State's fiscal watchdog say it's too big and it increases debt during financial crisis
HARRISBURG, Pa., Dec. 9, 2010 /PRNewswire-USNewswire/ -- Auditor General Jack Wagner said today that he will not sign Gov. Rendell's $650 million bond issue, calling it a bad deal for taxpayers because of its unprecedented size and because it increases Pennsylvania's debt load during a time of financial peril.
While the sum is less than the $1 billion in borrowing Rendell had initially sought, it still remains the largest bond issue ever sought by a lame-duck governor with less than seven weeks left in his term, easily surpassing the $500 million in debt that Gov. Mark Schweiker issued in December 2002.
With Pennsylvania facing a $4 billion to $5 billion budget deficit next year, now is not the time to increase the state's debt, said Wagner, who noted that this bond issue would increase the commonwealth's debt payments by about $46 million a year for the next 20 years.
"Americans hold 8 million fewer credit cards than they did a year ago, because they understand that debt is a bad thing," Wagner said. "It's time that state government listened to the public."
The Rendell administration had wanted to borrow $1 billion to help finance public-improvement and other construction projects across the state. Neither Wagner nor State Treasurer Rob McCord would approve it, at least one of whom must do so under state law.
Wagner said he stood by his concerns about the new debt, which he laid out in a letter he sent to Rendell last week.
Wagner expressed concern that the commonwealth's debt has increased from $6.1 billion as of June 30, 2002 to $8.4 billion as of Nov. 11, 2010, an increase of 39 percent. He also cited the increasing cost of paying for debt as a reason to reject the bond issue.
"Money devoted to paying off debt is money that is not spent to provide programs and services to seniors, children, families, or veterans, those who government must put first in times of deep economic distress like today," Wagner said.
This bond issue is not necessary because there is more than $300 million left over from previous bond sales that can be used to fund necessary projects until Gov.-elect Tom Corbett takes office, Wagner said. "Those proceeds plus the new proceeds from the $650 million bond issuance still come close to $1 billion."
Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the commonwealth's elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts more than 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department's website at www.auditorgen.state.pa.us.
SOURCE Pennsylvania Department of the Auditor General