It's Just Not the Federal Government That We Need to Question Regarding Debt
An Example of State Perils (and I am not picking on California—this is just too good of an example to pass up) Many states are currently in economic peril—with California perhaps at the top of the list. California’s state debt outstanding (including accrued interest) totaled $163.6 billion as of August 1, 2011. The state is projected to run a $6 billion deficit for the 2010-2011 fiscal year and $19 billion for 2011-2012. And by 2012-2013, that annual deficit is projected to rise by $22.4 billion.
Given a population of 37.2 million (U.S. Census Bureau 2010) that equates to a projected 2012-2013 state debt per Californian of $5,672. With an average household size of 2.91 people, the state debt alone is $16,500 (28 percent of median household income). Because of this soaring debt load and increased future obligations already passed by the California Assembly, California will require added debt to fund these obligations.
Yet just look at how the state is spending its money (or reducing tax revenues). Consider a proposed development in Oxnard where 43 units of affordable housing is in line to qualify for $11 million of state-issued, tax exempt bonds. While there is also some commercial development included in the project, (and why would the state ever fund such development), if you ignore the non-residential side, California is funding this project to the tune of $255,814 per dwelling unit (and this is for a state where 31 percent of all home sales in August 2011 were short-sales and where median home prices today are $316,500—down from a peak of $552,100 in May 2007-a decline of more than 42 percent). Oxnard is located in Ventura County where the current median home price is $355,000 (per DataQuick) and is down from a peak of $630,000 in December 2005—a decline of 43.7 percent. Yep—it makes all the sense in the world to subsidize housing there today……Right? To read more about this click here.
I truly believe that our economic problem of a mountain of debt at the federal, state and local levels is a function of elected officials doing everything they can to get reelected rather than doing what is right (and perhaps painful and unpopular). Now more than ever, we need to seriously consider term limits for elected officials. Take away their tenure and you take away their power—and hopefully gain some moves that instead of the popular things getting done, the right things are accomplished.
But then it would take leadership to accomplish this, so I not going to hold my breath……