State debt limit: Last legislative hurdle?

Today we learned that the House and Senate have reached agreement on both a plan to overhaul the state’s workers’ compensation system and a budget to close a $5.1 billion shortfall for the 2011-13 biennium (details on the budget are unknown at this point). Legislators have yet to announce an agreement on addressing the state’s debt limit, and this could be the one remaining issue for the Legislature to deal with before special session ends on Wednesday.

Yet, as we detailed in our recent brief, “State Debt Limit Debate Misses the Point,” those on both sides of the state debt limit issue are ignoring the fundamental problem: our inadequate, inequitable, and unstable revenue system. The budget tug-of-war between the need for immediate resources to fund public services and the ability to invest in large-scale infrastructure projects is one of the many consequences of our broken revenue system, which doesn’t adequately support core state functions.

At issue is whether to lower our Constitutional debt limit, which is based on the amount we devote each biennium to making payments on existing debt to finance large-scale infrastructure projects, such as the construction of new schools, roads, bridges, water treatment facilities, and other permanent public structures.  Proponents of lowering the debt limit are rightfully concerned that growing state debt payments will hamper our ability to maintain public services like health care, education, and public safety. Opponents of lowering the limit are equally justified in their concern that lowering the limit will impair our ability to make needed long-term investments in schools, correctional facilities, water treatment facilities, and other important infrastructure.

In order to address the many needs of our state it is essential that policymakers and the public consider reforming our inadequate revenue system. Ideally, the state should have the resources it needs to pay the bills on our investments in needed infrastructure as well as invest in our shared values of economic security, healthy people and environment, thriving communities, and education and opportunity.

Read the entire brief here.