California $12.8 bln bond sales to push debt service costs up

SAN FRANCISCO, Oct 1 (Reuters) - California's debt service costs will rise as the state plans to issue a combined $12.79 billon in new-money general obligation and lease revenue bonds in its current and next fiscal years, the state treasurer's office said in a report on Monday.

The state's ratio of debt service payments to general fund revenue is expected to rise to 8.9 percent in its current fiscal year from 7.9 percent in the fiscal year ended in June, according to the report.

The ratio will increase more in the next fiscal year if voters reject Governor Jerry Brown's tax measure on the November ballot, the report added.

The ballot measure, if approved, would raise income tax rates on wealthy taxpayers and the state's sales tax to prevent spending cuts to education programs over the short term and support general state spending in coming years.

State Treasurer Bill Lockyer's office estimates that with an additional $12.79 billion in issued bonds, California's debt service payments from its general fund will increase by $35.03 million in the current fiscal year and $392.50 million in its next fiscal year.

California plans to issue $4.19 billion of general obligation bonds and $1.06 billion of lease revenue debt in its current fiscal year, followed by $5.27 billion of general obligation bonds and $2.27 billion of lease revenue debt in the fiscal year beginning next July.

Moody's Investors Service rates California's general obligation bonds A1 while Standard & Poor's Ratings Services and Fitch Ratings both rate the state's general fund-backed bonds A-minus.

(Reporting by Jim Christie; Editing by Theodore d'Afflisio)

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