(The Center Square) – Michigan’s total bonded obligations total nearly $32.5 billion, making it the state with the 10th highest bond obligations in the nation, according to a new study released by The American Legislative Exchange Council this week.
That averages out to a $3,251 per capita obligation for Michigan’s approximately 10 million residents, placing the state firmly in the middle of ALEC’s national rankings in that subcategory. Connecticut earned a top berth with a $12,055 per capita obligation, and Wyoming trailed the pack at $67 per capita obligation.
Only nine other states exceed Michigan’s total obligation, with California and New York topping ALEC’s rankings by a respective $209 billion and $122 billion of total bonded obligations. By comparison, Wyoming has the nation’s lowest total bonded obligations at just below $39 million.
All told, U.S. states, municipalities and other taxing authorities have issued more than $1.25 trillion in bonded obligations. According to ALEC’s analysis, that amount breaks down as
- 37% General Obligation bonds, backed by the “full faith and credit” of the state; Michigan’s General Obligation bonds are $1.7 billion at 16.34% interest
- 36% revenue bonds issued by the states and repaid through specific revenue sources; Michigan’s revenue bonds are $1.9 billion, and the state’s $4.619 billion business-activity bonds are also the tenth highest in the nation
- 26% issued by states’ municipalities and other taxing authorities; Michigan’s component units bond obligations are the fourth-highest in the nation at $24.2 billion
The states with the top 10 highest bonded liabilities comprise more than $809 billion, or nearly 64.5%, of the nation’s total bonded liabilities.
“The root cause of state debt problems is a government spending problem. Many states use bonds to increase spending today while passing the costs onto future generations,” the authors of the ALEC study wrote. “States should enact priority-based budgeting, tax and expenditure limits and effective bond and debt caps to help curb the growth of spending and debt. States that do not get spending and debt under control will see taxpayers leave for states with less burdensome tax and fiscal policies.”