CHICAGO — Wisconsin plans to take competitive bids July 6 on $800 million of operating notes that will help the state smooth out its cash-flow needs.
The notes will mature June 15, 2012. They don’t feature a general obligation pledge but the state is obligated to deposit all general fund revenues, other than those required to pay its GO debt, into a note-redemption fund to cover repayment.
The two-year, $66 billion budget approved by lawmakers earlier this month anticipates an $800 million note sale in each of the fiscal years and the size is similar to state cash-flow notes issued over the last few years, said capital finance director Frank Hoadley.
The state will follow up with a $300 million new-money GO competitive sale later in the summer and expects to soon launch a competitive selection process to establish a new list of qualified broker-dealers for negotiated sales, Hoadley said last week. All three rating agencies rate Wisconsin’s $7.2 billion of GOs in the mid-double-A category with stable outlooks.
Gov. Scott Walker is still reviewing the budget sent to him by lawmakers for the fiscal biennium beginning July 1. It closely mirrors his original proposal that relies on deep spending cuts to erase $3 billion of red ink. It does not include any general tax increases and would leave the state with a $300 million ending balance.
The budget authorizes $1.36 billion of new GO borrowing and another $695 million of new revenue-backed bonding, including $342 million for transportation and $353 for clean-water projects, according to the Legislative Fiscal Bureau. The budget relies on one significant one-shot measure, the restructuring of $337 million of GO and commercial paper debt service due in fiscal 2012.
