CHICAGO - The Ohio House yesterday approved a bill that calls for the issuance of $975 million of bonds in fiscal 1993 and 1994 and that would eliminate most of a projected $250 million budget shortfall in the current fiscal year 1993 budget.

State officials said the Senate was expected to concur with the House measure, which would fund capital improvements and trim the shortfall with spending cuts and tax measures.

On Wednesday, Gov. George Voinovich and legislative leaders agreed on a budget-balancing plan plus $1 billion of capital improvements appropriations that would be mainly funded through bonding.

Under the capital improvements plan, the state's Public Facilities Commission would issue $642.5 million of special revenue bonds, payable from the general fund to the commission under a lease-rental agreement.

About $516 million of the proceeds would be used for new and renovated higher education facilities, and $85.6 million would go for renovation projects and new equipment for mental health programs. Another $40.9 million would pay for the Department of Natural Resources' recreational facilities and environmental programs.

The Ohio Building Authority would issue the remaining $332.4 million of bonds, with $228 million of the amount going to adult and juvenile correctional facilities, $112 million to administrative facilities, and $34.4 million to the state's Arts Facilities Commission.

While those bonds would also be issued under a lease-rental agreement, an additional $55.3 million of bonds for transportation projects would be backed by gas tax revenues, according to Herb Kruse, the state's debt coordinator.

The capital improvements bill also includes $24 million of other projects funded with moneys available in several special revenue funds, said Paolo De Maria, assistant director of the state's budget office.

The bill is good news for the Gateway Economic Development Corp., the nonprofit developer of a $362 million sports complex in Cleveland. De Maria said the appropriation for the Department of Natural Resources includes $15 million for the Gateway project.

Timothy Offtermatt, Gateway's chief financial officer, said the appropriation is the last major piece of the complex's financing to fall into place. Earlier this month, Gateway closed on a replacement letter of credit for $31 million of bonds issued for the stadium. The bonds had been secured with a short-term letter of credit from Fuji Bank that was scheduled to expire Dec. 31.

Offtermatt said the new letter of credit from four Ohio-based banks will be in effect for five years. The $31 million of bonds, backed by stadium revenues, was part of a $146.7 million tax-exempt bond issue Gateway sold in December 1990 for the stadium that is to be used by the Cleveland Indians baseball team. The remainder of the bonds are secured with revenues from special liquor and cigarette taxes levied in Cuyahoga County.

The arena, which will be used by the Cleveland Cavaliers basketball team, is being built with excess tax revenues and the proceeds from a $75 million taxable bond issue sold by the county earlier this year. Cleveland also sold tax-exempt bonds this fall for $48.7 million worth of parking garages that will serve the complex.

"We're on a roll," Offtermatt said, adding that Gateway hopes to get another $10 million from the state's 1995-96 capital improvements budget.

The appropriations bill passed by the House also contains measures to fill a projected $250 million revenue gap in the state's $14 billion general fund budget for fiscal 1993, which ends June 30.

The budget-balancing plan calls for $50 million of spending cuts that would mainly be made in the Department of Human Services' budget. About $190 million of revenues would come from expanding the tax base for certain taxes and increasing or eliminating loopholes for other taxes, according to De Maria. He added that the state would wait to monitor revenue developments before addressing the remaining $10 million of the shortfall.

Under the budget plan, any revenues in excess of $70 million or 0.5% of total fiscal 1993 revenues would be deposited into the state's depleted budget stabilization fund. De Maria said a deposit into the fund was not anticipated because the "best guess" is that the state will end the current fiscal year with only a $40 million to $60 million balance.

Ohio's budget stabilization fund had been drained to help eliminate a $457 million deficit in the fiscal 1992 budget.

James Dearborn, an assistant vice president at Moody's Investors Service, said the state "has acted appropriately in the past two fiscal years to deal with declining revenues." He added that the revenue measures contained in the bill should provide recurring revenues for the state in the fiscal 1994-95 biennium, which begins July 1.

Joe O'Keefe, a director at Standard & Poor's Corp., said Ohio appears to have fulfilled the agency's expectation that it would take care of its budget problem.

The state's general obligation debt is rated double-A by Standard & Poor's and Moody's. Kruse said the state has about $4 billion of outstanding lease-rental debt that is rated A-plus by Standard & Poor's and A by Moody's.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.