AT current rates of repayment, the state's debt for capital improvements could be retired in fewer than 25 years. That's good, right?
Only if you want crumbling infrastructure.
State Treasurer Ken Miller works in a building that is starting to crumble. It's the one with a dome at NE 23 and Lincoln. Miller says repaying state-supported debt would take about a penny of every dollar generated by the economy in just one year.
At another building with a dome, the situation is vastly different. For Congress to retire the federal debt would take $1.07 for every dollar generated by the economy. While Oklahoma would keep 99 cents on the dollar to repay its debt, Washington would have to borrow 7 cents on the dollar — increasing the debt to pay down on the debt.
Paying off debt isn't the issue here. The issue is managing the debt. Oklahoma needs more bonded indebtedness to keep up with infrastructure needs. Washington needs to pay down on the debt but instead keeps running it up.
Oklahoma's relatively low debt and Washington's relatively high debt are connected politically. The more that the Republicans who control Oklahoma's state government see Washington fail to put its house in order, the more reluctant they are to incur state-supported debt. This is foolish because infrastructure needs won't go away.
In purely political terms, the case for increasing Oklahoma's state-supported debt can't be made with logic, reason and arithmetic. Those things make the case quite well, but as long as Oklahoma politicians and the voters who put them in office look with disdain at what's happening in Washington, increasing state-supported debt will be difficult.
Consider that the national debt is growing by $6.6 billion per day, according to Miller, while Oklahoma's state-supported debt totals less than $2 billion. In Washington, the government borrows money to pay salaries and fund services. Congress isn't required to balance the budget. In Oklahoma, debt can't be used for operating expenses such as payroll. Legislators are required to balance the budget.
While avoiding more bonded indebtedness, the state has been refinancing debt to leverage better interest rates. Miller cites net savings of nearly $11 million from recent refinancing. Annual payments on principal and interest of state bonds comes to about four cents of every dollar appropriated from the general revenue fund.
Jim Joseph, the state's bond adviser, says Oklahoma could borrow as much as $300 million for new bond issues without affecting the state's credit rating. We would argue that not issuing new bonds for projects such as Capitol repairs and a facility for the state medical examiner's office will adversely affect credit ratings by signaling that the state is deferring projects that will get more expensive over time.
The state does have a debt problem in one area — public pensions. Oklahoma ranks 33rd among the 50 states in its unfunded pension liabilities. That's actually an improvement.
What's not improving is the resistance to incurring more debt for capital improvements based largely on the perception that voters can't distinguish between Washington's profligate ways and Oklahoma's modest borrowing practices. Not all debt is equal. Leadership requires making the right decisions that may cause political heartburn.
In Washington, the issue is the metaphorical fiscal cliff. In Oklahoma, we should be worried about a literal cliff that develops because we failed to spend money to prevent it from developing.