The General Assembly reconvenes this week to consider budget and legislative admendments suggested by the Governor. They also will take up action on a bond package of approximately $1.6 billion. This package includes very worthwhile capital projects. Now however is not the time to advance this bill.
For the four years I recently served in the State Senate we were able to use surplus dollars to meet the state's capital needs. Now that the surpluses are no where to be found the response is well, just borrow the money and let our kids pay it back. Interesting isn't it that when state revenues drop the answer is to float bonds. It is what I hated about HB3202. That transportation bill "solved" transportation by putting out $3.0 billion in bonds for ongoing transportation infrastructure needs.
It has been interesting to me that none of the "conservative/libertarian" bloggers have commented on this bond package. Don't they know once you issue the bonds you have to pay the debt service. The current package considered will be about $150 million per year. That's if the issuance is successful. I guess as long as there is no tax increase to pay for the bonds some are happy. Well let me tell you, once you put the bonds out it takes funds out of your budget for many years regardless of the income picture.
Also this is a terrible time to go into the market with a bond issuance. The termoil in the credit markets have made some high quality bond packages priced far over the norm, hence driving up the cost of debt service.
If you guys, (legislators), have to put this forward at least have it go before the voters in the fall. Then you can make your case that this is a good idea for now. It would also allow me to vote no.
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4 comments:
Truth be told, Brandon, I think with the Senate and Presidential races (and the Chairman race, and the HB3202 court case . . .), this thing just slipped under the radar.
Thank you very much for pulling this above. I'll be sure to comment on it and hold my legislators' feet to the fire on this one.
Delegate Fralin (R) has a different take on the bond issue.
Check out his comments on the bond package today at the Star City Harbinger.
http://starcityharbinger.com/?p=203
I just couldn't stand running a piece on Hillary's PA victory last night.
Hank,
I'm not suprised that William supports the package. Personally I not totally opposed to issuing bonds for capital improvements. The key is how you service the debt. With tight revenues what will be sacrificed in the future to fund the bonds. I doubt that he would be enthusiatic about supporting the bond package if it actually included a revenue stream (tax or fee) to finance the debt. You see this type of action leads to the pressure in future years to raise taxes when you can't cut the expense of the debt already issued.
I would love to see this go forward--maybe next year when we see how our economy is recovering.
The $3 Billion dollar bond for road construction was paid for by dedicating 1/3rd of the existing 2% tax on insurance premiums.
The other 2/3rds supposedly goes to some kind of orphans and widows fund, that I am quite dubious of... $400M annually for orphans and widows?
It sounds more like raising the gas tax 5% on the wholesale price and dumping it into the general fund to be divied up by the politicians...
Yes, I am referring to SB 708 in 2006 that you voted for Former Senator Bell.
I don't know what point you are trying to make with this post. You are trying to make yourself sound like a fiscal conservative, when you voted for the Mother of All Tax Increases in 2006.
http://www.spankthatdonkey.com/spankthatdonkey2/2008/1/5/lets-cut-a-deal-va-general-assembly.html
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