The Oklahoma Senate adopted a proposed constitutional amendment last week that would put a ceiling on how much debt service could be paid each year on bonds supported by state taxes.
Senate Joint Resolution 10 caps annual debt service at 4.5% of the average of state general fund revenue over the previous five fiscal years. Lawmakers could raise the annual limit by declaring an emergency by a two-thirds vote.
Oklahoma will pay approximately $185 million in debt service in fiscal 2013 on $1.5 billion of net state tax supported debt, or about 3.4% of annual revenue.
The proposed amendment is sponsored by Sen. Josh Brecheen, R-Coalgate, who said the debt service cap would help protect Oklahoma's credit ratings.
"This bill establishes a framework designed to be neither overly restrictive nor generous and, based on rating agency commentary, would likely preserve our bond rating through emergency override provisions purposely included," said Brecheen.
"Those of us in the state legislature who have opposed new bond debt issuance might be convinced to vote differently if such a valid limitation was established," he said.
A similar proposal has been introduced in the House by Rep. Jason Murphey, R-Gutherie.
Oklahoma's GO debt is rated Aa2 by Moody's Investors Service and AA-plus by Fitch Ratings and Standard & Poor's.