Bonds

Massachusetts DOT releases five-year capital plan

The Massachusetts Department of Transportation’s executive board last week approved a $15.7 billion capital plan for 2023 to 2028.

Approximately 60% of capital spending called for is “focused on improving the reliability and resiliency” of the existing infrastructure, MassDOT chief Gina Fiandaca wrote in an introduction to the plan, with an additional 23% going towards modernizing those systems, which include roads, rails, shared-use paths, airports, buses, and bridges.

The rest will go towards new construction across the state.

Highway bridge construction in Massachusetts, where the Department of Transportation released a new capital plan.

Massachusetts DOT

“These investments are crucial as we continue to prioritize our residents’ transportation options for years and generations to come,” Fiandaca said.

The capital plan leans on a mix of funding sources including $11.7 billion in infrastructure bonds approved by state legislators in August to support a swath of spending across MassDOT and the Massachusetts Bay Transportation Authority.

The MBTA, transit operator for the Boston area, is carrying out its own capital plan as it seeks to modernize infrastructure and addresses safety issues flagged by federal authorities. In June, its executive board approved a $2.72 billion fiscal year 2024 budget that upped spending amid expectations for declining revenues.

Fiandaca said the timespan of MassDOT’s capital plan aligned with that of the state’s capital program to help “maximize” federal support and add to state funds.

Gov. Maura Healey in June announced a five-year, $14 billion capital plan that leans on a mix of funding to carry out work across the state on housing development, transportation, and green energy.

Major federal transportation funding factors into its financing, including $1.5 billion of federal formula funding and grants and another $1.8 billion in federal funds are to support maintenance and new work on state highways.

It also includes support from state issuances; Massachusetts sold $1.2 billion in general obligation bonds in June.

MassDOT’s most recent sale was of $371.8 million of highway transportation variable-rate revenue refunding bonds in 2022.

S&P earlier his year along with upgrading Massachusetts’ general obligation bond rating to AA-plus from AA also revised the rating of infrastructure revenue bonds associated with the ‘Commonwealth Transportation Fund’ to AAA from AA-plus based on priority-lien criteria.

The rating took into account revenue streams, including the state’s motor fuel tax and licensing fees, as well as credit quality when notching the transportation bonds’ higher than the state’s GO, S&P said.

“The CTF bonds are eligible to be rated above the sovereign because we believe pledged revenues can maintain better credit characteristics than the U.S. in a stress scenario,” S&P said.

The Kroll Bond Rating Agency also assigned its AAA rating to the CTF revenue bonds citing “numerous legal protections” they believe “insulate the pledged revenues from budget operations of the Commonwealth.”

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