1 / 7

Informational Hearing on Debt Service

Informational Hearing on Debt Service. Legislative Analyst’s Office. Presented to: Assembly Budget Committee December 14, 2009. www.lao.ca.gov. How Does the Legislature Affect Debt Service?. Over the longer run, the Legislature has virtually total control over debt service.

elsie
Download Presentation

Informational Hearing on Debt Service

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Informational Hearing on Debt Service Legislative Analyst’s Office Presented to: Assembly Budget Committee December 14, 2009 www.lao.ca.gov

  2. How Does the Legislature Affect Debt Service? • Over the longer run, the Legislature has virtually total control over debt service. • Determines bond amounts submitted to the voters. • Authorizes lease-revenue bonds. • Exception: Voter-approved initiative bond measures. 1

  3. Legislature Also Has Considerable Control in the Shorter Term • Most bond proceeds must be appropriated by the Legislature. • Biggest exception: K-12 bonds. • The Legislature can statutorily suspend authority for previously authorized lease-revenue bonds. 2

  4. Projected Debt Service Ratio (As a Percent of General Fund Revenues) 3

  5. Is There a “Right” Level of Debt Service? • No. • Ratio will vary significantly with changes in revenues. • Ratio should vary based on state’s capital outlay needs. • Trade-off is with the hit on budget. • $70 million in debt service for each $1 billion in bonds sold. 4

  6. How Can the Legislature Better Control Its Debt Service Payments? • State has a five-year infrastructure plan. • Not changed the administration’s or the Legislature’s approach to capital budgeting. • Treasurer proposes a Master Plan. • Takes planning process further. • The Legislature should do more. • Create a Joint Committee on Infrastructure. 5

  7. What Would a Joint Infrastructure Committee Do? • Assess the annual five-year plan. • Assign state/local responsibilities. • Maximize use of non-General Fund revenues. • Maximize use of existing facilities. 6

More Related