Wednesday, July 14, 2004
Digging a hole
[Phillip Brownlee, "IOUs," The Wichita Eagle, 14 July 2004.]
Wichita Eagle editor Phillip Brownlee points out in today's editorial that Kansas is on its way to the poorhouse if its policymakers continue to balance the budget by picking up additional debt:
State lawmakers like to brag about how they have held the line on raising taxes. But they don't mention how they did it: by borrowing record amounts of money.
Kansas had the biggest increase in the rate of borrowing from 1992 to 2002 of any state (a whopping 333 percent per capita).
In 1992, Kansas' bonded debt was $486 million, or about $195 for every resident -- the lowest per capita amount in the nation. Not anymore.
By 2002, the state's debt was $2.29 billion, or $844 per capita. And the borrowing hasn't slowed.
Kansas issued about $1.2 billion in bonds in the past two years. And by the end of this fiscal year, the state expects to owe $3.7 billion. If population growth trends remain the same, that debt will translate to $1,352 per resident -- or almost a 600 percent increase since 1992.
Already, Kansas has moved up from 50th to 17th in the nation in per capita debt, according to a 2004 report by Moody's Investor Services.
But some of the current borrowing will be repaid from the state's general fund, rather than from a designated revenue stream, such as motor fuel taxes. That will mean less money available to spend in coming years on education and other state needs.
As Flint Hills has shown, legislators can expect significant increases in the cost of Medicaid in coming years. Avoiding this issue will only make the debt matters currently facing the state that much worse.
As well, policymakers can hardly expect a bailout from the federal government - recent reports indicate their finances aren't in any better shape:
The government's deficit ballooned to $326.6 billion in the first nine months of the 2004 budget year, according to a snapshot of U.S. balance sheets released Tuesday.
That's more than 20 percent larger than the $269.7 billion shortfall for the corresponding period last year. For the current budget year which began Oct. 1, this spending has totaled $1.73 trillion, 6.4 percent more than the same period a year ago. Revenues came to $1.40 trillion, 3.5 percent more than the previous year.
So far this year, the biggest spending categories are programs from the Health and Human Services Department, including Medicare and Medicaid, $407.1 billion; Social Security, $397 billion; military, $322.3 billion; and interest on the public debt, $274.9 billion.
[Phillip Brownlee, "IOUs," The Wichita Eagle, 14 July 2004.]
Wichita Eagle editor Phillip Brownlee points out in today's editorial that Kansas is on its way to the poorhouse if its policymakers continue to balance the budget by picking up additional debt:
State lawmakers like to brag about how they have held the line on raising taxes. But they don't mention how they did it: by borrowing record amounts of money.
Kansas had the biggest increase in the rate of borrowing from 1992 to 2002 of any state (a whopping 333 percent per capita).
In 1992, Kansas' bonded debt was $486 million, or about $195 for every resident -- the lowest per capita amount in the nation. Not anymore.
By 2002, the state's debt was $2.29 billion, or $844 per capita. And the borrowing hasn't slowed.
Kansas issued about $1.2 billion in bonds in the past two years. And by the end of this fiscal year, the state expects to owe $3.7 billion. If population growth trends remain the same, that debt will translate to $1,352 per resident -- or almost a 600 percent increase since 1992.
Already, Kansas has moved up from 50th to 17th in the nation in per capita debt, according to a 2004 report by Moody's Investor Services.
But some of the current borrowing will be repaid from the state's general fund, rather than from a designated revenue stream, such as motor fuel taxes. That will mean less money available to spend in coming years on education and other state needs.
As Flint Hills has shown, legislators can expect significant increases in the cost of Medicaid in coming years. Avoiding this issue will only make the debt matters currently facing the state that much worse.
As well, policymakers can hardly expect a bailout from the federal government - recent reports indicate their finances aren't in any better shape:
The government's deficit ballooned to $326.6 billion in the first nine months of the 2004 budget year, according to a snapshot of U.S. balance sheets released Tuesday.
That's more than 20 percent larger than the $269.7 billion shortfall for the corresponding period last year. For the current budget year which began Oct. 1, this spending has totaled $1.73 trillion, 6.4 percent more than the same period a year ago. Revenues came to $1.40 trillion, 3.5 percent more than the previous year.
So far this year, the biggest spending categories are programs from the Health and Human Services Department, including Medicare and Medicaid, $407.1 billion; Social Security, $397 billion; military, $322.3 billion; and interest on the public debt, $274.9 billion.
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