|Posted:||July 16, 2014 11:17 AM|
|From:||Representative Kerry A. Benninghoff|
|To:||All House members|
|Subject:||Further Reduction of Redevelopment Assistance Capital Projects Debt Ceiling|
|Earlier this session, we passed legislation to reign in our debt spending by lowering the statutory debt ceiling on Redevelopment Assistance Capital Project (RACP) by $600 million. In the near future, I will introduce legislation to continue this effort to control our capital debt obligations and annual debt service.
From 2002 through 2010, the statutory debt ceiling for RACP projects was increased five times. In 2002, the RACP debt ceiling was $1.45 billion. A short eight years later, that ceiling climbed to an astonishing $4.05 billion. Using an average inflationary rate during this same timeframe, the RACP debt ceiling should be about $2 billion.
During this same time frame, RACP project releases skyrocketed from an average of $245 million per year under the Ridge/Schweiker Administration to $547 million under the Rendell Administration. In his last year in office, Rendell released $1.025 billion in new projects. These projects are funded through borrowing – bonds amortized over a 20 year period.
In 2013, the debt ceiling was lowered to $3.45 billion. This legislation will further reduce the RACP debt ceiling by an additional $500,000,000. Beginning July 1, 2018 (the year in which the RACP debt under Rendell peaks), and each year thereafter, the debt ceiling would be lowered by $50 million increments until it reaches $2.95 billion (on July 1, 2027). These reductions will ensure that, as we to pay off the debt accumulated under the Rendell Administration, we maintain a leaner, more transparent, RACP program.
The rationale for this legislation is fairly simple: By limiting our borrowing, we decrease our debt load and debt service over time. As debt service decreases, our ability to fund core government services goes up.
I urge you to add your name to the list of cosponsors of this legislation.
Introduced as HB2420