Rep T.W. Shannon
Special to The Sun
All too often, government’s approach to spending is borrow now, pay later. We see that approach on sad display in Congress, where the federal government has spent our country into trillions of dollars in debt, risking the prosperity of future generations.
Although Oklahoma has weathered through the recent economic crisis quite well, we have debt problems of our own. Today, outstanding tax supported bond debt is just under $2 billion. Additionally, the state has roughly $6 billion in revenue bond debt. Neither includes the nearly $12 billion in unfunded pension liabilities.
That $2 billion debt represents a multitude of projects, many of which have come and gone. But the bill for those projects is still owed, with interest.
And the bill isn’t exactly small.
In fiscal year 2013, for instance, Oklahoma’s total debt service on tax supported bonds was $233 million, including almost $85 million in interest payments alone.
There is a simple principle to borrowing money: When you spend money you don’t have, you pay for it later.
Today’s debate on bonds is a perfect example. There are some legitimate projects and needs that require our attention, such as the crumbling State Capitol building and various other state infrastructure issues.
We’ve heard the arguments. Money is “cheap,” they say, meaning that interest rates are low. There are claims that it would be “affordable” to just borrow the cash and foot the interest payments for the next 20 years.
The problem is, “cheap” money isn’t exactly cheap. Even at today’s low rates, borrowing $200 million would cost the state the extra $80 million in interest over the next two decades.
Only in government does it make sense to pay $280 million for something that costs $200 million. There is another way, and like the Oklahoma Department of Transportation’s eight-year plan, we can get ourselves out of the hole.
Instead of borrowing now and paying later, I have been working with State Treasurer Ken Miller and the Secretary of Finance and Revenue Preston Doerflinger to create a new plan to change the way state government approaches these issues.
The basis of my plan is simple: We should pay for critical infrastructure needs as we go, instead of waiting until our state assets are literally crumbling around us.
My plan calls for an immediate cash investment from the state to address our most pressing infrastructure needs, with a continued investment over the next decade that will fund other necessary repairs as well as ongoing maintenance.
By making this commitment now, we will have a responsible approach that will address our infrastructure needs without adding to our debt and paying $80 million in interest.
In addition to my pay-as-you go plan, this session I have proposed a cap on bonds. When you get a credit card there is a limit. We need a credit limit to avoid spending away the tax money of hardworking future generations.
Too often leaders look to how things always have been for their inspiration. Keeping things the same and increasing debt has led us down the wrong path. My definition of leadership is leaders should see things as they can be, not as they are.
While it may be true that Oklahoma is different from Washington, D.C., the amount each taxpayer owes individually as a result of the federal government is roughly $146,000. Now is not the time to add to that number.
HOUSE SPEAKER T.W. Shannon, R-Lawton, represents House District 62.