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The
American Legislative Exchange Council, or ALEC, released its
annual State Bonded Obligations publication, which highlights
the risks posed to taxpayers by excessive borrowing.
State governments borrow for a number of reasons and issue
various types of bonded obligations. General obligation bonds
serve as a way for local governments to raise funds for projects
that create streams of income for things such as roads, parks
and infrastructure.
Illinois is one of 10 states with the largest bonded liabilities
that make up 66% of the country’s total state government debt,
amounting to over $810 billion. Illinois accounts for nearly $58
billion of that total, and that doesn't include public pension
debt and other retiree obligations. The other states are
California, New York, Texas, New Jersey, Massachusetts,
Washington, Connecticut, Virginia and Michigan.
“At the root of the government debt problem is a government
spending problem,” ALEC Research Manager Thomas Savidge said.
“It is vital for state leaders to curb the growth of spending
and debt on behalf of their constituents and for the fiscal
health of their state budgets.”
The total bonded obligations slightly declined over the past
year. This is in part because states received billions of
federal tax dollars amid the government-imposed COVID-19
lockdowns. As a result, states beat revenue expectations in
2020.
Savidge said Illinois was heading toward a risky place
financially if not for the federal tax dollars.
“Without the federal government assistance through CARES and
things like the municipal liquidity facility at the federal
reserve, Illinois very likely could have defaulted on its debt,”
Savidge said.
According to the report, today, state bonded obligations total
$1.23 trillion nationally, equal to $3,700 for every man, woman
and child in America.
“By using bonds to increase spending today, states are passing
the costs on to future generations of taxpayers,” said Jonathan
Williams, ALEC Chief Economist and Executive Vice President of
Policy. “State leaders can make the necessary changes, such as
implementing priority-based budgeting and tax and expenditure
limits, to ensure the future financial well-being of their
states.”
Kevin Bessler reports on statewide issues in
Illinois for the Center Square. He has over 30 years of
experience in radio news reporting throughout the Midwest.
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