When we talk about what government costs us, we often focus on the appropriation of tax revenue, what that revenue buys and if it is a good investment. What is often overlooked is how far in debt the government is going, keeping in mind of course, that the debt will be paid by?taxpayers.

In the 2007-2009 state budget, lawmakers committed us to $554 million in additional debt. Add this to the $6.4 billion the government already owes and we?re talking some real money. As a matter of fact, our state?s debt has more than doubled in the last seven years and is growing faster than revenues are coming in.

Local governments have also increased their debt to pay for new capital projects (schools, parks, open space) as well. Governments use debt for projects much as a family would borrow money to build a home. And just like a family has options on how to finance a mortgage, state and local governments have options when it borrows money as well.

They can issue general obligation bonds (GO Bonds), which offer the lowest cost, most transparency, and voter approval (which seems only fair since the voters will be repaying the loan). Certificates of Participation (COPs) is a financing option that does not require voter approval, pledges the property for which the loan is taken as collateral, and has higher costs that GO bonds. Tax increment financing (TIF) is the latest tool for government to borrow money. It requires no voter approval, is dependent on increased value of the property to provide the extra money to pay back the debt, and carries the highest costs.

Under the leadership of the last decade, government has grown tremendously, continues to provide more stuff to more people and is substantially increasing debt. Joe Coletti has just issued a new spotlight that offers the best explanation of government financing options. Check it out here for a summary and to get to the pdf of Joe’s report.