Newspaper article THE JOURNAL RECORD

Bond Officials: Increase Should Go for Economic Development Activities

Newspaper article THE JOURNAL RECORD

Bond Officials: Increase Should Go for Economic Development Activities

Article excerpt

If the federal government raises the ceiling on how much Oklahoma can issue in private activity bonds, most if not all of the increase should be set aside for economic development activities such as housing starts, bond officials told the House Appropriations and Budget Committee on Wednesday.

Since 1986, each state has been restricted in the amount it is permitted to issue in such bonds, which are used to back housing, industrial revenue bond activities, student loans and farm loans at low interest rates.

Allocation is currently calculated at $50 per capita. Oklahoma's cap is set at $167 million per year.

"We don=t think the federal government should limit us in doing that, but they do," said Morris Hatley, with the Oppenheim Division of Bank of Oklahoma.

Because the cap may be boosted in the next couple of years, he said, Gov. Frank Keating wanted a study conducted of how Oklahoma allocates private activity bond funding.

Under current federal law, Hatley said, state bond caps are scheduled to increase each year beginning with a 20 percent hike in 2002, with appropriate increases each year through 2006 until the limit is increased by 50 percent, or up to $75 per capita.

"That's a pretty significant increase," Hatley said.

President Clinton vetoed a bill that would have implemented the 50 percent increase immediately. A new measure is now under consideration that would implement the stepped increases, but start them next year instead of in 2002. Hatley said this measure it attached to the latest minimum-wage bill.

Hatley said that about one-half of Oklahoma's bond cap is set aside for housing.

"That's the way it should be," he said, "because it is our most important economic development tool."

This is especially true in rural Oklahoma, Hatley added.

"That's where we have the greatest need, where we can do the most good," he said.

At the same time, Hatley said, the state must balance the desire to help rural areas against the need to help people where they live, in more metropolitan areas. He said this is why a certain amount of housing funding is set aside for Oklahoma and Tulsa counties. If the cap is increased, Hatley told the committee, the same things should be done for Comanche and Cleveland counties, which are smaller but growing metro areas.

Hatley also brought up a situation involving current state law.

As the statutes now stand, if Oklahoma's bond ceiling is increased to more than $170 million, the first $30 million must be reserved for the student loan pool. If it goes above $200 million, the next $30 million is to be reserved for an economic development pool.

Hatley said he is convinced that the Oklahoma Student Loan Authority can get by with less funding, or the $10.5 million the authority currently receives in bond funding. He said that loans administered by the authority have a current interest rate of about 6. …

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