It’s Election Day tomorrow, with statewide general elections in Kentucky and Mississippi, and state-legislature races in Virginia and New Jersey. In addition, there’s a smattering of special elections and local elections in many states.
It’s an odd-number election year, so unless you’re in one of the few states with gubernatorial or legislative elections, you probably aren’t paying too close attention. Which is exactly what local governments with the desire to borrow a bunch of money want.
Local governments, including school districts, want to put bond issues on the ballot in low-turnout elections so most people don’t notice them. These bond issues can sometimes be for hundreds of millions of dollars. They often pass because people see “schools,” and they like schools, so they vote yes. But there’s little reason to give government more power to spend even more of your money than it already does.
Debt issuance is future taxation. That’s especially the case for state and local governments, which, unlike the federal government, can’t print money to pay back debt. When the government asks you if it can take more of your money than it already does, you should tell it “no.”
Since the pandemic, state and local governments have been on the receiving end of hundreds of billions of dollars in extra federal money, above and beyond the federal money they normally receive. That money came despite the fact that state tax collections actually came in well above revenue expectations in 2021 and 2022, leaving nearly every state in the country with a budget surplus.
State governments are still in great shape. As the spring 2023 Fiscal Survey of States from the National Association of State Budget Officers found, actual state revenue is expected to exceed forecasts by 6.5 percent for fiscal year 2023, with 45 states doing better than expected. States don’t even know how to spend all the money they have, with record-high balances in their rainy-day funds and leftover general revenue on top of that. State and local governments don’t need to issue more debt.
The national average per-pupil spending in 2021, the most recent year with data from the Census Bureau, saw its largest increase in over a decade, jumping by 6.3 percent. Forty-one states increased K–12 spending in fiscal year 2022. “This robust spending, along with the nearly $280 billion in support to education through federal stimulus measures, means that K-12 and higher education are receiving more public investment than ever,” the National Conference of State Legislatures told Congress last year. (Never mind that spending has little to no correlation with educational outcomes, and some of the districts that spend the most get terrible results.)
The time to demand more money was during state and local governments’ normal budgeting process. As I’ve said before, even if you support the goal of a bond issue, ask yourself:
- Is it really true that the government couldn’t have spent the money it already takes from me to fund this issue?
- Is it really true that a pay-as-you-go funding process couldn’t be used instead of borrowing?
- Is it really true that the public sector is a lean, mean, efficient machine that spends money wisely and should be rewarded with more?
The answer to at least one of those three questions will almost certainly be no, which should also be your vote on any bond referendum.