Bond issues are ultimately equivalent to taxation, and government takes a bunch of our money through taxation regardless.
Tomorrow, some state and local governments will be asking you directly whether you would like to be taxed more. You should tell them no.
Bond issues are ultimately equivalent to taxation because money that government borrows now will have to be paid back with increased revenue later on. Chris Edwards of the Cato Institute notes that state and local governments should not be issuing more debt right now:
Bond issues are particularly unjustified this year because most states have large budget surpluses. State and local tax revenues soared 10 percent in 2021 and may grow another 7 percent in 2022. In addition, the federal government showered the states with $1 trillion in pandemic‐related aid followed by hundreds of billions more aid in the 2021 infrastructure bill. Governments should be paying down debt right now, rather than issuing more debt.
The particular examples are galling:
New Mexico is asking voters to approve $19 million in debt for libraries and $215 million for schools and colleges. If the spending is really needed, couldn’t the state have included it in its $25 billion regular budget? After all, the state currently has a budget surplus of $2.5 billion. Similarly, Rhode Island is asking voters to approve $50 million in debt for environmental and recreational projects, yet the state has a $900 million budget surplus.
Edwards says he always votes against bond issues. He’s right. The government takes a bunch of our money through taxation regardless. If the government wants to fund something specific, it should find a way to pay for it with the money it already raises.
That’s especially true with schools, a common recipient of money approved through bond referenda. Don’t buy the sob stories about school districts not having enough money. Per-pupil spending in the United States is currently at or near an all-time high, having tripled in the past 50 years. Educational outcomes are not strongly correlated with spending. Much of the new spending doesn’t end up in classrooms, and schools hire armies of administrators who don’t work with students at all. New York spends the most per pupil of any state and doesn’t have any better educational outcomes than other states that spend much less.
State and local governments have budgeting processes by which elected leaders decide what to do with revenue. That’s the time to demand more funding for whichever priority suits your fancy. Even if you support whatever the new money will be spent on, ask yourself:
- Is it really true that the government couldn’t have spent the money it already takes from me to fund this issue?
- Is it really true that a pay-as-you-go funding process couldn’t be used instead of borrowing?
- Is it really true that the public sector is a lean, mean, efficient machine that spends money wisely and should be rewarded with more?
The answer to at least one of those three questions will almost certainly be no, which should also be your vote on any bond referendum.