Note To Iowa Officials – Don’t Gamble With Our Future

Last week, in his “Condition of the State” speech, Governor Chet Culver outlined a plan to borrow $700 million. He hopes to spend the borrowed money on infrastructure projects to create jobs and keep Iowa’s economy from suffering further in the current recession. But there are several problems with the plan, not the least of which is that it takes an unnecessary gamble with our future.

The estimated population of Iowa is just over 3 million people. So the Governor’s proposal seeks to borrow a little more than $230.00 per person - before interest - on a risky proposal. That works out to just under $1000.00 for an Iowa family of 4. It’s hard to imagine any Iowa family expressing a willingness to give the government $230 plus interest (per-person) from their savings for a state bailout.

The Governor’s proposal seeks to borrow the $700 million via 20-year, tax-exempt state revenue bonds, and plans to repay the bonds with gambling taxes, but there is no guarantee the state can collect sufficient gambling taxes to repay the debt. Clearly, people are slowing their spending on all variety of things, including gambling. By financing Iowa’s future with anticipated gambling taxes, the Governor takes a big risk. If gambling continues its slide towards unpopularity, either he will have to double down and expand gambling in the state or raise taxes.

Gambling has a profoundly negative impact on society. It has been shown to increase suicides, bankruptcies, divorce rates, foreclosures and criminal activity such as embezzlement. Each of those negative outcomes carries with it a cost to society.

Mortgaging our children’s future with the hope of underwriting the loan through gambling taxes is the wrong decision on several levels. Now is the time for each of us to contact our state legislators and say, “pay for things as you go. Don’t take out a loan and ask our kids to pay for it.” Let’s make sure that the legislature gets this message: Don’t Gamble With Our Future.