COBI 2015 - Debt Service

Overview
Issues
Performance
Background
Financials

Sources Uses

FY 2016 Appropriation

The Debt Service line item contains appropriations necessary to pay off interest, principal, and arbitrage calculation and trustee fees due on the state's bonded indebtedness. The state uses long-term debt to finance large capital expenditures including new buildings, major remodeling, and highway projects. The state issues general obligation bonds backed by the full faith and credit of the state and lease revenue bonds secured by dedicated revenue streams such as enterprise fund revenue or dedicated lease payments. Both general obligation and revenue bond debt, issued by the state, are included in this line item. Bonds issued by entities besides the State of Utah, such as institutions of higher education or loan funds, are not included in this line item.

Funding History

Funding Issues

Debt Service Payments

Money would be used to cover the state's contractual obligations on its debt service.

Related Publications

Bond Refunding: Saving Money on Debt Service

Appropriation Overview

During the 2015 General Session, the Legislature appropriated for Fiscal Year 2016, $467,374,500 from all sources for Debt Service. This is a 2.6 percent increase from Fiscal Year 2015 revised estimated amounts from all sources. The total includes $85,896,600 from the General/Education Funds, a reduction of 0 percent from revised Fiscal Year 2015 estimates.

Appropriation Adjustments

In addition to statewide compensation and internal service fund cost increases, the following appropriation adjustments were made during the 2015 General Session:

DescriptionOngoingOne-Time Debt Service Payments$22,768,200$13,400

OngoingOne-TimeFinancing Source

$0$14,139,000General Fund, One-time

$22,768,200$0Transportation Investment Fund of 2005

$0$14,900Transp Inv Fund of 2005, One-time

$0 ($17,000)Federal Funds

$0$300County of First Class State Highway Fund

$0$15,200Transfers

$0 ($14,139,000)Transfers - Other Funds

Money would be used to cover the state's contractual obligations on its debt service.

Mandatory Debt Service$82,500$69,800

OngoingOne-TimeFinancing Source

$62,700$0General Fund

$0$49,400General Fund, One-time

$19,800$0Education Fund

$0$20,400Education Fund, One-time

No Description

Refunding Bonds ($800,000)$0

OngoingOne-TimeFinancing Source

($800,000)$0Transportation Investment Fund of 2005

Bond refunding options identified by the State Treasurer could save General Fund resources through reductions in debt service payments. Savings are estimated at $13.5M, as of January 9, 2015. This reduction would occur in the debt service line item, not in the State Treasurer's budget; the estimated figure is about $800,000 annualized.

Statute

Article XIV, Section 1 of the State Constitution, the "Constitutional Debt Limit," limits the total general obligation indebtedness of the state to an amount equal to 1.5 percent of the value of the total taxable property of the state.

UCA 63J-3-402, the "Statutory Debt Limit," limits the maximum general obligation borrowing ability of the state at any given time to no more than forty five percent of the maximum allowable state budget appropriations limit set in UCA 63J-3-201 (a formula that reflects changes in population and inflation). Some highway bonds are exempt from this debt limitation.

UCA 63B-1-201 creates the State Bonding Commission composed of the governor, state treasurer, and a third person appointed by the governor.

UCA 63B-1-202 requires that all legislation authorizing the State Bonding Commission to issue bonds contain an estimate of the annual amount of funds necessary for operation and maintenance of each project.

UCA 63B-1-304 creates the State Building Ownership Authority composed of the governor, state treasurer, and the chair of the State Building Board. The authority may, among other things, borrow money and issue obligations (including refunding obligations); pledge revenues from any facility to secure the payment of obligations relating to that facility; cause to be executed mortgages, trust deeds, and other documents; own, lease, operate and encumber facilities; and rent or lease any facility to any state body. Any obligations issued by the authority may not constitute general obligation debt of the state and must be legislatively authorized.

UCA 63B-1-307 requires the State Building Ownership Authority to lease space back to the agency for which obligations were issued. Rent amounts must be sufficient to pay off the principal and interest as they come due.

UCA 63B-1a, known as the "Master General Obligation Bond Act," authorizes the State Bonding Commission to issue bonds only if the Legislature has affirmatively authorized the issuance of the bonds, the capital projects to be funded, and the maximum amount of the bonds.

Article XIII Section 5(3) of the State Constitution requires a tax levy to pay off general obligation bonds within 20 years while UCA 63B-1a-101(4) limits maturity dates to 15 years unless otherwise directed by the Legislature.

UCA 63B-1a-301 requires that a sinking fund be created to pay debt service on general obligation bonds. The State Treasurer administers the fund and deposits monies into the fund as necessary to pay debt service. Any bond monies remaining after a project is completed are to be deposited in the sinking fund.

UCA 63B-1a-303 levies a direct property tax each year after bonds are issued until they are paid off, sufficient to pay principal, interest, and premiums on each bond. However, subsection (5) abates the tax to the extent money is available from other sources.

UCA 63B-1a-601 allows the State Bonding Commission to issue bond anticipation notes that represent a general obligation of the state. Notes are payable from proceeds of the sale of bonds and/or other monies of the state.

Further Information

Debt Service Ratios for Triple A Rated States

Utah Historical Debt Service Ratios

Intent Language

HB0003: Item 51

The Legislature intends that in the event that sequestration or other federal action reduces the anticipated Build America Bond subsidy payments that are deposited into the Debt Service line item as federal funds, the Division of Finance, acting on behalf of the State Board of Bonding Commissioners, shall reduce the appropriated transfer from Nonlapsing Balances - Debt Service to the General Fund, One-time proportionally to the reduction in subsidy payment received, thus holding the Debt Service fund harmless.

The Legislature appropriates General Fund and Education Fund to pay general obligation debt service on buildings. The Legislature also appropriates Transportation Investment Fund and County of the First Class transportation restricted funds to pay general obligation debt service on highways.

Agencies occupying buildings constructed with lease revenue bonds make lease payments, recorded as dedicated credits, to the debt service line item.

Display By:

Line Item

Funding Source

Expenditure Category

Appropriation Type:

Appropriation History by

Line Items	FY11 Actual	FY12 Actual	FY13 Actual	FY14 Actual	FY15 Approp	FY15 Change	FY15 Revised	FY16 Change	FY16 Approp
Debt Service	366,403,500	434,346,100	462,885,000	478,308,700	469,556,100	(14,226,000)	455,330,100	12,044,400	467,374,500
Total	$366,403,500	$434,346,100	$462,885,000	$478,308,700	$469,556,100	($14,226,000)	$455,330,100	$12,044,400	$467,374,500

Sources of Finance	FY11 Actual	FY12 Actual	FY13 Actual	FY14 Actual	FY15 Approp	FY15 Change	FY15 Revised	FY16 Change	FY16 Approp
General Fund	51,599,700	54,599,700	54,599,700	54,599,700	54,473,100	0	54,473,100	62,700	54,535,800
General Fund, One-time	13,393,800	15,252,400	15,252,400	14,111,600	14,154,200	49,400	14,203,600	(64,600)	14,139,000
Education Fund	17,164,300	17,164,300	17,164,300	17,164,300	17,202,000	0	17,202,000	19,800	17,221,800
Education Fund, One-time	0	0	0	64,300	0	20,400	20,400	(20,400)	0
Transportation Investment Fund of 2005	34,318,000	82,431,100	332,808,600	343,656,600	326,452,000	0	326,452,000	21,968,200	348,420,200
Transp Inv Fund of 2005, One-time	0	0	0	0	0	14,900	14,900	(14,900)	0
Centennial Highway Fund	137,915,300	137,663,200	0	0	0	0	0	0	0
Federal Funds	15,141,300	16,999,900	16,260,400	15,775,900	15,775,900	(17,000)	15,758,900	0	15,758,900
Dedicated Credits Revenue	20,829,600	22,060,000	22,231,500	22,726,400	25,089,100	0	25,089,100	0	25,089,100
Dedicated Credits - GO Bonds	6,450,000	0	0	0	0	0	0	0	0
County of First Class State Highway Fund	20,988,300	20,988,300	22,100,800	24,639,000	16,498,600	300	16,498,900	(10,115,300)	6,383,600
Critical Highway Needs Fund	53,802,800	76,391,200	0	0	0	0	0	0	0
Transfers	(13,393,800)	(15,252,400)	(15,252,400)	(14,154,200)	0	(14,139,000)	(14,139,000)	14,139,000	0
Transfers - Other Funds	0	0	0	(1,051,400)	0	0	0	(14,139,000)	(14,139,000)
Beginning Nonlapsing	20,391,600	12,197,400	6,149,000	8,429,300	7,356,300	296,500	7,652,800	243,800	7,896,600
Closing Nonlapsing	(12,197,400)	(6,149,000)	(8,429,300)	(7,652,800)	(7,445,100)	(451,500)	(7,896,600)	(34,900)	(7,931,500)
Total	$366,403,500	$434,346,100	$462,885,000	$478,308,700	$469,556,100	($14,226,000)	$455,330,100	$12,044,400	$467,374,500

Show Table | Show Additional Information

Categories of Expenditure	FY11 Actual	FY12 Actual	FY13 Actual	FY14 Actual	FY15 Approp	FY15 Change	FY15 Revised	FY16 Change	FY16 Approp
Current Expense	366,403,500	434,346,100	462,885,000	478,308,700	469,556,100	(14,226,000)	455,330,100	12,044,400	467,374,500
Total	$366,403,500	$434,346,100	$462,885,000	$478,308,700	$469,556,100	($14,226,000)	$455,330,100	$12,044,400	$467,374,500

COBI contains unaudited data as presented to the Legislature by state agencies at the time of publication. For audited financial data see the State of Utah's Comprehensive Annual Financial Reports.