slope on debt bombs

shane.martinSen. Shane Martin (R-Pauline) has recently earned the nickname “slope” for the “shane slope” he uses to simplify how our current broken medicaid system costs are skyrocketing exponentially. Sen. Martin and I are singing out of the same hymn book 99.99% of the time, especially when we’re talking about the constant appearing of that dump truck at the state house dumping debt on our children.

Debt Bombs
Speaking of debt, the biggest so–called “achievement” of this past legislative year is the debt bomb that was exploded in front of us, our children and our grandchildren. The General Assembly, you may recall, earlier this year passed almost unanimously a resolution to borrow (by issuing bonds) $120 million and give it to a manufacturer for what we were told will be an expansion of their facility in SC. I say that we were told that because we were shown no documentation of the terms of the deal or the consequences if they failed to uphold its end. I truly appreciate the presence of all manufacturers in South Carolina, but I’m not exactly sure why we’re borrowing $120 million of our tax money and giving it to a company that made $1.2 BILLION in the first quarter of this year ALONE. Again, reasons for my NO vote on this debt!

Then, as I’ve mentioned in previous updates, we decided to use the “roads crisis” as a pretense to add another $500 million (again, with bonds) to the tab of our children and grandchildren. And that occurred after several efforts by myself and my colleagues (via amendments to the budget bill) to spend money that we actually have on hand. That debt also was piled upon our kids with very few specifics attached. For instance, the borrowed money is to be used, in part, for “rehabilitation projects,” but when I asked the question on the Senate floor, no one could tell me what that phrase means. So, if it means nothing, then it means everything, and that means the money can be used for every pet project which a politician dreams up—and it will. Another thing about this borrowed money is that since it is for roads, then most if not all of it will end up within spitting distance of salt water. If you have not heard of Interstate 73 and Interstate 526 extension, then you soon will. Those proposed roads are in Myrtle Beach and Charleston, respectively, and if I’ve learned one thing since I’ve been in Columbia, it is that road money (and much of the other money, too) rolls downhill.
When you add the two together they equal $620 million in borrowing, or almost $140 for every man, woman and child in South Carolina. But, as we all know, borrowing isn’t free; the lender extracts a price for their money. And this is where we find perhaps the biggest insult of all to the taxpayers. Some of us (only a couple, really) asked what would be the terms of the $500 million road bond. No one knew. Let me repeat that, not one soul could tell me the terms of the bond. The South Carolina Senate (all but 4 of us, that is) voted to send us, and our descendants, hundreds of millions of dollars into debt with absolutely no idea what the terms would be. We weren’t told the interest rate, or the terms or the closing costs, and yet nearly the entire Senate voted to plunge us and our kids even deeper into debt. We still don’t have the information, but a good estimate is that these bonds will be issued on a 15-year term at 5% interest. That means that the $620 million in debt (roads plus Boeing) actually will cost $465 million over the life of the bonds. You recall that I have mentioned that about half of our general fund budget goes to K-12 education. Well, that means that over the next 15 years K-12 will lose out on $232.5 million. Paving one mile of two-lane flat road costs $150,000. So, that’s 3100 miles of road that won’t be paved. $465 million of your hard-earned tax payments won’t be going to provide services for you but to Wall Street. And, remember, we had enough money on hand this year to do both of these things.

If reading this story has left you angry enough to chew glass, then you know how I felt as I watched nearly every other senator merrily vote to spend someone else’s money without even so much as asking a question. Those two days were some of my worst in my time in public service. Please ask this question: How could my tax dollars be better spent rather than paying interest on needless borrowing??

The disappointment continued when Governor Haley signed these debt bombs into law instead of vetoing them. I had hoped that Governor Haley, who campaigned as a fiscal conservative, would just say no to over a billion dollars in borrowing. What I find even more troubling is that she also agreed to the notion of over a billion dollars in borrowing with absolutely no idea of the terms and costs. The actual terms and costs remain unknown as of this writing! Fellow taxpayers, I really don’t know what else to say.

The billion-dollar debt bomb decision by the Assembly and the Governor to borrow money when we had the cash on hand will stand as a terrible betrayal of the taxpayers for years and years to come.