Mississippi’s bonded indebtedness grew from $2.2 Billion in 2000 to over $4.1 Billion in 2012. In the past 2 years the overall debt has been declining (by about $141 Million) and two recent Sun Herald opinions, Let’s not encourage pushing Mississippi deeper into debt and Debt service is big spending, attribute that to then state treasurer Tate Reeves’ push to reduce dependence on debt.
Syndicated columnist Bill Crawford points out, Debt Service is the 3rd largest budget item for Mississippi at $375.4 Million, 7.5% of the 2014 General Fund. Only education ($2.8 Billion) and social welfare ($737.9 Million) are larger budget items.
Current state treasurer Lynn Fitch says in the 2014 Debt Affordability Study that Mississippi could manage the anticipated $1.8 Billion of bonds that are expected to be requested by state entities over the next 5 years.
As the Sun Herald points out, the conclusions are riddled with words such as “expected,” “forecasted,” and “anticipated.” Such words create a doubtful foundation on which to take on debt. Mississippi does not need to be saddled with increased debt that has bankrupted cities across the U.S. such as Detroit and Stockton. The U.S. government has demonstrated how quickly that can get out of hand.
The Debt Affordability Study notes several strengths:
The State practices fiscal conservatism through a statutory 2% budget set-aside and mandatory spending cuts if revenues were to fall below 98% of the budget estimate.
Standard & Poor’s “expect[s] the overall economic climate of the East South Central Region (Alabama, Kentucky, Mississippi, and Tennessee) to improve in the upcoming year, and our economic outlook for the region remains largely positive over the next couple of years.”
There are some risks that are also documented:
Mississippi has an economy that trails many national median indicators and is more dependent than other states on federal spending [i.e. Pork].
A weak socio-economic profile seen by below average wealth and income coupled with the nation’s highest poverty rate and lowest educational attainment levels present challenges to the state’s credit rating.
Unfunded pension liabilities are among the highest of the states when measured as a percentage of personal income.
With $958 Million in bonds authorized by the legislature but not yet issued, the state could reverse recent debt reduction efforts and increase existing debt by nearly 25%. Urge our state leaders to avoid the trap of more debt. Mississippi should lead the nation is fiscal restraint and discipline. Let’s hope the words of Reeve’s spokeswoman, Laura Hipp, are followed, “The days of just ‘bonding’ every project every state agency wants are over.”
Proverbs 22:7 — The rich ruleth over the poor, and the borrower is servant to the lender.
For more information:
- SUN HERALD | Editorial: Let’s not encourage pushing Mississippi deeper into debt
- SUN HERALD | Debt service is big spending
- State of Mississippi Debt Affordability Study, March 7, 2014
- Department of Finance and Administration
- State Treasurer’s Website