Oklahoma Legislature Readies Three-Part, $475M Bond Sale

DALLAS - The Oklahoma Legislature spent much of the last day of its 2008 regular session on Friday putting the final touches on a three-part bond package totaling $475 million. The Legislature was set to adjourn at 5 p.m., but earlier in the day extended the session until midnight.

The bond package was the result of at least a week of behind-the-scene negotiations between legislative leaders and Gov. Brad Henry, who was represented in the talks by Treasurer Scott Meacham.

The governor and leaders from both parties in both chambers of the Legislature announced Wednesday that a deal had been reached on the general outlines of the $475 million package, but did not come to a final agreement on the details until late Thursday.

Several of the appropriations and authorization bills that would enact the three portions of the bond package had been approved in each chamber by press time on Friday. The full package was expected to be approved and sent to the governor by the time the second session of the 51st Legislature ended on Friday night.

"Everything appears to be on track," said Tim Allen, deputy state treasurer for policy and administration.

The package includes three separate measures.

One would authorize $300 million of bonds for state and county road projects, and another calls for $100 million of bonds to provide the state match for private contributions for endowed chairs and posts at state colleges and universities.

The third part of the package authorizes $75 million of bonds, with the proceeds divided equally among state flood control projects, a series of low-water dams on the Arkansas River in Tulsa, and the American Indian Cultural Center and Museum currently under construction in Oklahoma City.

Henry said the state would save money by financing the bond-list projects now rather than later.

"In a difficult budget year, this was the only way to address the state's most pressing capital needs and keep the promise we made on endowed chairs," Henry said. "By investing now in roads and bridges, flood control dams, and other important projects, we will pay a much lower price tag than if we had waited several years when costs will undoubtedly be higher."

Senate co-president pro tem Glenn Coffee, R-Oklahoma City, said there is no pork in the bipartisan bond package.

"The taxpayers have demanded additional action to fix our state's dilapidated roads and bridges, and this agreement provides a big shot in the arm to transportation funding," Coffee said.

The road bond bill allocates $275 million of the proceeds to the state highway department's eight-year maintenance program and establishes a revolving loan program for county road and bridge projects with $25 million of the proceeds.

The road bonds will be issued by the Oklahoma Capitol Improvement Authority in two tranches, with $150 million to be issued by Aug. 1, 2009, and the final $150 million no later than Aug. 1, 2010.

Debt service on the road bonds will be paid with a portion of the annual growth in motor vehicle fees. The average annual growth in motor vehicle fees is more than 3%.

The road bonds bill includes an appropriation of $30 million a year for debt service on the bonds.

Debt service on the road bonds will begin in fiscal 2010 with an initial payment of $13.6 million, going to $27.3 million in fiscal 2011 after the second tranche is issued and continuing through 2024. There is a final payment of $13.6 million in fiscal 2025 on the bonds issued in August 2010.

The agreement also removes the trigger of 3% growth in state revenues on the appropriation of money for road maintenance, and guarantees a maximum increase in annual appropriations to the maintenance fund of $30 million. By the time it is fully implemented in 2016, the measure will provide $300 million a year for upkeep of Oklahoma's roads and bridges.

Oklahoma State University and the University of Oklahoma will split the first $94 million of bond proceeds for endowed chairs and posts at those schools, with $6 million allocated for positions at the 23 other institutions under the oversight of the State Regents for Higher Education.

The $25 million in bond proceeds for the dams project in Tulsa will be used to leverage $50 million in federal funds for the effort.

 

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