Ohio hits the market with a $300 million competitive sale of higher education bonds Tuesday as lawmakers weigh more spending on public schools and the state's public colleges and universities.
Lawmakers in the House and Senate introduced identical bills Monday outlining a preliminary $2.6 billion capital budget for the 2019-20 fiscal years. The new capital budget provides about $600 million for building new schools and around $483 million for colleges and universities.
The majority of the spending would be supported by general revenue fund-backed debt obligation bonds and $402 million would be supported by non GRF-backed bonds and cash funds.
“The capital budget represents state investment in our local communities. Through bond dollars and not taxpayer expense, we are able to financially support a wide variety of local projects that support and uplift our neighborhoods,” Sen. Bob Peterson. R-Washington Court House, said in a statement. “These improvements are created and coordinated by local leaders and I am proud to be able to help boost them.”
Office of Budget and Management director Tim Keen said in presentation to a Senate committee Tuesday that most of the spending is supported by long-term debt issued by the state, with the principal and interest payments funded by General Revenue Fund appropriations in future operating budgets.
The $2.6 billion in capital appropriations reflects a biennial increase of about a half percent, or $13.7 million, from total GRF-backed capital appropriations enacted in the FY 2017-2018 capital biennium, according to Keen. He called the plan both “manageable and affordable within our current and future budget capacity,” and said it keeps the state well under the constitutional five% limitations on debt service as a percent of revenue.
“The spending plan will also continue to support the credit rating agencies ranking of Ohio’s debt burden as ‘moderate’, our AA-plus credit rating and our ‘stable’ credit outlook,” Keen said.
S&P Global Ratings and Fitch Ratings affirmed the state’s AA-plus ratings and stable outlook ahead of a $300 million general obligation bond sale scheduled for March 6. Moody’s Investors Service rates the bonds Aa1. “Ohio has solid expenditure flexibility,” Fitch said. “The state has had a budget-cutting bias rather than relying on revenue increases when necessary to maintain budgetary balance, even in core spending areas.”
The bonds will fund the costs of capital facilities for state supported higher education facilities.
The state plans to sell $360 million of infrastructure bonds at the end of March and $300 million of common school fund GOs this summer.