DeLeo sidestepping Baker on bonds
Climate change bonds would be exempt from caps
HOUSE SPEAKER ROBERT DELEO is using a novel funding approach for his climate change legislation, authorizing the issuance of $1 billion in state general obligation bonds that would be exempt from controls set by the Baker administration.
The Legislature regularly approves bond authorizations allowing state government to borrow money for all sorts of projects. To prevent overspending with borrowed money, the governor has the legislative authority to set caps on the amount of bonds that can be issued each year and the amount of interest on bonds that can be paid out of the state budget. The two caps give the governor wide latitude to determine how many bonds actually get issued each year and for what purposes.
DeLeo’s bill would sidestep the caps, exempting the bonds for his climate initiatives from the limits typically enforced by the governor. The speaker’s approach also ensures that the bonds for his climate initiatives would not be pared back by the governor.
Catherine Williams, the communications director for DeLeo, said in an email that the goal of the bill is to get cities and towns the resources they need to address climate change “without impacting the Commonwealth’s other spending priorities.”
“Speaker DeLeo wants to have a leadership role on climate change,” Golden said. “It’s a critically important issue.”
Golden also said Baker tends to be conservative in issuing bonds. “There is an argument to be made that more money can be spent on bonding,” he said.
Baker has filed his own climate change legislation, which also calls for raising $1 billion in bond money. Baker’s bill differs from DeLeo’s legislation in how it pays the interest on the bonds. While DeLeo’s bill would pay the interest using funds from the state budget, Baker’s bill would use the proceeds from a slight increase in the deeds excise tax to pay the interest. The deeds excise tax is the tax paid when a property is sold.
Michael Widmer, a long-time budget analyst, said DeLeo’s approach is unusual but not illegal. “It’s a way of not living within the bond cap and a way for the speaker to gain some measure of control over spending priorities,” he said.
Tim Cronin, the policy and partnerships manager at the Climate Action Business Association, reviewed the speaker’s Greenworks bill in a recent post on ClimateXChange and concluded DeLeo’s “creative solution” on financing gives far less control to Baker.“Based on our preliminary research, this procedural circumscription of the governor has never been attempted before in a bond bill,” he wrote.
Golden, however, said other bond authorizations have sidestepped the caps on bonds and debt service. He said he thought an accelerated bridge repair program and a school building assistance initiative were funded with bonds exempted from the caps. Widmer said he, too, thought the approach had been used before, including the issuance of bonds to raise money to pay a contractor who widened Route 3 north.