Several legislative budget subcommittees will meet next Tuesday to look at alternatives for filling a budget shortfall in the new spending plan. One solution Republican leaders probably won’t touch is increased debt to fill the hole. They in the past have complained about increased debt, especially the use of COPS to borrow more money without asking voters for permission. The COPS issue was the subject of a recent article by the Civitas Institute. The budget writers also have a warning from State Treasurer Janet Cowell. Her office released a report this week showing the state had exhausted its capacity to take on anymore debt.
“The annual analysis found that the state has exhausted its General Fund debt capacity until fiscal year 2013. Additionally, the combined debt capacity of the Highway Fund and the Highway Trust Fund has been more than utilized until fiscal year 2014.”
The report also points out liabilites the budget writers will have to consider:
“These liabilities include: the unfunded portion of retiree health care benefits, which totaled $32.8 billion as of December 31, 2009; the $2.15 billion to the U.S. Treasury for funds borrowed to make unemployment benefit payments; and the failure to fund the annual required contribution rate to the Retirement Systems that will result in an increase to the State’s net pension obligation. Although these liabilities do not impact the calculation of debt capacity, they may have a negative impact on the bond ratings.”
Recently the state’s triple-A bond rating was reaffirmed.