Officials plan on adding to state's $3.8 billion debt
Sunday, January 18, 2004
JEFFERSON CITY, Mo. -- A mental hospital in St. Joseph, a football stadium in St. Louis and a new pump station for sewers in rural town of Milan. They all have at least one thing in common -- it's probably going to take Missouri taxpayers almost a generation to pay them off.
During the next 25 years, the state will be paying off $3.8 billion in debt, and Democrats and Republicans alike are embracing plans that would add hundreds of millions of dollars to that.
Gov. Bob Holden, a Democrat, has proposed selling up to $200 million in bonds as a way to create jobs by investing in everything from research facilities to sewer systems to high-speed Internet lines.
House Speaker Catherine Hanaway and Senate President Pro Tem Peter Kinder, both Republicans, are promoting a $190 million bond sale that would go toward life science research at the University of Missouri.
None of the politicians seem concerned about adding to the state's long-term debt. And economists don't seem concerned either.
An October report from the municipal credit rating service Fitch lauds Missouri for its "very conservative approach to debt," as well as a "long record of well managed and balanced financial operations despite current and ongoing pressures."
In the current fiscal year, Missouri will pay about $218 million on its debt.
The debt that will cost the state the most this year comes from the Highways and Transportation Commission -- about $55 million. The commission rolled up close to $1 billion in debt with three recent bond issues, all authorized by the 2000 legislature as a way to speed up road construction.
Other costly debts include:
Two classes of bond issues for state buildings, property, colleges and universities and prisons. Close to $2 billion of those bonds were issued, and the state currently owes about $500 million in principal and interest.
Water pollution control bonds. The state is paying $29 million this year as part of a $487 million in outstanding debt.
About $387 million in bonds, authorized last year by the legislature, to plug gaps in the 2003 and 2004 budgets.
Some of Missouri's better-known debt projects include the construction and maintenance of a domed football stadium and convention center in St. Louis, and ongoing state payments for Kansas City's convention center, and its baseball and football stadiums. In the fiscal year that starts in July, the state also will begin paying off a new basketball arena at the University of Missouri-Columbia.
Holden, Hanaway and Kinder all say their proposals to add to the state's debt are reasonable investments because they would create jobs and take advantage of the currently low interest rates available on borrowed money.
Another reason the politicians aren't concerned about the debt is that top financial analysts consistently give Missouri good marks. Fitch, Moody's and Standard & Poor's all give Missouri the top rating on general obligation bonds. Bonds issued by the Highways and Transportation Commission get the second-highest rating from all three agencies.
Moody's ranks Missouri 36th among states in debt per capita at $368 per person. That's far below the national median of $606.
Steven Cochrane, the regional economics director for Economy.com, said Missouri's latest bond plans sound like reasonable ideas. The funding would go toward capital improvements that contribute to the economy and increase future tax revenues, which could help pay off the debt, he said.
A look at Missouri's debt
Missouri government owes about $3.8 billion during the next 25 years thanks to bonding and other long-term financing programs. Here is what the state is paying toward each category this year and the total still owed over the life of the project, including principal, interest and other fees:
|Water Pollution Control||$29 million||$487 million|
|Third State Building Bonds||$33 million||$367 million|
|Fourth State Building Bonds||$18 million||$332 million|
|Stormwater Control||$3 million||$72 million|
|Board of Public Buildings||$44 million||$685 million|
|Plugging gaps in 2003-2004 budgets||$0||$387 million|
|St. Louis football stadium and convention center||$12 million||$223 million|
|University of Missouri- Columbia basketball arena||$2 million||$53 million|
|Miscellaneous highway bonds||$55 million||$975 million|
|St. Louis convention hotel and parking garage||2 million||$59 million|
|Kansas City convention center||$2 million||$24 million|
|Kansas City baseball and football stadiums||$3 million||$36 million|
HIGHWAY CONSTRUCTION AGREEMENTS
|Jefferson City||$2 million||$16 million|
|Springfield||$5 million||$14 million|
|Acute Care Psychiatric Hospital||$2 million||$22 million|
|Psychiatric Rehab Center||$2 million||$22 million|
|Northwest Missouri Psychiatric Rehab Center||$1 million||$16 million|
|Bonne Terre Prison||$8 million||$134 million|
|TOTAL DEBT$218 million||$3.8 billion|
Notes: Numbers do not add up to totals due to rounding. Board of Public Buildings debt includes construction of a new prison in Jefferson City, Department of Natural Resources office building, Western Missouri Mental Health Center and others. St. Louis convention hotel and garage bonds can only be paid by revenue from the convention center. Not all bonding projects are a complete obligation of the state.