Senators debate whether higher education building bonds would be good debt or bad debt

JEFFERSON CITY - A proposal that would create a funding option for $700 million worth of higher education capital projects faced opposition from Senate Democrats in a committee hearing Monday afternoon.

The measure, which is sponsored by Rep. Chris Kelly, D-Columbia, passed the House on April 16 with a 131 to 28 vote.

The proposal would give Missouri voters the opportunity to issue bonds to fund higher education projects. The amount would be enough to cover first-priority projects for 4-year state universities and community colleges as well as finish all uncompleted projects begun under the Lewis and Clark initiative, Kelly said.

An amendment that was proposed but not voted on would create an additional $100 million for general projects such as state buildings, facilities and parks.

Sen. Tim Green, D-St. Louis County, said the proposal is a misuse of the state's credit. He said the state shouldn't be taking out money because without the federal bailout, the Missouri government wouldn't have been able to continue operations, let alone spend millions on construction projects.

"Everyone's quick to pull out the credit card now, but when we have to pay down on the credit card, nobody's willing to cut services," Green said.

Sen. Kurt Schaefer, R-Columbia, who is guiding the resolution through the Senate, said using debt to finance the creation of tangible assets was a good move for the state's economy.

"With our economy the way it is, I don't think we can sit back and not do anything. And I think on a project like this that allows for construction and allows for high-paying jobs ... and allows for stimulating the economy, actually by building new things and then creating capital assets that we have into the future," Schaefer said. "There is such a thing as good debt and bad debt to the extent we've got to leverage a little bit to get us out of this hole."

Kelly said in his testimony that it's not a question of whether the government would complete these projects and go into debt to do so -- only a question of when. He said the current economic situation gives the state the opportunity to take advantage of low interest rates and create needed jobs.

Sen. Joan Bray, D-St. Louis County, questioned whether higher education should be the top priority, citing mental health as a division needing state dollars.

The Senate committee chose to postpone voting on the resolution to work on a substitute that would include the additional $100 million in project funds.

"What I have heard ... (is) that there is actually a substitute out there that would increase it from $700 million to $800 million, and that's probably going the wrong way," said Sen. Wes Shoemyer, D-Clarence. "Growing that larger is probably not a way to get that passed through the Senate."

Kelly said that he's not worried and that proposals often get pushed through right before session ends.