The difference between state government debt and your home mortgage
As we near the end of the legislative session, the Legislature will be presented with last minute, late session emergencies in order to compel legislators to issue more taxpayer-funded debt.
Since taking office I have seen this scenario play out over and over again.
Why is this so bad? An unfortunate 5-4 decision in 1998 by the Oklahoma Supreme Court opened up the floodgates by which Oklahoma lawmakers have since issued billions of dollars of debt. In his dissent, Supreme Court Justice Joseph Watt said that the decision “runs afoul of the plain language of our Constitution, and sounds the death knell to Oklahoma’s constitutional balanced budget provisions.”
Watt is absolutely correct. Oklahoma politicians like to campaign by explaining that Oklahoma government is different from Washington D.C. because our Constitution requires our budget to be balanced. But I would suggest that those who vote for bonds, which are not approved by a vote of the people, have forever given up the ability to make this case.
Today, Oklahoma has more than 2 billion dollars of debt on the books. The payments on this debt now tie the hands of today’s lawmakers who must appropriate approximately 175 million dollars off of the top money just to make this year’s debt payments. The debt will not be paid off until the year 2034.
In order to pay off the debt, each Oklahoman would need to come up with 618 dollars.
So why would we issue more?
Here’s the foremost argument used to justify the issuance of even more debt.
“You wouldn’t buy a house or a car without getting a mortgage or a loan would you? Why is government any different?”
Those who make this argument fail to take into account one very important fact.
When an individual takes on too much personal debt, he must live with the consequences of that decision. This creates a powerful deterrent to fiscal irresponsibility.
When a politician takes on too much debt he does so on behalf of the taxpayers. His own money isn’t at risk. But, while he shares no liability for his bad action and the long term consequences which will follow, he does take the credit for the short term benefit of the debt.
I experienced this phenomenon first hand years ago when a local incumbent sought re-election. He pointed to the fact that he had co-authored a measure to construct a new building at an area college campus, but he hadn’t paid for the building from available revenues. Instead, he passed a mega bond. This debt is still being paid… and two years ago the Legislature appropriated yet another 24 million dollars to help with these bond payments.
While that local politician was able to take a victory lap, he was doing so with other peoples’ money. Unfortunately, we are still battling the grave consequences of that decision to this day. Believe it or not, that particular legislation allows the debt to remain on the books for up to 30 years and since that particular politician is no longer in office, the taxpayers are unable to demand accountability from him.
During the next few weeks it will be imperative for Oklahoma legislators to stand strong against the inevitable push to issue even more debt.
Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email Jason.Murphey@hd31.org with your thoughts and suggestions.