A provision of the budget compromise approved by the Ohio legislature would force state bonding authorities to seek insurance or a letter of credit in place of a reserve fund for future bond issues.
About $30 million in appropriations for an estimated $700 million of bond issuance would be eliminated over the biennium as part of a compromise budget plan drafted by a bipartisan committee of legislative leaders. The money had been earmarked for the reserve funds of the future bond issues.
The panel is trying to come up with revenues to help balance the $27.3 billion general revenue fund budget for fiscal years 1992 and 1993.
Herb Kruse, the state's debt coordinator, said the issuance provision would affect lease revenue bonds issued by the Ohio Public Facilities Commission and Ohio Building Authority. Once the budget is signed into law by Gov. George Voinovich, Mr. Kruse, who is also the assistant secretary of the facilities commission, said the next step would be to start talking to credit enhancers to get some preliminary cost quotes.
Jenny Camper, a spokeswoman for Gov. Voinovich, said the governor is expected to sign the budget into law.
Mr. Kruse and Kevin Fenlon, assistant director of the building authority, said they did not expect any difficulty in persuading the boards of the two authorities to approve the use of a credit enhancement for the reserve funds, in view of the fact some past bond issues of both authorities had been insured.
The facilities commission and the building authority issue lease revenue bonds that are subject to appropriations by the Ohio General Assembly. Their unenhanced bonds are rated A by Moody's Investors Service and A-plus by Standard & Poor's Corp.