DENNIS SEID: Issuing bonds instrumental for operations, investment

By Dennis Seid/NEMS Daily Journal

Much has been said of the disagreement in the state Capitol over the issuance of bonds. Specifically, the state House wanted a $250 million bond bill that would have, in part, paid for expansions at Ole Miss, Mississippi State, MUW and Southern Miss.
The Senate, on the other hand, is willing to go with $120 million.
Lt. Gov. Tate Reeves, the former state treasurer, said the state doesn’t need to get into deeper bonded indebtedness, now sitting at around $4.1 billion. Reeves said the state already pays about $450 million annually in debt-service payments.
That works out to about $150 for every citizen in the state. And Reeves has a lot of support for his view.
Now, I understand having the government take money out of our pocket is an unpleasant experience. Who wouldn’t love to keep more money? We already have federal and state taxes taking money from our checks, in addition to sales and other local taxes.
Let’s be honest: Government is inefficient and often counterproductive. But government of some kind is necessary to provide basic services. Police and fire protection, for example. Paved roads is another. Could government do better? Of course.
But the political conversation the past few years has tilted heavily toward the idea that all debt and borrowing is bad.
In a vacuum and in a perfect world, everything would be paid for in cash. Everyone would make enough money to pay for the essentials and have some left over to buy other goodies.
But we’re dealing with reality. When expenses on all levels continue to rise and revenue is flat or not rising enough to match those outgoing expenses, something must give.
So you look for a funding mechanism of some kind. Governments and schools turn to bonds.
How many of the people arguing against taking on debt have a mortgage or a revolving business credit line? How many business owners have borrowed money to expand their business and added jobs?
Don’t they make payments with the intent to repay?
The idea behind issuing bonds is to get that necessary capital, with the intent to pay it off with some interest. We sell the bonds, and the buyers get a reward down the road for their investment.
For the state’s universities – and yes, it can be argued we have too many – the bonds pay for needed facility repairs, renovations and expansions for growing enrollments.
Those things still need to be done, but the universities will have to dip into other funds. So is it a coincidence that tuition is going up again?
Bonds have been issued to pay for infrastructure improvements and other incentives to help recruit industry. Think Toyota, Severstal, American Eurocopter, Nissan.
Those companies provide jobs, which put money in the pockets of Mississippians. That money is spent and invested in our communities. And that means revenue back in government coffers to help pay those bills – and those bonds.
So let’s not miss the forest for the trees and get lost trying to find our way.
Dennis Seid is the business editor at the Daily Journal. Reach him at or (662) 678-1578.

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