLICA#17Economic Update - GDP Quarterly Growth at Annual Rates (%) 17 40% 30% 20% 10% Growth in Real Product, Massachusetts and the United States, 2022 Q2 0% -10% -3.1% -5.1% -20% -30% 33.8% 31.5% -31.2% -33.0% 8.2% Massachusetts U.S. ■MassBenchmarks Projections 8.9% 7.8% 6.3% 6.7% 6.9% 4.5% 5.5% 3.8% 2.3% 0.2% -0.2% -1.6% -0.9% 2.0% 1.0% -40% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2021 2022 Source: U.S. Bureau of Economic Analysis, MassBenchmarks Calculations by Dr. Alan Clayton-Matthews SIGILLUM REIPUBLICE#1818 Economic Update - Employment Growth Employment Growth Index (2010=1.00 Employment Growth Index in Massachusetts, the Northeast and the United States 1.20 1.15 1.10 1.05 1.00 United States Massachusetts Northeast 0.95 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW); UMDI analysis ASSA SIGILLUM REIPUBLICA#19United States Massachusetts Unemployment Rates in Massachusetts and the United States as of July 2022 (Seasonally Adjusted) Economic Update - Unemployment 18% 16% 14% 12% 10% 8% Unemployment Rate 6% 4% 2% 0% Jan-00 Jan-01 Jan-02 19 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-21 Jan-22 Source: Massachusetts Executive Office of Labor and Workforce Development, Local Area Unemployment (LAU) Statistics; UMDI analysis Jan-10 Jan-11 Jan-12 SIGILLUM REIPUBLICA MASSACHUSEN SIS#20Socioeconomic Indicators for Massachusetts • The latest edition of our Socioeconomic Indicators Report was published in August. The edition includes four sections: Economy, Workforce, Environment and Residents. Each section paints a picture on Massachusetts providing a story along with economic data on a multitude of topics. The edition also includes a special topic on transportation in the Commonwealth, which focuses on the relation of transportation/mobility and Massachusetts' economy You can find it on our website under our Financial Reports Section in the Quarterly State Economic Information tab (August 2022 Socioeconomic Indicators) or as an attachment on our Information Statement New Highlights from this Edition Socioeconomic Indicators for Massachusetts August 2022 ➤ Annual Hours of Delay per Auto Commuters Freeway Daily Vehicle Miles Traveled. ➤ Monthly Transit Ridership ➤Logan International Airport Passenger Volume ➤ Share of Total Massachusetts Population by Race and Ethnicity ➤ Housing-Cost-Burdened Households by Housing Tenure in Massachusetts and the US ➤ Housing Tenure in Massachusetts by Race and Ethnicity MASSACHU#21Financing Update Since the last investor call in January, the Commonwealth sold two General Obligation series totaling $650 million and two negotiated series of Commonwealth Transportation bonds totaling $350 million. In addition, we sold two series bonds for the Unemployment Insurance Trust Fund for a total par amount of $2.7 billion in August. Financings since last Investor Call > Upcoming Financings Series Par Amount Sale Date Award/Senior Manager Maturity Range Average Life (yrs) All-in- TIC Timing Par Amount Туре Credit Method of Sale GO Series A $300 MM 2/1/2022 Citigroup 2028-2038 11.4 2.07% Week of Oct 17, 2022 $1,200 MM New Money/ Refunding GO Negotiated GO Series B $350 MM 2/1/2022 Wells Fargo 2039-2048 21.4 2.93% New Decemb er 2022 $900 MM Money/ Refunding GO Negotiated CTF Series A (Sustainability) $250 MM 6/22/2022 Wells Fargo 2022-2050 26.6 4.48% 1st Quarter 2023 $750 MM New Money GO TBD CTF Series B $100 MM 6/22/2022 Wells Fargo 2022-2052 29.4 4.47% 2nd Quarter 2023 $900 MM New Money GO TBD Unemployment Insurance Trust Fund Series A (Sustainability) $1,996 MM 8/16/2022 Jefferies 2023-2031 3.6 3.87% 2nd Quarter 2023 $350 MM New Money CTF TBD Unemployment Insurance Trust Fund Series B (Super Sinker) $684 MM 8/16/2022 Jefferies 2023-2031 8.9 4.17% 21 SIGILLUM#22Next Week's Financing Overview and Additional Information General Obligation Bonds Consolidated Loan of 2022, Series C $1,000,000,000* General Obligation Bonds, Refunding 2022 Series A $104,770,000* $1,104,770,000* General Obligation Bonds Consolidated Loan of 2022, Series C & Refunding Series A Maturity (10/01)* 2032 Par Amount* 25,000,000 Maturity (10/01)* Par Amount* 2029 34,255,000 2033 25,000,000 2030 36,235,000 2034 25,000,000 2031 34,280,000 Tax Status Tax-Exempt 2035 25,000,000 2036 25,000,000 Use of Net Proceeds New Money and Refunding 2037 25,000,000 2038 25,000,000 Amortization* Series C & Refunding Series A 2039 25,000,000 Ratings (Moody's/S&P/Fitch) Aa1 (Stable)/AA (Positive)(**) / AA+ (Stable) 2040 25,000,000 2041 25,000,000 Timing* Sale Date: Wednesday October 19, 2022 2042 25,000,000 2047 325,000,000 Closing* October 27, 2022 Preliminary Official 2052 400,000,000 Statement Additional Information https://emma.msrb.org/P21619189- P21247452-P21672005.pdf www.massbondholder.com * Preliminary, subject to change ** S&P revised its outlook to positive from stable on October 7, 2022 22 SIGILLUM REIPUBLIC#23Preliminary Financing Schedule and Additional Resources Financing Schedule* S October/November 2022 MTWT S FL 1 216230 3 4 5 9 10 11 12 13 17 18 19 23 24 25 26 31 1 2 62223 7 8 14 15 20 21 27 28 225 804 Tuesday October 11: Post POS Friday, October 14 at 11:00AM: Investor Call Tuesday, October 18: Retail Order Period Wednesday, October 19: Institutional Order Period Thursday, October 27: Bond Closing Kathy Bramlage Senior Debt Analyst 617-367-3900 x494 [email protected] 23 Contact Information Sue Perez Deputy Treasurer 617-367-3900 x816 [email protected] Additional Resources • • Information Statement as of September 21, 2022 https://emma.msrb.org/P21613893-P21243633-P21667847.pdf Preliminary Official Statement https://emma.msrb.org/P21619189-P21247452-P21672005.pdf Massachusetts Investor Website https://massbondholder.com Department of Revenue https://www.mass.gov/service-details/dor-press-releases-and-reports Preliminary, subject to change SIGILLUM REIPUBLICA#2410th Annual Investor Conference The Commonwealth of Massachusetts Presents THE 10TH ANNUAL MASSACHUSETTS INVESTOR CONFERENCE OCTOBER 20, 2022 Boston Convention & Exhibition Center 24 24 The Commonwealth of Massachusetts is excited to announce that next week our 10th Annual Investor Conference will be held on October 20, 2022 at the Boston Convention and Exhibition Center in Boston, MA. Meeting run-time is 8:00 AM - 1:00 PM • We are fortunate to have a Senior Economist and Policy Advisor from the Federal Reserve Bank of Boston join us again this year. Dr. Christopher Foote, whose research and policy interests include housing and the macroeconomics of the labor market, will be our luncheon keynote speaker. This year's conference will also feature presentations on the Massachusetts economy and panels discussing topics pertinent to the Commonwealth of Massachusetts credit and the credits of our statewide issuers. Ticket Information: FREE for investors, potential investors, issuers, and analysts. Please sign up on our website: https://massbondholder.com/investor- conference-registration $100.00* for public finance, legal, and financial advisors. Please register on our Eventbrite page: https://www.eventbrite.com/e/10th-annual-massachusetts-investor-conference-tickets- 415583390107#25QUESTIONS 25 25 SIGILLUM REIPUBLICA