The average American taxpayer is deeply in debt, and not all of it is due to runaway federal spending or a personal lack of financial restraint. Local and state governments have also been racking up some pretty big bills.
“State and local debt was pretty stable during the ’80s and ’90s,” Chris Edwards, director of tax policy studies at the Cato Institute, told The Examiner. Indeed, a cautious pay-as-you-go mentality was the norm. “But five orsix years ago, debt started soaring.” Added to the exploding costs of Medicaid and enormous unfunded government employee pension and health care liabilities, it’s now become a ticking fiscal time bomb.
“They ought to be reducing debt now,” Edwards says. Instead, most state and local officials are still borrowing heavily, apparently oblivious to the looming financial danger ahead.
For example, Fairfax County wants voters to approve $150 million in bonds on Nov. 7 — not for new capital projects such as needed roads, schools or libraries, but to cover renovations to existing police and fire stations and the county’s animal shelter, all of which should have been paid for using the double-digit property tax increases that have poured into the county’s coffers each of the past six years.
Despite the windfall, Fairfax County couldn’t even come up with $10 million for synthetic turf for its overused athletic fields. That’s going on the credit card, too. “Such routine stuff ought to come out of today’s taxes and fees — not debt,” maintains Edwards, who lives in Fairfax County.
According to the U.S. Census Bureau, the average American is in hock $6,659 for state and local government obligations alone. While the per capita debt load is lower than the national average in both Maryland ($4,998) and Virginia ($5,348), the same cannot be said for D.C. residents, who owe $11,715 each.
The trend line is even more alarming. During the past decade, local and state governments were not only expanding, but also piling on long-term debt. Officials became quite adept at running up the tab, even resorting to “grant anticipation” loans based on future federal payments they hadn’t yet received. Outstanding debt is now up to $6.4 billion in D.C., $27.7 billion in Maryland and $40 billion in Virginia (82 percent higher than a decade ago). Like federal deficits, paying interest on swiftly rising debt consumes a larger proportion of current revenue, which in turn encourages even more borrowing.
“Citizens need to remember that government debt simply represents deferred taxes,” Edwards points out.
The piper must eventually be paid. Be forewarned: The enormous $1.9 trillion in debt already racked up by America’s state and local governments will come due in the not-so-distant future. Right about the same time the Social Security and Medicare systems are swamped by the coming flood of baby boomer retirements.
Can the politicians spell “bankruptcy”?
