Worries increase along with Arizona's debt
by Mary Jo Pitzl - Jun. 9, 2010 12:00 AM
The Arizona Republic
Imagine selling your house to raise money - and then leasing it back, with interest, over 30 years.
That's essentially what Arizona is doing this week as it conducts a two-day sale of state buildings. The sale, which concludes today, is expected to net the state $300 million. But it will cost much more to repay when interest is added, and it will contribute to raising the state's total debt load to more than $10 billion, a figure five times as great as a decade ago.
Paying off that debt will strain state budgets for years to come. For the fiscal year that starts July 1, the state must make a $232 million debt payment out of its general fund.
This latest borrowing to help cover the state's massive budget deficit is a stopgap measure, which some politicians say will leave Arizona having to spend hundreds of millions of dollars a year on repayments that could have been spent on programs or used to reduce taxes.
"For a conservative Legislature, which is what we've tagged ourselves, we've borrowed a huge amount," said state Rep. Bill Konopnicki, R-Safford.
He tried in vain to get the Legislature to consider a budget plan that would have aggressively paid down the debt, retiring most of it in five years instead of the current 20- and 30-year time frames. It would have required tax hikes, but it would have been more honest than saddling future legislatures and taxpayers with tax increases to pay for today's spending, he argued.
The state budget, he said, is headed for a car breakdown by adding debt.
And Konopnicki said the breakdown is fast approaching.
"All the lights are on the dash - oil, gas - and we're driving as fast as we can," he said.