The Texas House of Representative has adopted a new measure that would limit borrowings by the double-A rated state to 5% of general revenues -- which is about four times the current debt load.
Kay bailey Hutchison, the Texas treasurer who proposed the measure as part of a broad debt management plan, applauded state Rep. Rob Junell, D-San Angelo, the sponsor, for the bill's passage.
"The legislation ... would put Texas in line with most triple-A bond rated states by providing a debt capacity measure," Mrs. Hutchison said in a statement. "This will assure that Texas will not suffer from debt creep -- getting into too much debt for our general revenue fund to absorb."
The measure has been sent to a legislative conference committee and is part of Senate Bill 3, which will likely face a final vote next week.
While Mrs. Hutchison has advocated increased oversight of state debt, she and other state officials note that Texas has the lowest debt burden among the 10 largest states in the nation.
With about $7.7 billion of outstanding debt, Texas this year is expected to spend $177 million on debt service for all kinds of obligations -- which is about 1.3% of state revenues.
Even if the state were to pay for another $1 billion in authorized but unused debt, the debt service budget in fiscal 1991 would total $245 million. That is about 2% of the $12 billion in general fund revenues expected for the fiscal year, which ends Aug. 31.
Moody's Investors Service has upgraded Texas A&M University's rating to Aa -- the second higher education credit in the state to be revised this year.
Robert Stanley, vice president and assistant director at Moody's said the improved rating resulted from the university's strong financial operations and its moderate borrowing plans.
The agency had rated some $203.8 million in parity debt as A1, excluding bonds secured by the state's Permanent University Fund. Texas A&M joins the University of Texas, which had its ratings raised to AA earlier this year.