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Treasurer and BFA tell committee a larger loan‑guarantee cap would reduce state borrowing headroom but risks are manageable
Summary
State Treasurer Monica Mazzappelli and Business Finance Authority Executive Director James Key Wallace told a House committee that raising the BFA's contingent credit limit from $200 million toward $450 million would reduce the state's debt capacity but is within modeled tolerances; the BFA said higher project costs and a robust pipeline justify a larger limit.
State Treasurer Monica Mazzappelli told the House committee that the state's statutory debt‑service limit under RSA 66 is driven by unrestricted revenue and currently the state is using about 65% of that capacity, leaving roughly $120,000,000 of headroom. "The legislature cannot approve additional debt if it exceeds 10%," Mazzappelli said, summarizing the statutory cap and the debt‑affordability study her office publishes.
Mazzappelli said the contingent liabilities the state guarantees for programs such as the Business Finance Authority are counted in that capacity calculation. She said approving an additional $250,000,000 in contingent credit for the BFA would increase the state's contingent exposure tied to the authority from about $200,000,000 to $450,000,000 and would leave approximately $470,000,000 in capacity for future issuances and capital budgets.
"The credit rating of the state is not really impacted by this guarantee," she said, noting the rating effect would occur only if guarantees were actually called and the state had to assume that liability. Mazzappelli recommended the committee ask the BFA whether the full $250,000,000 increment is needed and suggested the legislature review other, unused authorizations (for example, a Peace Development Authority guarantee) to free capacity.
James Key Wallace, executive director of the New Hampshire BFA, told lawmakers that rising construction costs and larger projects mean each guarantee uses a bigger portion of the authority's capacity. "Ten years ago a project might have been $15 million; now it's $40 million," Wallace said, and he described statutory and program safeguards the BFA uses, including collateral requirements, an 80% loan‑to‑value rule and reserve set‑asides. Wallace said the agency has never had to call a guarantee and that a 400–450 million contingent cap is within the range the BFA believes it needs to avoid repeated emergency requests to the Legislature.
Committee members pressed on alternatives and timing. Representative McGuire asked if guarantees "have the same effect on our bonding ability as taking out an actual bond," and Mazzappelli said they do for the RSA 66 capacity calculation. Representative Muntz and others asked what a lower increase (for example, $150,000,000) would mean for the BFA's pipeline; Wallace replied that a smaller increase would likely cover known projects but could require the BFA to return to the committee in an emergency if a larger opportunity arose.
Lawmakers discussed trimming the requested amount—the Senate has considered a $400,000,000 cap—and some members suggested diverting a portion of any increase to housing supports. The committee did not vote; the chair closed the HB1042 work session and said the committee will continue consideration after tracking related Senate action.
