Investor Presentation: General Obligation Bonds Consolidated Loan of 2020
Credit Factors
TENSIS
Economy
Finances &
Liquidity
Governance
Debt and
Pensions
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Large economy focused on important knowledge sectors that pay above average wages such as health
care, technology and education
Deep and diverse economy that was strong going into the recession with low 2.9% average
unemployment. The pandemic affected the state's economy, and the State had the nation's highest
unemployment rate in June of 17.7% - preliminary unemployment in September was 9.6%
High income levels with per capita income at 132% of the nation in 2019, 2nd highest among states (1)
Massachusetts' individual income taxes and sales taxes accounted for over 80% of total tax revenue in
2020. The State is still finalizing its fiscal 2021 budget. Through October, fiscal 2021 tax revenue is up
1.3% year-over-year with growth in both income and sales taxes
Strong budget stabilization fund balance at $3.5 billion (preliminary and unaudited as of June 30, 2020)
or 7.3% of 2019 expenditures. May draw on stabilization fund in fiscal 2021, but even with any draw,
balance will remain healthy
The Commonwealth plans to issue $1.2 billion in Revenue Anticipation Notes this fiscal year. The State
also has a $200 million commercial paper program, $200 million note purchase agreement and a $1.75
billion line of credit opened on May 11, 2020
Strong financial, debt and budget management policies including: (i) consensus revenue estimating; (ii)
multiyear financial plans/forecast; (iii) annualized formal debt affordability statements and (iv) multiyear
capital investment planning
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Strong budget gap closing capacity – the Governor has authority to cut expenses for executive agencies
without legislative authority if there is a revenue shortfall
Massachusetts' strong governance framework will remain a key credit factor as the state navigates
future uncertainty
There is an annual administrative limit on the amount of bond-funded capital expenditures, or "bond-cap"
to keep the Commonwealth's debt within affordable levels (FY21-FY25 plan is $2.46 billion)
Debt is elevated compared to other states in part because of the Commonwealth's practice of financing
projects for local governments(1)
As of the last valuation date January 1, 2019, the funded ratio of the pension system based on the
actuarial value was 56.3%
Source: November 2020 Credit Rating Reports - See massbondholder.com
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(1) Refer to AppendixView entire presentation