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Fitch Ratings Upgrades Massachusetts $14.4B GO Bonds to 'AA'.



NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of
 -- Fitch Ratings Fitch Ratings

An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris.
 upgrades the rating of $14.4 billion Commonwealth of Massachusetts full faith and credit general obligation (GO) bonds to 'AA' from 'AA-'.

The upgrade reflects the commonwealth's economic recovery, enabling surplus operations and the rebuilding of reserves to strong levels. Prudent financial management through the recent downturn has positioned Massachusetts well. In addition, the near-completion of the $14.6 billion Central Artery/Ted Williams Tunnel project considerably reduces a financial risk to the commonwealth, although some uncertainty exists around problems associated with leakage LEAKAGE. The waste which has taken place in liquids, by their escaping out of the casks or vessels in which they were kept. By the act of March 2, 1799, s. 59, 1 Story's L. U. S, 625, it is provided that there be an allowance of two per cent for leakage, on the quantity which shall appear . These strengths remain tempered by high debt levels that are expected to rise with issuance under a new school building authority borrowing program.

Massachusetts has considerable economic resources and high wealth levels, with the second highest per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals.  personal income in the nation in 2004 (up from third). Economic improvement appears to be under way, although growth lags the nation. Employment declined 2.4% in 2002 and 1.9% in 2003, among the steepest drop of the states, but was down only 0.1% in 2004. Year-over-year gains have been registered in every month since July 2004. May 2005 employment increased 0.7% above May 2004, compared to 1.5% for the nation. Unemployment levels remain below the national average.

Massachusetts built up significant fund balances through fiscal 2001, and used the large accumulated reserve position as a safety valve safety valve, device attached to a boiler or other vessel for automatically relieving the pressure of steam before it becomes great enough to cause bursting.  when revenues, under pressure from recession and sharply reduced capital gains, fell short in 2002 and 2003. The stabilization fund Stabilization fund may refer to:
  • Exchange Stabilization Fund
  • Stabilization Fund of the Russian Federation
  • Petroleum Fund of Norway (SPF)
  • Chile's Copper Stabilization Fund (CSF)
  • Oman's State General Reserve Fund (SGRF)
 balance dropped from $2.3 billion in fiscal 2001 (more than 10% of spending) to $881 million in fiscal 2002 and $641 million in fiscal 2003. With revenue exceeding estimates in fiscal 2004, the balance increased to $1.1 billion. Although fiscal 2005 was budgeted to use $340 million of stabilization fund monies, due to strong revenue performance the year-end stabilization fund balance is now estimated as high as $1.8 billion. Other funds, such as the approximately $500 million Health Care Security Trust that was funded from tobacco settlement payments, represent significant additional reserves of the commonwealth.

Revenue estimates for fiscal 2005 were increased by $301 million in October 2004 and another $419 million in April 2005, to $16.65 billion. Revenues now are reported to have closed higher than estimates, at more than $17 billion, primarily due to personal income taxes. Surplus operations were realized again, despite significant increases in expense categories such as pension funding, which rose 46% to $1.2 billion. The use of non-recurring resources has steadily declined from $1.8 billion in fiscal 2002 to $323 million in fiscal 2005.

The legislature passed a budget for fiscal 2006 similar to that proposed by the governor, although it did not approve the governor's proposed income tax cut and increased spending over the governor's proposal for items such as education aid. The adopted budget assumes use of $600 million in stabilization fund monies; however, it relies on a revenue forecast of $17.1 billion, which is essentially flat to actual estimated fiscal 2005 revenues. Growth of less than 4% over fiscal 2005 would cover the proposed stabilization fund draw. In April, the commonwealth's estimate for fiscal 2006 revenue growth was about 5.1%.

Commonwealth debt is high and will remain so as the commonwealth embarks on direct funding of its share of the cost of school buildings. Net tax-supported debt amounts to about $24.5 billion, or $3,856 per capita and 9.1% of personal income. The total authorization for the new school building authority borrowing program is $10 billion. The authority will issue $4.1 billion to fund projects currently on a waiting list and may fund up to $500 million (adjusted upwards 4.5% per year) in new projects annually, starting in fiscal 2008. Authority bonds will be secured by a dedication of one cent of the commonwealth's five-cent sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. , to be phased-in through fiscal year 2011. Although the program will increase the commonwealth's direct debt, it replaces a longstanding commonwealth commitment to local debt issued for school capital.

The diversion of portions of the commonwealth sales tax to specific purposes (20% to the Massachusetts Bay Transportation Authority The Massachusetts Bay Transportation Authority (MBTA) is "a body politic and corporate, and a political subdivision" of the Commonwealth of Massachusetts [1] formed in 1964 to finance and operate most bus, subway, commuter rail and ferry systems in the greater  and 20% to the new school building authority) is designed to lend predictability and parameters to the commonwealth's obligations.

In addition to the upgrade of the commonwealth's GO bonds, Fitch upgrades the underlying ratings of the following credits, which are linked to the commonwealth rating:

--Boston Metropolitan District general obligation bonds, to 'AA' from 'AA-';

--Foxborough (Foxboro Stadium Boston/New England Patriots
    [
) infrastructure improvement bonds, to 'AA' from 'AA-';

--Massachusetts Bay Transportation Authority (MBTA MBTA Massachusetts Bay Transportation Authority
MBTA Migratory Bird Treaty Act of 1918
MBTA Model-Based Tracking Algorithm
) general transportation system bonds, to 'AA' from 'AA-';

--Massachusetts Convention Center Authority (Boston Common
For the television series, see Boston Common (TV series)


Boston Common is a popular public park in Boston, Massachusetts. Dating from 1634, it is the oldest city park in the United States. Its area is 50 acres (202,000 m²).
 Parking Garage) commonwealth GO bonds, to 'AA' from 'AA-';

--Massachusetts Government Land Bank bonds (1997 series A & B), to 'AA' from 'AA-';

--University of Massachusetts Building Authority bonds guaranteed by the commonwealth, to 'AA' from 'AA-';

--Woods Hole, Martha's Vineyard Martha's Vineyard (vĭn`yərd), island (1990 est. pop. 8,900), c.100 sq mi (260 sq km), SE Mass., separated from the Elizabeth Islands and Cape Cod by Vineyard and Nantucket sounds.  & Nantucket Steamship steamship, watercraft propelled by a steam engine or a steam turbine. Early Steam-powered Ships


Marquis Claude de Jouffroy d'Abbans is generally credited with the first experimentally successful application of steam power to navigation; in 1783 his
 Authority steamship bonds, to 'AA' from 'AA-';

The 'A+' rating of the Route 3 North Transportation Improvements Association lease revenue bonds is affirmed.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental  are also available from this site, at all times. This document will remain on the public site for seven days.
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Publication:Business Wire
Date:Jul 8, 2005
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