Lawmakers Increase Debt for Politicized Grants

While it is often difficult to pass legislation prior to an election, legislators agreed to pass a bill that increased state debt by more than $1.6 billion. The House recently approved this piece of legislation which was passed by the Senate in June. The Governor is expected to authorize the additional borrowing in the coming weeks.

The majority of funds are earmarked for public infrastructure projects. However, a significant amount of these newly borrowed funds will be applied to the Redevelopment Assistance Capital Projects program (RACP). The capital projects fund funnels government grants to private development projects. This new legislation will cost taxpayers $2.3 billion over 20 years or an additional $115 million in annual debt servicing.

When it comes to allocating funds, the RACP has a longstanding history of being a “political process, first and foremost.” Administrators of projects under the RACP umbrella openly admit that the program is both abused and manipulated by lawmakers. Frequently, the most politically connected businesses are seemingly able to appeal for taxpayer funding of their private projects.

During the spring legislative session, the House approved legislation to gradually, over a period of 20 years, reduce the size of the RACP’s $4 billion debt ceiling to $1.5 billion. Included in this proposal were requirements that would make the grant process more open and transparent. These reforms would be a positive step in eliminating pork barrel spending as balancing the state budget becomes more difficult with each fiscal year. Unfortunately, this important bill remains stalled in the Senate.

As Independent Fiscal Office projects indicate mandatory spending growth to outpace tax revenues, the additional borrowing costs from this legislation will further burden budgets for years to come. Legislators need to exercise greater restraint by reforming and reducing politicized spending on the taxpayer’s dime.

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