Wednesday, April 23, 2008

Governor wants to max out the credit card.

Who says we cannot deficit spend? There are creative ways to spend money we don't have. It is called debt service. The House wants to pass HB 5221, a capital outlay bill for new building projects on the campuses of our state funded universities and community colleges. This bill, which she is pushing for is loaded with a few extra goodies that have nothing to do with capital outlay for universities and colleges, things like a new warehouse for the Dept. of History, Arts and Libraries, and $14 million for a new energy efficiency initiative...

Meanwhile, she is blowing another hole in the budget which will require debt service payments for the next four or five years. What she is effectively saying is, "I am not borrowing money, I am making my payments on the credit card every month!" But what she's doing is raising the credit limit and just making the minimum payments on the card. But guess who has to pay the extra finance costs?

How does she get this bad legislation it through? By putting money into every campus...who can vote against his own district?

Here is language from the bill analysis:
The Governor is recommending a $ 1.4 billion capital outlay budget of which the state will be responsible for $ 562 million in GF/GP debt service into future budget years. Parts of this budget along with portions of her FY 2008-09 Capital Outlay budget as well as $ 150 million in proposed road construction comprises her "nearly a billion dollars" Economic Stimulus Package she proposed in her State of the State address. The Governor appears to have increased the size of her stimulus plan to nearly two billion dollars since her advisers now claim that the two Capital Outlay budgets comprise $1.65 billion of her Economic Stimulus Package.

The House has added another $ 500 million in construction projects for our community colleges and universities (an additional 15 projects) that will cost the state over $ 200 million in additional General Fund commitments over the life of the bonds that will be taken out to pay for these building projects. This will not necessitate raising the bond cap (currently at $ 2.7 billion) because these projects will not be counted towards the cap until construction has been authorized, not planning. However, in order to maintain spending below the bond cap there will be no ability to approve new capital outlay projects until FY 2012.

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