The Senate passed a proposal April 1 that aims to wean the state of its addiction to borrowing.
Senators approved SCR1060, which caps the amount of debt the state can take on, by a vote of 18-8.
“I believe it is time to put a stop to our excessive borrowing,” said Senate President Bob Burns, the measure’s sponsor.
Burns has often complained about the state’s penchant for borrowing, expressing concern over the growing cost to service debt, which takes away money from agencies and programs.
If approved by voters, the measure would delete the existing $350,000 debt limitation in the state Constitution and allow Arizona to borrow money on two conditions.
First, the total debt cannot exceed 5 percent of the net assessed property value in the state. The debt cap would apply regardless of when a debt is incurred.
Second, the measure would require the Legislature, beginning in 2012, to identify a revenue source other than the state’s general fund to pay for the debt and for debt servicing. The approach is similar to requiring a dedicated revenue stream for voter-approved spending.
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.