States on a borrowing bender

By John Hanna
Associated Press
July 26, 2004

TOPEKA, Kan. -- Kansans once enjoyed the distinction of being the Americans least burdened by state borrowing, owing less than $200 in bonds per resident. Most states had at least five times as much debt per person.

But starting in the 1990s, state lawmakers in both parties took advantage of low interest rates to go on a spending bender. They issued bonds to finance better highways and bridges, repairs on state university campuses, and even a restoration of the state Capitol.

The phenomenon wasn't unique to Kansas. Other states also turned heavily to borrowing. Total state debt nationwide nearly doubled over a decade, and the binge didn't let up when the economy turned sour a few years ago. Lawmakers found it was easier to borrow money than raise taxes.

The numbers were dramatic. Kansas' bonds per resident ballooned by 333 percent from 1992 to 2002, more than any other state's, according to US Census Bureau figures analyzed by The Associated Press. Kansas' per capita borrowing increased more than twice as fast as Texas's, which had the second-highest rate of bond growth per person.

Kansas continues to float more bonds. The State Budget Division now calculates that, at the end of the current fiscal year next June 30, the state will have $3.71 billion in bonds to pay off.

While that's still relatively low in comparison with many other places, if Kansas' population keeps rising at its current rate, it works out to $1,352 per person. That's enough to buy a computer for every man, woman, and child in the state. It's almost enough to enroll full time for a semester at Emporia State University.

"You just have to start wondering at what point Kansans need to be concerned," state Treasurer Lynn Jenkins said. "We may be getting there."

While the state's budget director, Duane Goossen, agreed that bond payments will represent a fiscal issue in the future, he said the state has yet to overly burden itself. Goossen said bonds in Kansas are used to acquire assets -- roads, bridges, prisons -- that will outlive the payback period.

"We're not bonding for any ongoing operations," Goossen said.

Similar arguments have come up elsewhere as, according to census figures, state-bonded debt increased from $372 billion at the end of the states' 1992 fiscal years to nearly $641 billion by the end of fiscal 2002. That's a jump of about 72 percent.

In recent months, borrowing has received the most attention in California, where voters in March approved a plan to issue $15 billion in bonds to help solve that state's budget problems.

While Kansas' borrowing has been on a much smaller scale, it is in some ways just as noteworthy, given the state's history.

According to the census, at the end of its 1992 fiscal year, Kansas had less than $486 million in bonds to pay off, about $195 for every resident. By 2002, according to the census, Kansas' debt had risen to $2.29 billion, and its per capita figure to $844. Tennessee and Arizona had lower figures.

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