Court: State’s refinance of bonds constitutional

Published 8:57 am Thursday, November 1, 2012

MINNEAPOLIS — Minnesota’s budget commissioner says a state Supreme Court ruling on refinancing bonds will save taxpayers “tens of millions of dollars.”

The court ruled Wednesday the state has the constitutional authority to borrow money to refinance the bonds it sold last year using future revenue from the its 1998 settlement with tobacco companies.

The state sold $757 million in tobacco bonds to help with a budget gap. Management and Budget Commissioner Jim Schowalter says the savings will depend on market conditions when the bonds are sold. But, revenue officials expect the rates will be significantly lower than 4.75 percent.

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The court ruled the type of debt the budget commissioner proposes is not the same as general obligation bonds which are based on the state’s credit and taxing power.