SAN FRANCISCO — Oregon Gov. John Kitzhaber unveiled a balanced budget proposal Tuesday for fiscal years 2012 and 2013 that reduces general-fund supported general obligation bond sales by 80% from the prior biennial spending cycle.
Kitzhaber’s budget recommends reducing general fund-supported GO issuance to around $200 million from about $1 billion during the two-year budget for fiscal years 2010 and 2011, according to Jack Kenny, finance manager in the budget and management division. Fiscal 2011 ends June 30 in Oregon.
Overall, Kitzhaber’s budget proposes an 8% spending increase — or $1.2 billion — to $14.5 billion, up from the current two-year budget of $13.5 billion.
“It is a significant decrease,” Kenny said of the proposal. “There really is almost no general-fund-supported debt in the governor’s recommended budget — probably less than $200 million.”
Kitzhaber, a Democrat, took office in January. He was elected in November after having served two earlier terms between 1995 and 2003.
The governor proposed a combined bond-issuance authority ceiling for GO and revenue bonds of $4.69 billion in the biennial budget — $1.46 billion of GO bonds and $3.23 billion of revenue bonds.
Estimates for the current two-year cycle, forecast Oregon issuance of $708 million GO bonds and $2 billion in revenues bonds.
Most of the increased bond issuance plans come from double-barreled GO bonds — bonds that are structured to be repaid from another revenue source, but also carry the state’s full-faith-and-credit pledge. Such obligations would grow from issuances of an estimated $489 million in the current two-year budget period to a proposed maximum $1.23 billion in the fiscal 2012-13 biennium.
Oregon’s outstanding GO debt as of June 30, 2010, stood at $4.5 billion. Its outstanding bonded indebtedness, including both general obligation and direct revenue bonds, but excluding certificates of participation was $9.3 billion, according to the governor’s budget.
Some agencies will see their bonding authority rise in the proposed budget.
“There is a significant increase in potential issuance authority for road and bridge infrastructure in the state because of the gas tax increase,” Kenny said.
Kitzhaber’s budget calls for Oregon to continue full speed ahead on its largest revenue bond program, calling for up to $663 million in highway user tax-backed revenue bonds for the Oregon Department of Transportation in fiscal years 2012 and 2013. That compares with $580 million in the current biennium.
Community colleges have less bonding authority in Kitzhaber’s spending plan.
“There is very much a reduction in the issuance authority for general obligation bonds for higher education community colleges,” Kenny said.
Oregon has authorized $207 million in general obligation and lottery-backed bonds for community college projects in the past three biennial budgets. Debt service for those bonds for the 2012 to 2013 cycle is $24 million, a 39% increase from the last two-year budget.
Due to the state revenue shortfall, the budget recommends no new capital projects for the colleges.
The new spending plan calls for Oregon to sell more than $2.4 billion of bonds and certificates of participation this fiscal term, excluding pass-through revenue bonds. That represents an increase of more than $500 million from 2007 to 2009.
Of the outstanding GO debt, 69% is structured to be fully self-supporting.