February 9, 2009: Legislative Report #14
Bonding to Pay Interest
The Republican governor Pawlenty is proposing in his budget to *bond $1,062,000,000.00 and proposes to repay this bond with revenue from the tobacco settlement funds. The problem with repayment with tobacco settlement is those funds are not available. The tobacco income directly deposited into the state general fund now and spent on other programs.
The purpose of the 20-year bond is to help balance the 2010-2011 biennium state budgets. The state has $4.7 billion in outstanding bonds in addition $2,700,000,000.00 in authorized bonds not issued yet but committed. In the next biennium, Minnesota is obligated for over $900,000,000.00 in interest and payments on the $4.7 Billion issued bonds.
The Governors plan is similar to an individual using a VISA card to make payments on other credit cards like the Master Card, American Express, and Discover cards. Even more disturbing is the idea we should accept spending another $600,000,000.00 in interest on interest with this bond request. If approved, the issue of such a bond has no actual production, investment or tangible brick and mortar projects, just more spending, debt, and delayed accountability.