The director of the Oklahoma Department of Transportation told highway commissioners last week that any more cuts in state funding could halt a planned sale of $150 million of bonds.
ODOT director Gary Ridley said a projected cut of 10% to 12% in fiscal 2011 could leave the agency with insufficient funds for debt service on the bonds. A 12% budget cut would slash the budget by as much as $35 million, he said.
“If ODOT has any more reductions, then we’re going to have to take a serious look at whether to sell the bonds and at our eight-year construction program,” Ridley said. “I’m certain there are projects that will have to be eliminated as well as many projects that will have to slide to later years.”
Debt service on the highway bonds would be $14 million a year for 14 years.
The bonds would be the second tranche from a total of $300 million authorized by the Legislature in 2008 to fund the agency’s eight-year transportation program.
The first $150 million were issued as Build America Bonds in August 2009 by the Oklahoma Capital Improvement Authority. ODOT’s outstanding debt is rated A-plus by Fitch Ratings and Aa3 by Moody’s Investors Service.
Ridley said delaying projects would be the best solution for dealing with another round of budget cuts. ODOT has 800 fewer employees that it did 15 years ago, he said, and could not function properly if more jobs are slashed. “We can’t reduce any lower without creating some serious problems,” he said.
