The State House's golden dome looks down on the Boston Common on Oct. 4, 2023. State House News Service photo

At $4.12 billion, Gov. Maura Healey’s housing production bond bill proposes a huge step up in state spending on affordable housing production over the next five years. But a fiscal watchdog group says it’s not yet clear how the state will be able to pay for the spending in future years.

In a report released Tuesday, the Massachusetts Taxpayers Foundation didn’t directly question whether the state could afford the housing bond bill, which would more than double state bond spending on housing production from $308 million per year to $824 million per year. Instead, it pointed to an administrative rule put in place under former Gov. Deval Patrick that restricts annual increases in state general obligation bonding capacity  – separate from bonding used to pay for transit infrastructure – to $125 million per year.

Even if each year’s $125 million increase was solely dedicated towards the bill’s housing production increase, Massachusetts would not be able to move $4.12 billion in housing bond money out the door, MTF’s report said. Nor would it be able to if an $87 million increase in that limit was effected, said MTF President Doug Howgate, as proposed by the state Debt Affordability Committee earlier this month in the first such increase since 2009.

“It’s not to say the goal shouldn’t be $4.1 billion in spending on housing over the next five years, it’s to make sure we’re having a conversation about what are the trade-offs,” Howgate said. “We have existing requirements on our debt and the people who rate our debt are very mindful of it. If they see us getting out over our skis on our capital budget, they’ll downgrade our debt and that will make it harder to pay for things.”

The Healey administration could stay within the bonding cap by reallocating money from other bonding needs towards housing, the MTF report says, and it could also make use of state housing finance agency MassHousing’s own separate, but limited ability to issue debt. But more than likely legislators will have to grapple with big, strategic questions of which public policy goals should be prioritized as the bond limit is increased, Howgate said.

The state could safely increase its bonding cap if it proves to Wall Street credit rating agencies that it has a plan to pay for the additional debt from future revenues, he said, but the bill comes at a time when tax collections are rising more slowly than anticipated.

While state tax revenues aren’t falling, the situation forced Healey to make nearly half a billion dollars’ worth of mid-fiscal-year budget cuts recently, and has raised questions about what the future direction state tax revenues are headed in after several years of record tax hauls and concurrent spending increases.