Earlier this week, the Oregon Department of Transportation (ODOT), through the Oregon State Treasury, sold $300 million in bonds to finance highway and bridge maintenance and repairs around the state. The agency secured the senior lien bonds at an average interest rate of 4.56%, with maturities ranging from 18 months to 25 years. The bonds received "AA" ratings from several leading firms, helping the agency secure the favorable interest rate in a competitive market.
"We went out with an aggressive pricing schedule, and although it wavered some during the day, we held firm," said Matt Garrett, ODOT director. "I'm extremely pleased with our financial team's work in strengthening the department's financial resources."
Moody's Investor Service, Standard and Poor's and Fitch Ratings assigned ratings of Aa2, AA+ and AA, respectively, on the senior bonds. It was an especially high-volume day for municipal bond issuance, with $4.5 billion of bonds being sold, including $1.5 billion from New Jersey alone. Still, Oregon's bonds prevailed.
"This interest rate is one of the most favorable rates we've received," said Dennis Strachota, chief financial officer.
To further support the department's funding goals, an additional $100 million in bonds will be sold in mid-June. These subordinate lien bonds will provide bond holders with a variable rate of return and lower interest costs over the long run. Proceeds of the bond sales will finance highway and bridge projects in Oregon under the Oregon Transportation investment Act.
In 2003, the Oregon legislature approved the OTIA III bill providing authority to issue $1.9 billion in highway user tax revenue bonds, an amount that nearly quadrupled prior authorizations. Taxes on highway users and motor fuels, as well as other motor vehicle licenses and fees, are dedicated to the highway use. By selling bonds, ODOT can continue carrying out its overall mission to provide a safe, efficient transportation system that supports economic opportunity and livable communities for Oregonians. ODOT has approximately the next five fiscal years.
The state's combined motor fuel and use taxes, weight-mile taxes and vehicle registration and driver license fees generated about $870 million in gross revenues in fiscal year 2005, with motor fuels and use taxes accounting for just under half (47%) of the total. Revenues fluctuate with economic cycles but generally provide a stable stream. Over the last six fiscal years, 1999-2005, gross revenues grew at an average annual rate of 2.8%. Oregon's gas-tax rate has remained at $0.24 per gallon since 1993.