Senate President Bob Burns is working on legislation to cap the state’s ability to create new debt, but he said he hasn’t worked out all the details.
“We got to put a lid on the amount of debt that we are creating,” Burns said.
Coming up with a precise definition of “debt” is part of the difficulty in coming up with legislation to limit the state’s ability to borrow money.
The state Constitution already prohibits the state from taking on debt of more than $350,000. It states: “The state may contract debts to supply the casual deficits or failures in revenues, or to meet expenses not otherwise provided for; but the aggregate amount of such debts, direct and contingent, whether contracted by virtue of one or more laws, or at different periods of time, shall never exceed the sum of three hundred and fifty thousand dollars.”
But the Goldwater Institute said politicians have come up with creative “debt-hiding schemes” to skirt the Constitution’s debt limit clause. One way that’s done is to label borrowing as something other than state debt.
The courts have narrowed the definition of debt in ways that have allowed the state to borrow much more than $350,000, which must have seemed like quite a bit of money when the state was founded almost 100 years ago.
On Feb. 23, Burns sent out a letter cautioning against Arizona’s growing debt. The state’s appetite for borrowing means debt servicing becomes a “bigger priority than paying for any of the state’s numerous other priorities,” Burns wrote.
For fiscal year 2009, debt servicing stood at nearly $700 million, according to the Legislature’s budget research unit.