The State is rightly seeking to repay its debt

With a historic revenue surplus and a windfall of federal funding, lawmakers are expected to adopt Gov. Mike Parson’s plan to pay off $100 million in unpaid debt.

As we reported in late January, the governor proposed a $100 million payment to reduce the amount of interest the state must pay on more than $2.2 billion in outstanding debt.

The payment would accelerate the repayment of the bonds, which would reduce the amount of interest. Parson said this should produce savings of about $148 million over the life of the bonds. The savings would be realized by 2040.

“At the end of the day, Missouri’s economy is strong,” Parson said during his state of the state address. “With a historic budget surplus and federal dollars flowing into our state, we want to build on our past momentum to seize even more opportunities for the future of Missourians. But I want to remind you that our economy is strong despite federal funding.”

Missouri had more than $2.2 billion in outstanding debt as of July 1, 2021 – the start of the current fiscal year. This total includes general obligation bonds, revenue bonds, other credit debt and transportation debt.

In the last session, the Legislative Assembly appropriated $12.4 million for the public debt for the current fiscal year. That’s less than 1% of the state’s operating budget.

But the state has a general revenue fund surplus of about $2.4 billion. That’s enough to wipe out our state’s debt.

We agree with State Budget Director Dan Haug that he would not be responsible for Missouri spending all of its surplus to wipe out the debt.

But equally, we would say that he is not responsible for not repaying the debt when our state has the capacity to do so. Parson’s proposal is fiscally prudent and we urge lawmakers to adopt it.

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