Debt Management

The Office of the State Treasurer is responsible for the issuance and management of the State of Vermont's debt in a prudent and cost-effective manner. The State Treasury issues long-term debt consistent with authorization by the legislature. The full faith and credit of the State is pledged to the payment of the State's general obligation bonds. General Obligation bonds are used for numerous purposes including construction and renovation of state office buildings, state recreational, cultural, health, correctional and educational facilities, making grants to municipalities for the purposes of funding wastewater and drinking water facilities upgrades; and for other capital projects.

The Treasurer is also authorized to issue short-term notes for the purpose of raising funds to pay expenses of government for which appropriations have been made but for which anticipated revenues have not been received, and other proposed uses outlined by statute. These can take the form of Revenue Anticipation Notes (RANs), Bond Anticipation Notes (BANs), commercial paper, or other related borrowing instruments.

The Treasurer may issue general obligation refunding bonds. In a refunding situation, new bonds are issued to retire existing bonds in order to take advantage of lower interest rates. Issuing bonds in order to pay off earlier bonds prior to their maturity dates is called advance refunding.

For the Fiscal Year ending June 30, 2008, the State issued three series of general obligation bonds. In November 2007, $35 million of 2007 Series D G.O. Bonds were offered in a competitive transaction with an average life of 11.7 years and a true interest cost of 4.30%. In Decmber 2007, $11 million of 2007 Series E G.O. Citizens Bonds and (specifically offered to Vermont residents in denominations as low as $1,000) were offered with an average life of 5.1 years and true interest cost of 3.49%. The $46 million total of these three series fund capital projects throughout the State.

Also in December 2007, the State issued $29.195 million of general obligation refunding bonds with an average life of 3.1 years and true interest cost of 3.33%. This issuance creates gross savings to the State of over $1.6 million through fiscal 2017 and present value savings of almost $1.1 million.