News Releases

October 02, 2007

State Debt Committee Recommends $54.65 Million in Bonding for Next Year

MONTPELIER, Vt.—Fiscal discipline is paying off for Vermont. Vermont’s favorable debt ratings and reputation in the financial markets are providing the State the ability to increase its bonding level and obtain very low interest rates on debt, while still comparing favorably to other states.

The State committee charged with determining how much new long-term debt Vermont can afford for buildings and other infrastructure needs has recommended increasing the State’s annual bonding level to $54.65 million for the 2009 fiscal year. This recommendation, which guides the State in determining the amount of long-term bonds to issue each year, is up 11 percent from $49.2 million for fiscal year 2008. The Capital Debt Affordability Advisory Committee (CDAAC) makes its recommendation to the Governor annually by October 1 of each year.

“Our adherence to a disciplined issuance process over the past decade is paying dividends, as we are now able to afford meaningful increases in bonding while maintaining a very positive debt profile,” explained State Treasurer and CDAAC Chair Jeb Spaulding. “We used to be one of the highest debt load states in the country, but now we are one of the lowest states in terms of benchmarks like debt as a percentage of income or debt as a percentage of state revenues.”

The Vermont Legislature created CDAAC in 1990 to make annual recommendations on the maximum amount of money the State should borrow through long-term general obligation bonds. At that time, Vermont had one of the highest per capita levels of state debt in the country. The legislature wanted CDAAC to provide discipline to the annual debt issuance process to improve Vermont’s debt profile. The legislature and Governor traditionally adhere to the committee’s recommendation.

Vermont now enjoys the best bond ratings of any New England state. The State achieved a significant milestone in February when Moody’s raised Vermont’s rating to triple-A. One reason Moody’s cited for the high rating was the State’s steady progress in reducing previously high debt ratios and maintaining an affordable profile. Vermont’s debt-to-personal-income ratio is now 2.1 percent, markedly improved from 1996 when it was 4.9 percent. The average debt-to-personal-income ratio for all states is 3.2 percent.

“I remain committed to observing benchmarks for key debt indicators that allow Vermont to compare favorably against the highest rated triple-A states, and believe this year’s recommendation is consistent with our policy of providing important capital contributions to the State’s physical infrastructure within a framework of appropriate debt affordability,” stated Spaulding.

From 1999 through 2004, debt issuance amounts recommended by CDAAC were level at $39 million or less per year. The committee has gradually recommended increases in the amount of long-term bonds issued as the State’s key debt indicators have improved, thereby making more money available for use in addressing capital project needs. Taking into account the FY 2009 recommendation, from FY 2005 through FY 2009, nearly $40 million of additional funds will be made available for capital projects versus what would have occurred with level $39 million issuance amounts.

For a complete copy of the Capital Debt Affordability Advisory Committee Report and Recommendation, go to

Source: Office of the State Treasurer
Last Updated at: October 02, 2007 11:36:08