Iowa ranks second for per-capita public debt

DES MOINES – Former Gov. Terry Branstad’s campaign Tuesday accused Gov. Chet Culver of using a “sleight of hand” to deceive Iowa voters by touting a low ranking for public debt that pre-dated Culver’s I-JOBS borrowing.

Culver’s office issued a news release Tuesday trumpeting the fact that Iowa placed second lowest nationally in per-capita state debt in a new report from Moody’s Investors Service. Moody’s noted that Iowa’s public debt equated to $73 per person for money borrowed to fund infrastructure needs while nationally the per-capita average was $936.

“We are weathering the economic downturn and natural disasters of the last few years extremely well when it comes to government debt in Iowa,” Culver said in a statement. “Even after bonding for desperately needed infrastructure investments through I-JOBS, we maintain one of the lowest debts among states – a testament to our very careful and cautious budgeting and spending practices in this state.”

Jeff Boeyink, manager of Branstad’s 2010 gubernatorial campaign, said the report gave a “significantly distorted view” of Iowa’s debt situation because it pre-dated legislative passage of a public infrastructure plan Culver proposed that will boost Iowa’s debt by $1.7 billion over the life of the bonds once full implemented – a long-term borrowing that would equate to more than $500 per Iowan for a state with roughly 3 million people.

“Just like he tries to mask his big spending increases in the state budget by not counting the use of one-time revenue sources and the use of reserve funds, Gov. Culver is happy to use this sleight of hand in reporting Iowa’s debt burden to further deceive Iowans about the true cost of his massive borrow-and-spend programs,” Boeyink said.

House Republican Leader Kraig Paulsen of Hiawatha said he was disappointed that Culver and his staff would attempt to mislead Iowans by highlighting Iowa’s low-debt standing in fiscal 2009 comparisons based on a public debt of about $219 million that did not reflect the $600 million in borrowing that took place last summer in the first round of the overall $875 million I-JOBS program. He said they were either intentionally trying to mislead Iowans or didn’t understand the numbers, something he found to be disturbing whichever was the case.

Senate GOP Leader Paul McKinley of Chariton said Culver was demonstrating how out of touch he was with economic realities by touting an outdated and incomplete analysis, adding the “campaign-style charade is exactly why Iowans do not trust Gov. Culver’s I-JOBS numbers (and) they do not trust his budget numbers.”

State Treasurer Mike Fitzgerald, a Democrat seeking re-election to an eighth term, said even with the I-JOBS borrowing included Iowa would rank 44th among U.S. states for per-capita public debt if none of the other states took on more debt, which has not been the case given the financial pressures facing many state governments.

“The Republicans are trying to say, hey, wait a minute, we’re going into debt and that’s irresponsible,” Fitzgerald said. “But yet, Branstad went into debt, too. He borrowed for the fiber-optics network. He did cash-flow borrowings just to pay our bills on time, he borrowed for the underground storage tanks and he borrowed for some prisons around the state.”

The state treasurer said Iowa continues to be a low-debt state and currently has the top bond rating of Aaa, which makes it an ideal time for the state to borrow to make infrastructure upgrade and disaster recovery repairs given that interest rates are low. He noted that the bonds are being repaid at $43 million a year from gambling profits to the state, not tax money.

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