Yesterday, during his mid-year budget briefing, Gov. Rendell repeated his claims that Pennsylvania state debt is pretty low, less than $1,000 per resident, and much lower (relative to state GDP) than other states. Yet I recently wrote about the massive debt Gov. Rendell had accumulated and left to his successor. What gives?
In fact, what Gov. Rendell always talks about is state “general obligation debt,” which is borrowed for a variety of purposes, and paid for as a line item in the Treasury Department’s budget.
Yet most state debt is contained in “independent state agencies.” For example:
- Gov. Rendell’s “economic development” plan created the Commonwealth Financing Authority (CFA), which issues hundreds of millions in debt every year. There is a line item in the Department of Community and Economic Development budget to give funds to the CFA, separate from our annual debt payments.
- The new funding for transportation under Act 44 of 2007, required the Turnpike Commission to issue billions in new bonds over the next few years. These are to be paid by higher tolls on the Turnpike, but are backed by state taxpayers.
- Rendell’s alternative energy subsidy plan involved borrowing through both the CFA and the Energy Development Authority. This debt is also paid off separate from general debt.
While general obligation debt increased $2 billion, or 28 percent, under Gov. Rendell—prior to the latest round of bond issues—debt by state agencies increased by $16 billion, or 93 percent.
|Pennsylvania State, State Agencies & Authorities Debt|
|Debtor||Debt Outstanding 2002||Debt Outstanding 2009||Increase||Change|
|State Agencies & Authorities||$16,848,800,000||$32,496,200,000||$15,647,400,000||93%|
|Source: Governor’s Executive Budget (http://www.budget.state.pa.us)|
Indeed state agencies, through the end of 2009, owed over $2,600 per Pennsylvania resident. Throw in local governments, and the total debt owed by Pennsylvania taxpayers is almost $10,000 per person.
|Pennsylvania State & Local Government Debt|
|Debtor||Debt Outstanding||Per Capita|
|State Agencies & Authorities||$32,496,200,000||$2,614|
|Sources: Governor’s Executive Budget (http://www.budget.state.pa.us) December 2009 data; PA Dept of Education (http://www.pde.state.pa.us/k12_finances/cwp/view.asp?a=3&q=89351) June 2009 data; U.S. Census Bureau (http://www.census.gov/govs/www/estimate.html) 2007 data/2009 projected by Commonwealth Foundation|
Given the full picture, it’s difficult to agree with Gov. Rendell that going deeper into debt is our path to prosperity.