|
Rep.
Richardson's May 4, 2007 Update
Oregon’s Ever-Increasing State Debt LoadOur society seems to have lost its financial anchors regarding debt and interest. I have taught my children general rules about the use of money.I taught them interest is what poor people pay and wealthy people earn. I taught them unnecessary debt is a monster that enslaves people. Debt requires interest payments and interest is a master that never sleeps. It never takes a day off and it always comes to claim its due regardless of how well-off or how poor the debtor might be. I taught them to avoid unnecessary debt like a plague, because once you are in debt your options become limited and a debtor is like a slave who must always consider his master before making life decisions regarding education, job changes, and personal freedom. Unfortunately, no one seems to have taught such lessons to Oregon’s financial managers. They are not alone. Oregon households generally are in a sea of debt. Nationally, American spent last year more than they earned, which indicates a willingness to maintain lifestyle on one’s ability to borrow, not on one’s ability to earn. The State of Oregon currently has $10 billion of gross debt. After other adjustments have been made, Oregon taxpayers are ultimately responsible for approximately $5.4 billion in tax-supported, long-term debt at the end of 2006. Assuming an interest rate of approximately 3.8%,the biennial cost for debt service on Oregon’s tax-supported debt is more than $400 million. The State Debt Policy Advisory Commission states in its report, that Oregon has a “maximum target ratio of 5% of General Fund revenues” for long term debt. Therefore, the Commission sets out that Oregon’s policy makers can continue to borrow hundreds of millions of additional long term debt without jeopardizing its credit rating. The caution I want to make is that long-term debt is too often seen as a way to satisfy the immediate need for additional revenue – actual or perceived. By doing so, Oregon loses the money spent in debt payments required to satisfy those “immediate needs” for two or three decades. Thus, long-term debt results in draining funds away from crucial services and programs for a full generation. On May 1, 2007 the House passed (over my opposition) House Joint Resolution 13. It will send to the voters the opportunity to approve an additional $2 billion of long-term debt. The money can be used for many good purposes, yet I opposed it nevertheless. Neither Oregon State, nor most Oregon families, have shown much restraint when it comes to incurring more and more debt for “good purposes.” I believe we would do well to stop burdening our children with debt and work harder to live within our means. Attached is my Vote Explanation for HJR 13. Sincerely, |
