November 27, 2008
Las Vegas Sun Interviews Staff Economist Josh Barro on State Government Borrowing
"To Hedge Cuts, State Ponders Borrowing"
By David McGrath Schwartz
Josh Barro, staff economist with the Washington, D.C.-based Tax Foundation, a conservative think tank, said it is not necessarily bad to borrow "if you're borrowing in lean times, on a scale where it can be paid off in flush years, when the economy is strong again."
Other states are also considering borrowing to make it through the downturn.
But Barro cited California as a cautionary tale. It, too, has a balanced budget requirement in its constitution, but has used accounting methods to essentially borrow and fund a large portion of its budget.
During recent flush years, the state didn't pay off the debt it had accumulated in the previous downturn. Now, California is looking to borrow even more.
