SAN FRANCISCO — An Oregon panel that advises policymakers on debt said in a report Wednesday that the state’s borrowing options will remain “highly constrained” in the near future.

The State Debt Policy Advisory Commission, chaired by Treasurer Ted Wheeler, said declines in projected general fund revenue will likely lead Oregon to temporarily exceed its target of 5% of general fund revenue dedicated to annual debt service by the end of fiscal 2013.

As a result, the commission recommended that the legislature and governor refrain from issuing any new general fund-supported debt for the rest of its two-year budget cycle.

However, Wheeler said in a letter to Gov. John Kitzhaber and lawmakers that the commission expects the state will be able to issue $640 million of general fund-backed debt each year for the subsequent four fiscal years.

Oregon’s outstanding long-term general obligation appropriation and revenue bond debt was $11.3 billion as of June 30, 2011, down slightly from fiscal 2010.

The state had nearly $3 billion of general fund-tied bonds outstanding as of the end of June, an amount that is expected to increase to $3.15 billion by the end of fiscal 2013.

The commission also asked policy makers to only issue lottery revenue-backed bonds during the biennium for critical projects.

Last year, Oregon refinanced and restructured a portion of its lottery-backed bonds, opening up $282 million of bonding capacity for the two-year budget through fiscal 2013. The legislature has already allocated the majority of that capacity.

But lottery bond capacity should also increase to $619 million over the next four fiscal years, according to the report.

Bonds linked to dedicated sources of revenue are not part of the debt capacity limit.

The state’s GOs are rated AA-plus by Standard & Poor’s and Fitch Ratings, and Aa1 by Moody’s Investors Service. The rating for lottery-backed debt is AAA by Standard & Poor’s and Aa2 by Moody’s.

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