(CONCORD) New Hampshire’s debt has grown by 30% over the last five years. According to official documents provided to potential bond buyers ahead of tomorrow’s planned sale of $150 million in new debt, the General Obligation Debt climbed from $634 million at the beginning of Fiscal Year 2006 to $823 million at the end of FY 2010.
The amount of new debt issued each year has also grown dramatically, from $75 million in FY06 to $282 million in FY10. The cost of the additional borrowing will start to hit the state’s bottom line this year. Nearly $123 million in bonds are due to be repaid this Fiscal Year, with $425 million payable in the next four years alone.
New Hampshire’s total debt tops $1.3 billion. This includes Turnpike and Highway Bonds which are funded through dedicated revenue sources, but does not include the state’s unfunded obligations to the state retirement system.
According to the Preliminary Official Statement issued for tomorrow’s $150 million General Obligation bond sale, New Hampshire debt per capita has risen from $491 in 2006 to $621 today. As a percentage of personal income, the debt has gone from 1.2% to 1.45%.
Earlier this year, the Legislature approved an additional $75 million in borrowing to help erase a $295 million budget hole. This included $50 million in new debt to make FY11 debt service payments, and $25 million from the University System, which will be paid back through the state’s annual Capital Budget. According to estimates provided by the State Treasurer’s Office, New Hampshire’s debt service ratio will reach 8% of General Fund expenditures next year. The state’s debt service ratio was 5.6% in 2005, and 5.7% in 2008.
According to State Treasurer Cathy Provencher, New Hampshire has traditionally carried a low debt burden. She cautions that the nation’s leading bond rating agencies would raise red flags if the state’s debt service ratio reached 10%. Provencher cited the state’s stable bond rating as the reason she scheduled the state annual General Obligation bond sale for this week. This year’s GO bond sale is the earliest by far over the past eight years. Since FY04, the annual bond sale has ranged from as early as November 4th to as late as January 19th. Provencher says that she does not plan to go back to the bond market again until the Fall of 2011.