Recent reports have shown that Gov. Chet Culver has failed to make key payments on his I-JOBS debt plan putting Iowa’s credit in danger.
To finance the governor’s spending plan, the state borrowed a total of $875 million with a total repayment cost of $1.667 billion. The bonds will not be repaid until 2033, with a $55 million repayment annually. Along with the annual bond repayment, the state must also contribute $47 million to a debt service reserve fund. This is essentially an insurance-type fund which is used if the state defaults on a payment. According to The Bond Buyer, a public finance newspaper, Gov. Culver failed to make that full payment.
“This is just another incident on the long list of failures that has come out of the governor’s office,” said House Republican Leader Kraig Paulsen (R-Hiawatha). “This time the governor’s mismanagement has landed Iowa on a negative CreditWatch list. This is not the kind of leadership we expect out of a governor.”
The Bond Buyer also notes that the governor will use the proceeds from the September 2010 borrowing to make up the $25 million deposit needed.
“Gov. Culver has spent too much, over $6 billion in Fiscal Year 2010, and when that wasn’t enough he borrowed another $875 million. Once again Gov. Culver has been irresponsible with taxpayer dollars. Getting a new credit card to pay off an existing credit card balance is reckless budgeting,” said Paulsen.