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State Representative Joyce Peppin
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-7806
For more information contact: Austin Bleess 651-296-5529
NEWS COLUMN
IF WE WANT TO GET OUT OF OUR DEFICIT HOLE, WE NEED TO STOP DIGGING
By Joyce Peppin
State Representative
Assistant Minority Whip
Growing up on a farm in central Minnesota, I remember one truism my dad passed on to me. He told me that if I ever wanted to get out of a hole, I needed to stop digging. Unfortunately, the recent passage of a $200 million “bonding” bill by the legislature at a time when the state still has a nearly $5 billion deficit shows there are many legislators who don’t understand that important message.
A “bonding” bill is legislation in which the state spends money by issuing bonds instead of paying cash. It is the equivalent of using the state’s credit card, and paying interest on the balance over a number of years. Why we would shoulder taxpayers with another $200 million in debt on earmarked projects, many of questionable merit, is beyond me, and the main reason I cast a NO vote on this bill.
Minnesotans understand we cannot spend our way into prosperity, but many in the legislature hold the contrary view. This $200 million bonding bill is the equivalent of a family going on a shopping spree when they have $75,000 in credit card debt on top of mortgage, utilities, and other monthly bills. It’s not responsible for the family and it’s not responsible for the state.
Tradition used to dictate that a bonding bill was passed only in even-numbered years, and included only projects with statewide significance. Spending on state parks, colleges and roads are projects with statewide significance. Unfortunately, this year there was no threshold applied and taxpayers are on the hook for $1 million so the state can purchase more wetlands, $4 million for a zoo and over $33 million to build light rail lines.
Some legislators are claiming this is a “jobs bill,” but that is simply not the case. The amount appropriated toward employment and economic development is $700,000, or less than 0.5%
of the entire bill. This legislation is more accurately a spending bill geared toward favored constituencies.
This bill also jeopardizes the bond rating of our state. Bond ratings are similar to personal credit scores. A better bond rating means better lending terms. If we pass a bonding bill that exceeds the debt limit cap, we could lose our current AAA bond rating, which would result in higher interest payments.
Traditionally our state spends no more than 3% of the budget to service debt. The bonding bill that passed the House will increases our debt service to 3.53% of the budget. By incurring $200 million in additional debt, we are likely setting ourselves up to pay more in interest in the long run. Those debt payments will be made by our children and grandchildren.
Instead of accumulating more debt on spending projects of questionable value, we need to focus on priorities, the most pressing being passage of a budget that lives within our means and doesn’t raise taxes on working families. With just over a month to go before the May 18 adjournment of the legislature, time is running out.
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News Items
- PEPPIN REPORT: NW SUBURBAN FAMILIES WILL BE HIT HARD UNDER DAYTON AND DFL BUDGET - (Posted: May 28 2013 4:35PM)
- Rep. Peppin’s bill would lessen unfair fiscal disparities tax burden on Rogers - (Posted: Apr 3 2013 9:36AM)
- PEPPIN REPORT: FEBRUARY FORECAST REVEALS FOURTH CONSECUTIVE STATE SURPLUS - (Posted: Feb 28 2013 12:00AM)
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