The other bad news? Capital budget.

I’m watching the Senate Ways & Means Committee on the budget (live on TVW) right now, and after a grim presentation on the operating budget — the one that will need to absorb $2.6 billion out of about $7.7 billion available to be cut — Brian Sims, Capital Budget Coordinator, started his presentation.

The joke in recent sessions, he said, has been that the Operating Budget is the sad one, where the Capital Budget brings happiness. But: “This may be the first session there’s not a whole lot of happiness in the Capital Budget,” he said.

Why? “As you’ve lost revenue, you’ve lost debt capacity” — meaning the state’s borrowing power for projects depends on it’s earning power (just like the rest of us). And, since there’s a Constitutional limit on bonds, things could get dicey.

“If you lost another $250 million dollars … you would then be in a position of your current bond appropriation not being able to be sold because it would exceed that 9 percent” Constitutional limit. What does a delay in a bond sale mean? “Capital projects that haven’t been allotted, wouldn’t be allotted,” while those that have already begun would be halted if their continuation depended on bond sales.

Here’s the full hearing:

Tags: bond capacity, capital budget