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.

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