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March 24th, 2009

Culver’s Shovel to Bury Iowans in Debt

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Written by: The Iowa Republican
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rants-copyBy State Rep. Christopher Rants

The Governor and Lt. Governor have been traveling the state the last two weeks with a shovel in hand. They are pitching hard their bonding scheme (I-JOBS) to borrow $750 M for infrastructure projects. Already the Senate has approved the first $175 M of the plan.

I asked a very uncomfortable question when I appeared on the cable news show, Iowa’s Agenda, with the Speaker Pro Tempore Polly Bukta from Clinton. Rep. Bukta is the third ranking Democrat in the House.

I asked, “Do you know how much taxpayers will spend on interest payments for that $175 M?” After much fumbling around I had to provide the answer – $130 M.

Borrow $175 M, and repay over $300 M…. That’s $130 M that could be spent on things like K-12 education, or Medicaid, or something crazy like plugging the hole in the state’s budget deficit.

But oh no, we are going to send $130 M to a bunch of Wall Street investment bankers…

That’s right. The same crowd that has so many Americans angry are the same bunch that will be loaning us $175 M, and turning a $130 M profit on the deal.

And Culver wants to raise the amount to $750 M.

What’s an “Appropriations Bond”?

What makes this all the more troubling is that there is no plan to pay it back. That’s right. Rather than use a dedicated source of revenue – like Iowa used gambling revenue for the Vision Iowa Program – this plan has no dedicated stream. Its something new called “appropriations bonds.”

We’ve never done this in Iowa before.

Couple reasons why; first its costs more, and second it pits those interest payments against all the other programs in the state’s general fund. The scary part is, that obligation is made possible by the ability to raise taxes…

What’s an I-JOB?

Culver’s name for the bonding scheme is some Orwellian dialect to convince Iowans that more jobs will come from taking on more debt. The I-GOV claims 30,000 more jobs. Or maybe its 21,000 jobs as his staff now asserts.

But ISU economic professor Dave Swenson estimates the number closer to 4,050 in Sunday’s Des Moines Register.

Once interest costs are figured in, an I-JOB will cost the taxpayers either $60,000 if you believe the math of Culver’s staff; or a whopping $312,000 if you go with the economist’s figures.

In either case, the jobs will be long gone by the time the taxpayers are done making payments. Remember, these are all public works jobs that should be completed in the next few years. Once the broadband deployment is finished, or the city hall has been rebuilt, the construction jobs are over. Unlike when private enterprise takes on a capital projects plan, there isn’t a line of new workers waiting to fill up the new building. This is largely replacement of existing government structures. At least the taxpayers should hope there isn’t a line of new government employees waiting…

More Trouble on the Horizon

Perhaps if the state wasn’t (as of last Friday) facing a $1.1 Billion budget gap, then I wouldn’t be so concerned. But Iowa is short over $1B to meet our existing commitments, and Culver and the Democrats want to tack on another $1.2 Billion in principal and interest payments for the next twenty years – with no identified repayment plan.

That’s $2.3 Billion worth of trouble…

Iowa can’t afford that kind of debt.

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The Iowa Republican

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