By Emily Wagster Pettus
JACKSON – State Treasurer Lynn Fitch told lawmakers Thursday that she expects Mississippi’s bond debt to drop back below $4 billion by the end of the current budget year, for the first time since 2011.
She said that’s good because bond rating agencies want to know that the state is keeping its long-term debt under control.
Mississippi had nearly $4.2 billion in bond debt as of Dec. 31, and Fitch said that the figure should be $3.9 billion by June 30, the last day of fiscal 2014.
Mississippi is at 33 percent of its constitutional debt limit.
“We’re positioned very well,” Fitch said.
Since the 2000 budget year, the lowest figure was 27 percent of the debt limit in 2007 and the highest figure was 36 percent in 2004. The state constitution says the bond debt cannot exceed one-and-a-half times the state revenue collected in any one of the preceding four budget years.
In calendar year 2012, the most recent period for which numbers are available, Mississippi had the 15th highest level of tax-supported bond debt per resident, at $1,735 per person. The U.S. median was $1,074. Fitch said on that list, it’s best to be ranked 50th, which is the lowest level of debt per person.
The state issues bonds to provide long-term financing for economic development projects and big public works projects such as highway construction or renovation of state-owned buildings. It’s a two-step process: First, legislators must agree on bond projects; then, the three-member state Bond Commission must vote for the state to take on the debt.
Sometimes, projects are authorized by the Legislature but don’t come to fruition. Fitch said it helps to clean up the books and remove unneeded bond authorization because rating agencies look at such projects when they’re examining the state’s debt or potential debt. The lower the level of potential debt, the better, she said.
During the 2013 session, legislators passed a bill to remove the authorization for several bond projects that authorities said are no longer needed, including decades-old authorization for $160 million of bonds to finance improvements at state-owned ports in Gulfport and Pascagoula.
Fitch said Thursday that with that legislative permission, the Bond Commission has removed $258 million of bond authorization from state books in the past few months.