State revenue is one of the most discussed topics of business each year. Many legislator newsletters and forums are dedicated to this issue, including my own. In my ongoing effort to bring the big picture of the condition of Iowa’s finances home to you, I’d like to talk about public debt.
It is understood the U.S. debt is now over $18 trillion. This amount continues to grow. It surprises many to learn the amount of Iowa debt among the state and subdivisions now totals over $15 billion. This breaks down among a number of entities who are allowed to borrow under Iowa law.
The largest portion of our debt is held by Iowa cities, with $5.34 billion in 2014. In 2012 this municipal debt was $5.11 billion, a two year increase of over $230 million in two years. This debt is used to fund items such as sewer lagoons, water towers, street construction and fire trucks.
Schools are the second largest borrower in the state. Schools issue bonds in order to build school buildings, buy computer equipment and make facility upgrades and expansions. Debt levels in 2014 for all Iowa schools totals $3.46 billion. A $452 million increase in school debt since 2012 is concerning.
Then we have the state of Iowa. Between the various state agencies and a few large state authorities they owe $3 billion on the books. The programs funded with these bonds include economic development, housing, infrastructure improvements and public safety. IJOBs bonds from 2009 and 2010 and the new state prison in Ft. Madison make up $800 million of this state debt.
Our 99 counties are the first level of government that do not reach the billion dollar milestone. $859 million is borrowed to finance county projects in Iowa. This is an increase of $61 million in the last two years. Examples would be law enforcement centers, large equipment, and road maintenance and construction.
Other government entities allowed to borrow against future revenues are the Iowa Board of Regents, Community Colleges and municipal utilities.
It is important to point out much of this debt is acquired in order to finance projects too large to cash flow in a single year’s budget. The Ft. Madison prison, for example, shows $133 million of bonds. That amount could not be expected to be funded in one year of cash appropriations. Instead, the payments are planned and built into the future budgets to repay these bonds. While sometimes borrowing money to fund infrastructure projects is necessary, I think many Iowans would agree with me, it’s usually better to pay for projects as money is available rather than to add to the growing debt that will be paid by future generations of Iowans.
Access to information about debt levels makes it possible for the taxpayer to form an opinion on which is best. All this information and much more is available to you and as close as your laptop computer. Go to http://www.treasurer.state.ia.
As we have covered in previous weeks, Iowa spends $20 billion annually in federal and state tax dollars. We now know we have $15 billion in government debt. All in a state of 3.1 million citizens.
I am working and voting to resist this pattern of borrowing and spending. One of the principles of your Senate Republicans is to run the state budget just as you handle your family budget. Spend less than you take in and pay for necessary infrastructure projects as you go rather than piling on debt. We can add the principle of not living beyond our means to this list.