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State treasurer outlines debt‑capacity metrics and warns about growing debt‑service ratio
Summary
State Treasurer Monica Mizzapelli briefed senators on debt affordability metrics, the statutory 10% cap formula, and how continued borrowing affects debt‑to‑revenue ratios used by rating agencies.
State Treasurer Monica Mizzapelli told the Senate Capital Budget Committee that the state’s current debt profile allows borrowing capacity but that officials should watch the debt‑service‑to‑revenue ratio that credit rating agencies monitor.
Mizzapelli described two ways the state evaluates debt capacity: (1) a statutory calculation she cited as "CRSRS 6 c" that limits new authorizations if projected debt service would exceed 10% of unrestricted revenue, and (2) an annual debt‑affordability study that models ratios such as debt per capita and debt service to general‑fund revenue. She said the statutory formula would theoretically allow as much as $1 billion of additional authorization under a strict 10% threshold but called that level "very aggressive." The treasurer recommended continuing prudent management and avoiding approaches that push ratios close to those limits.
Using the department’s numbers, Mizzapelli said New Hampshire’s debt‑to‑revenue ratio improved from about 8.2% in 2015 to 3.8% in 2024, reflecting revenue outperformance and lower outstanding debt. The treasurer noted that the governor’s capital budget proposal and a recent house version include different totals (the governor proposed about $143 million in general‑fund bonding, the house a slightly smaller figure) and that any additional large authorizations would raise debt‑service projections.
Mizzapelli encouraged committee members to focus on the useful life of projects when deciding whether to use bond financing: projects or purchases with useful lives shorter than 20 years may not be appropriate for 20‑year bonding. She also said the department prepares a debt‑affordability study each year and includes assumptions such as a base authorization of $60 million per year (with a historic working number of $120 million used in some projections).
Committee members asked for additional projections if the committee considers raising bonding authorizations. The treasurer said staff can include alternative scenarios and urged legislators to consult the debt‑affordability data when weighing new projects.
