Senate Finance Committee advances bill to raise BFA contingent credit ceiling to $450 million

The Senate Finance Committee on an executive-session voice vote advanced House Bill 1042 after adopting a committee amendment that raises the Business Finance Authority's unified contingent credit limit to $450 million.

James Key Wallace, executive director of the Business Finance Authority (BFA), testified at the public hearing and described the bill as the House version of SB 525. "This does not use any state funding," Wallace said, adding that the BFA's guarantees require board and executive council approval. He told senators the statutory limit on guarantees is not indexed for inflation and that, over 35 years, "the state has never had to pay out on a state guarantee." Wallace also said the BFA has about a 99% repayment rate over its history.

The committee's discussion focused on why the bill sets a new limit at $400 million and whether that amount properly reflects inflation and larger projects. Senator Waters asked why lawmakers selected $400 million instead of a different inflation-adjusted figure; Wallace pointed to two drivers: projects cost more now and the state is recruiting larger projects, citing New Balance as an example of a recent expansion the BFA supported. "We're doing not only more projects, but the projects are also bigger," Wallace said.

Senator Rose raised concerns about whether a higher cap might increase the state's exposure and potentially affect the bond rating. Wallace responded that the change "is just the ability to do more of the same that we've been doing successfully for a long time" and reiterated the BFA's safeguards, including collateral requirements and capital reserves.

After testimony the committee closed the public hearing (the online sign-up showed zero in support and three opposed), entered executive session, and considered the measure. Senator Inis moved a committee amendment to raise the limit to $450 million; Senator Waters seconded the motion. The committee adopted the amendment by voice vote and advanced the bill as amended on consent.

The bill now moves forward from the Senate Finance Committee with the committee amendment adopted. The chair indicated some senators may speak on the measure later on the floor.

Why it matters: The unified contingent credit limit determines the total amount of state-backed guarantees that can be in force at one time. Supporters say raising the ceiling gives the BFA room to support larger and more numerous economic development projects without tapping state taxpayer funds; critics warned about potential long-term exposure to contingent liabilities.

Next steps: The committee advanced the bill as amended; the measure will proceed according to the Senate's calendar and any further floor or cross-chamber action.