Stadium projects would push state debt over $3 billion

JEFFERSON CITY, Mo. -- The proposed Cardinals stadium and three other stadium projects, estimated to cost at least $906 million, would boost the current amount of Missouri state government's bonded indebtedness above the $3 billion mark.

An oversight audit by the Committee on Legislative Research reveals that the current state bond issue debt totaled $2.5 billion by the end of Fiscal Year 2002, excluding indebtedness of $72.4 million for the state's capital and lease/purchase projects, and $97.9 million for other bonded obligations by state government.

The combined state government and its independent statutory authorities currently have a bonded indebtedness of $20.1 billion, more than the cost of all state governmental operations in this year's proposed budget. The independent authorities are primarily the state's colleges and universities and specific programs dealing with public health, housing and urban projects.

In addition to state government and independent statutory bonded indebtedness, political subdivision debt at the close of last year's fiscal period reached $1.3 billion. This includes capital improvements approved by voters in school districts, municipalities and special-project jurisdictions. The largest borrower among political subdivisions is the city of St. Louis, which has issued two municipal and two school district bonds totaling $552 million.

The actual amount of this debt category is much larger than $1.3 billion because enabling statutes do not require mandatory registration.

One of the largest participants in the state's debt program is the Missouri Department of Transportation, which was authorized to borrow up to $250 million to jump-start highway building and improvement in the state. The agency received its first funds, $21.9 million, in the current fiscal period. A second state bond payment of $21.4 million is scheduled to be made in Fiscal Year 2003.

When all six of the jump-start bonds are issued, Missourians will pay $156.8 million in interest which, added to the $250 million principal, will cost taxpayers $406.8 million over the proposed six-year duration of the bond issues.

$199 million balance

Another current liability state taxpayers assumed a decade ago, the construction of a new St. Louis football stadium, still has an outstanding balance of $199 million for both principal and interest, despite an initial authorized bonded outlay in 1991 of $153.2 million. Current fiscal-year payments represent nearly twice as much for interest ($6.6 million) as will be applied to the principal ($3.4 million).

State outlay of general-obligation bond payments is included in each year's budget approved by the General Assembly, and these funds get first priority in spending appropriations. Bond payment appropriations must be paid before funds are distributed for public schools, welfare assistance, health programs and even state payrolls.

The same process and requirements are in effect for debt repayment by independent political subdivisions which are held responsible for their own incurred debts. No estimate is made in official audits of the total cost of independent authority debt, but the list continually expands.

Political subdivisions, on approval of their voters, may issue general obligation bonds and local debt service is paid by taxes or special assessments collected by the various jurisdictions. During Fiscal Year 2001, $1.3 million in first-time bonds were issued by these political subdivisions in the state.

Despite the current record-high state debt, the acting director of the Oversight Division of the Committee on Legislative Research, Mickey Wilson, notes that Missouri has continued to maintain its AAA bond rating.

"This means the state has a superior credit rating and can issue its bonds at a lower rate of interest," Wilson said.