BOSTON -- Fiscal 1994 was a good year for Massachusetts, according to a preliminary report from the state comptroller's office.

The report, prepared by Comptroller William Kilmartin, said that for the fourth consecutive year the state has achieved a positive fund balance. Because of the positive balance, the state will be able to contribute to the stabilization, or rainy-day, fund.

Kilmartin said the state ended fiscal 1994 with a positive fund balance of $581 million, and that $59.5 million will be infused into the rainy-day fund, which now totals $377 million.

Some of the state's other surplus funds will provide $78 million for continuing appropriations and debt service relief, the report said. Another $125 million will be used as an undesignated surplus for appropriations during fiscal 1995, which began on July 1, 1994.

"This result demonstrates the state's ability to manage within extremely tight fiscal constraints," said Mark Robinson, the secretary of administration and finance. "It is good news not only from the perspective of the taxpayers, but also from that of the investment houses on Wall Street who determine the costs of the state's borrowing."

Kilmartin's report comes at a good time for Gov. William E Weld, who is running for re-election.

The report paints a generally positive picture of the state's finances. However, it states there is still room for improvement in the way the finances are managed.

In the final section of the report, "Conclusions and Recommendations," Kilmartin said that despite the positive turn the state's finances have taken since Weld came into office, the governor should actively promote policies to continue this growth.

On the capital expenditure side, Kilmartin recommended that the state eliminate some of its inactive capital project funds. These dormant funds include the Lockup Facilities Improvements Fund, Suffolk Jail Facility Fund, Federally Assisted Housing Fund, and Environmental Challenge Capital Projects Fund.

By eliminating these funds, Kilmartin said, the state would have an easier time managing its capital expenses.

The report also credited the state with refunding over $2 billion in the commonwealth's debt over the past two fiscal years.

"These bonds take advantage of current low interest rates to refinance older bonds previously issued at higher rates," Kilmartin said. "The economic value of such transactions is to decrease annual debt service expense in the budget for many years in the future."

Kilmartin recommended that the state invest more heavily in automated technology to help improve government efficiency, consolidate some of the state's 37 budgeted funds, and produce its budget by using generally accepted accounting principles.

But Kilmartin's suggestions did not detract from the report's upbeat tone. For the third year in a row, the state was able to show that its revenues were higher than expenditures.

During fiscal 1994, the state saw an operating gain of $18.1 million because of this "structural balance between inflows and outflows," the report said.

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