Construction costs have escalated so quickly over the last two fiscal years that the purchasing power of Massachusetts’ capital investment plan has been “significantly eroded,” a panel of state finance experts said last month as it recommended the largest increase in borrowing for capital spending in at least a decade.
The Capital Debt Affordability Committee determined that Massachusetts can afford $3.117 billion in general obligation debt for capital spending in fiscal year 2025, an increase of $212.2 million or 7.3% over the current year. The committee generally considers $125 million the maximum annual increase in the bond cap, but its non-binding recommendation for fiscal 2025 includes that now-standard amount plus an additional $87.2 million “adjustment” to account for construction cost inflation.
“Committee analysis of the data indicates that [Capital…
