Why Bond Issues Suck for Our Kids

Here's some math that arithmetic-challenged Pennsylvanians have never taken the time to calculate: When you see a bond issue referendum on the ballot for a good cause, think first. Voters approved $625 million in bonds for Growing Greener II. Now, I am as big an environmentalist as the Republican Party can claim, but I voted against the borrowing. For those of you who do not understand macroeconomics, state constitutions state that a balanced budget has to be passed by the end of the fiscal year, which is June 30 in PA. However, when we start the 2007-08 fiscal year, we are already $1 billion in debt, which buys no services, no tangible items, no health care, except paying the interest on debt incurred to pay for overages unavailable from tax revenues in budgets long ago past. $1 billion. May not sound like a lot in a $55 billion state and federal budget, $27 billion in state money, but it is. Rendell wants to borrow more - for alternative energy. Again, a good cause, but we have to stop and calculate the premium we are paying for this money. The $625 million Growing Greener II bonds need to be repaid. Investers buy these safe havens with the backing of the state taxpayers guaranteeing them as safe investments that will pay, let's say 6.5 percent return. We're talking $45 million or so a year on the money borrowed. Over the 20 year life of the bond, that's an estimated $325 million, probably more. One estimate I saw was that the $625 million will cost an additional $325 million to repay, a 52 percent premium, but I also saw a higher estimate that the money will cost $974 million to repay...It's like a mortgagee buying a house from the bank for $127,000 and owing the bank over the life of the loan $240,000 over the 30 year if you live there the whole time. So let's call bond issues what they are: taxpayer morgages. We are making our children pay for them. So I voted against growing greener bonds, against Persian Gulf War bonds and will vote against Energy Fund bonds. $850 million in proposed borrowing...will cost maybe $1.5 BILLION to repay, a 55 percent premium assuming $75 million a year (paid for by a new electric bill surcharge, i.e. tax that WE will pay because corporations won't suck it up and make their bottom line less for their corporate investors and stockholders). The tipping fee increase, about a $2.75 per ton, will come back to us in our garbage bills. That pays for the interest on the GGII bonds, not existing tax dollars, but future dollars. Let's pay as we go, not make our children pay for our past borrowing. We don't ask them to pay the mortgage on the house back to the bank, why whould they bee the morgagees for out current state fiscal decisions. Vote no on the bond issue. Don't let government convince you to borrow money because of packaging, branding and spin doctoring...an alturistic spin for living beyond your means as a state, branding like Growing Greener or Energy Independence Fund = higher taxes for you and your kids.