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Mississippi treasurer blasts ‘reckless’ $308 million bond bill

By   /   April 20, 2016  /   News  /   No Comments

 

Photo illustration by Steve Wilson

CORNUCOPIA: Mississippi will take on $250 million in debt to fund various projects if House Bill 1729 is signed by Gov. Phil Bryant.

Mississippi Treasurer Lynn Fitch blasted the Legislature for its passage of a recent bond bill, calling the proposed increase in state debt “reckless,” “abusive” and “irresponsible.”

Fitch says in a letter addressed to legislative leaders that if House Bill 1729 is signed into law by Gov. Phil Bryant, the Legislature will have added $582 million in debt this session. Her staff added up the costs on HB 1729 and found it totaled $308 million in new debt, not $250 million that was quoted by proponents of the bill during debate. The Legislature also passed a $274 million incentive package for Continental Tire and Topship in February, which is also in the form of bonds.

Related: $274 million incentive package took five hours to pass

“This isn’t the first time I’ve alerted the Legislature about fiscal responsibility and debt service and provided them with a debt affordability study that showed how much the state could take on,” Fitch told Mississippi Watchdog. “But then to get a bond bill like that showed complete irresponsible actions by the Legislature. I felt like it was time to have a discussion. These are the taxpayer dollars and that’s something that they need to remember.”

Fitch, who sits on the state bond commission with Bryant and attorney general Jim Hood, said she would like to put a stop to what she terms irresponsible borrowing for questionable projects. The bond commission approves the sale of bonds to finance various projects, including those contained in HB 1729.

“They don’t need to be lumped together. Every project should stand on their own merit,” Fitch said. “Does it meet the test? Is this a long-range, 20-year project? Do we get the value as a state by investing these dollars and by asking for individual resolution on each one, we [the bond commission] have the chance to vet out that project and take an up or down vote on whether that project should be included in a bond bill.”

She also criticized the lack of specificity in some of the projects, which were labeled “infrastructure improvements” without any further explanation or elaboration. She said “reckless” borrowing for projects could affect the state’s credit rating, which could make further borrowing more expensive as the state wouldn’t be able to take advantage of cheaper interest rates.

“There were several projects that had no specific details for infrastructure or economic development,” Fitch said. “You’ve got to test the credibility of the project because these are 20-year bonds and is this asset going to be covered for 20 years? It’s an important test.”

While Fitch was supportive of some of the projects, such as the projects at the universities and the $7.5 million for capital improvements at the East Mississippi State Hospital, she said that paying salaries and benefits ($100,000 going to the Jackson Police) and recurring projects, such as the $1.1 million for improvements at Columbus Air Force Base, were not the sort that should be financed with 20-year bonds. The state financed more than $2.2 million in improvements at Columbus AFB in one of the two bond bills from last session. Senate Bill 2906 also had money for several projects, including Ingalls Shipyard, the Mississippi Maritime Museum and the Jackson Zoo, that received money from this year’s bond bill.

Related: Mississippi bond bills would provide money for Gulfport aquarium, pet projects

The conference report on the bond bill, approved by the legislature Monday night, includes $45 million for Ingalls Shipbuilding, $69.2 million in capital improvement projects at the state’s universities, $25 million for community college projects and $16.2 million for two state museums under construction in Jackson: the Museum of Mississippi History and the Mississippi Civil Rights Museum.

Legislators who voted against HB 1729, such as state Rep. Joel Bomgar (R-Madison), agree with Fitch’s criticism of the increased indebtedness.

“I don’t think borrowing in general is fiscally conservative,” Bomgar said. “The reason why we’re short on money is we’ve got debt service of $300 million plus a year. If a huge part of our state budget wasn’t paying off money borrowed in the past, we’d have plenty of money to do everything that we wanted to do.”

Related: Mississippi has stagnant economy and growing debt

Here are some of the other projects that will receive money from HB 1729:

State of Mississippi photo

NEW DIGS: $5 million in the $250 million bond bill will help build the Mississippi Arts and Entertainment Center in Meridian, which is scheduled to open in 2017.

  • $5 million for the Mississippi Arts and Entertainment Center in Meridian, a $45 million museum that will act as a hall of fame of Mississippi entertainers. The museum’s web site says it will generate “billions of dollars for the state’s economy.”
  • $1.4 million to buy land for economic development in Tate County, which was home to the failed Twin Creeks solar plant, which went bankrupt in 2012 after receiving $26 million in state funds.

Photo by U.S. Air Force

 

  • $1.1 million for walking and bike trails, hunting ranges, a firing range and other recreational facilities at Columbus Air Force Base. The bill says the money is for “the purpose of providing and improving available quality of life activities” at the base.
  • $800,000 to connect buildings and build a memorial garden at the B.B. King Museum in Indianola.
  • $750,000 for a Vietnam veterans memorial wall in Tupelo.
  • $700,000 for horse centers in Lowndes ($400,000) and Tishomingo Counties ($300,000).

Related: 2015 bond bill helped fund Gulfport aquarium

  • $625,000 for a new fire station in Brookhaven.
  • $500,000 for tourism improvements in Vicksburg.
  • $500,000 to build the Mississippi Native American Museum in Kosciusko.
  • $305,000 for the Hattiesburg Zoo and $200,000 for the Jackson Zoo for repair and renovation of buildings, facilities, exhibits and infrastructure.
  • $100,000 to help complete the Mississippi Maritime Museum in Pascagoula.
  • $100,000 for a recreation center in McComb.
  • $100,000 for the Jackson Police Department.

The state’s bond debt added up to more than $4.3 billion as of April 1. In February, during a briefing before the Legislature, Fitch told lawmakers that it would take 37 years to retire the state’s bond debt, not including the unfunded liabilities in the state’s pension fund and the new debt contained in HB 1729. According to Fitch, the debt translates into more than $1,747 owed by every Mississippi citizen, more than double the national average.

The bond bill isn’t the only issue Fitch had with the Legislature.

The state might not be able to completely cover its debt service, according to Fitch, after the Legislature passed a debt service appropriation that isn’t up to the task. At most, she said, her office could provide $73 million, not the $111 million required as part of the appropriation for debt service from special funds. The state will be paying more than $517 million in total debt service in fiscal 2017, with more than $392 million from the general fund alone.

Contact Steve Wilson at [email protected]. Get regular updates on Mississippi through our Facebook or Twitter accounts.

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Steve Wilson is the Mississippi reporter for Watchdog.org. Beginning his career as a sports writer, he has worked for the Mobile Press-Register (Ala.), the LaGrange Daily News (Ga.), Highlands Today (Fla.),McComb Enterprise-Journal (Miss.), the Biloxi Sun Herald(Miss.) and the Vicksburg Post (Miss.) Steve's work has appeared on Fox News, the Huffington Post and the Daily Signal. His bachelor's degree is in journalism with a minor in political science from the University of Alabama. Steve is also a member of the Mississippi Press Association and Investigative Reporters and Editors. He served four-plus years in the United States Coast Guard after his high school graduation and is a native of Mobile, Ala.