LOS ANGELES -- Debt service payments this year will make up a smaller share of California’s state general fund revenues than previously estimated, according to a report released Tuesday by State Treasurer Bill Lockyer.
For the fiscal year 2013-14, debt service will equal 7.7% of general fund revenues, down from the 9.8% projected in the 2009 debt affordability report.
In a letter to Californians accompanying the report, Lockyer attributed the lower debt service payments to improved debt management practices and the state’s stronger fiscal performance lately.
“In the market, the state’s general obligation bonds have become more competitive with higher-rated bonds, and investors have reduced the interest-rate premium they demand to buy our bonds,” Lockyer said. “At the same time, the state refinanced billions of dollars of bonds at lower interest rates and reduced taxpayers’ debt service payments by hundreds of millions of dollars.”
The treasurer’s office releases a debt affordability report every October.
Lockyer also noted the state’s return to fiscal health, which he said began in 2010 when voters adopted Proposition 25. The measure allowed the state budget to pass with majority votes, instead of two-thirds. Since then, the legislature and governor have enacted on-time budgets, he said.
“The Legislature and Governor have shown spending discipline and more careful priority setting, and the budgets they have produced have won uncommon praise from economists and rating agencies,” Lockyer said.
The state is planning to issue $12.5 billion of bonds supported by the general fund through fiscal year 2014-15, according to the report. That includes $7.3 billion of bonds this fiscal year and $5.2 billion during the next fiscal year.
Approximately $9.9 billion of the total $12.5 billion will consist of voter-approved general obligation bonds that will finance public works projects. The remainder will be lease revenue bonds authorized by the legislature.