The Oregon State Debt Policy Advisory Commission said the state can afford to issue as much as $979 million of new general fund-backed bonds and $616 million of lottery bonds over 2009-2011 biennium.
The five-member commission, chaired by new state Treasurer Ben Westlund, published the 2009 Legislative Update on Jan. 9.
It said Oregon had $2.5 billion of outstanding general fund debt as of June 30, 2008, and will end the current fiscal year with about $3 billion of outstanding debt. Based on the most recent revenue forecasts, debt service will take up 3.9% of the general fund in the current biennium, which ends June 30. Officials aim to keep the number below 5%,
The state had $706 million of lottery bonds outstanding as of June 30, and will end the current fiscal year with about $1.2 billion outstanding, the report said. That will leave Oregon with a 7.4-times debt service coverage ratio on the debt, and it has covenanted to maintain a ratio of at least 4 times.
“This forecast represents the maximum amount that could be issued” within existing debt management policies, the update said, adding that the state’s net tax-supported debt load has increased significantly in recent years.
The commission advises Gov. Ted Kulongoski and the Legislature on the state’s ability to take on new debt. Lawmakers are working on a number of debt-financed economic stimulus measures to spur Oregon’s rapidly deteriorating economy.
While lawmakers would like to use bond-financed infrastructure projects to help offset job losses, declining revenue collections mean that the budget can support less debt, the report said. It said a 10% drop in revenues would cut general fund bonding capacity by $200 million.