HIGHWAY BONDS

To issue bonds, or not to issue bonds? How does $500 million more in state debt sound, the money to be used for road and bridge improvements?

The Missouri Highway and Transportation Department is asking lawmakers to consider, in the annual session that begins Jan. 3, whether to go to this form of debt financing to make up a half-billion dollar shortfall in highway funding for projects to be completed in the next three years. Through a mix of state fuel tax and federal money, department officials can count their way to $2.1 billion coming over the next three years. The problem: Department commitments are for $2.6 billion over the same period. The shortfall arose when department officials announced, with considerable embarrassment and yet a candor rare in any government agency, that they had goofed on projections.

Arguments against the debt financing are familiar: Missouri has been a conservative, pay-as-you-go state on highways since 1921 and should remain so. Interest costs are high, and state debt has piled up quite enough already, including $250 million last year alone. We'll pay approximately $260 million in interest over 15 years for highway work that will be accomplished, we are told, in three. In this regard, readers should know that of the $600 million state bond issue narrowly approved by voters back in 1982, the state still owes approximately $550 million in principal 13 years later. That isn't very rapid debt retirement. And readers should know that authority exists for lawmakers' doing this particular bond issue without going to the voters for approval.

Arguments for the bonds boil down to these: Missouri is in good shape with its debt, enjoying a AAA rating that ranks it among the top three states year after year. The faster completion of highway projects will enhance safety for motorists, saving lives and making a noticeable difference in economic development efforts. Badly needed road and bridge improvements will come more quickly to all parts of the state. It is noted that among those joining in support for the bond issue are the road contractors, the investment bankers whose business it is to sell bonds and, not least, the bond attorneys.

The fact of the support of these obviously self-interested parties doesn't automatically mean the bonds shouldn't be issued. Still, Missourians will be a hard sell on this one. One question arises immediately. Suppose the bonds are issued. What happens after the three years? Will department officials be back with another, great-sounding plan, backed by another $500 million bond issue, obligating taxpayers for 15 more years of debt service on another three years of road and bridge work? A host of unanswered questions such as this will continue to plague those pushing for this bond issue.

Bond promoters have made it clear they won't sustain their push for the bonds if bipartisan support is lacking. They are concerned that this not become entangled in partisan wrangling. Another imponderable is the position of Gov. Mel Carnahan. With a budget message due next month, he has been silent to date.

Down the road toward another half-billion bond issue lies a swelling state debt burden and soaring interest costs that will strain future revenue streams and ultimately increase pressure for yet another tax increase. The road work can be stretched out and further efficiencies found. It is doubtful that a bipartisan majority of legislators will rush out to support this proposal. Lawmakers should pass on it unless a much stronger case is made.