State Debt Management

State Debt Management
Last Updated March 22, 2021

State officials often choose to borrow money to finance large expenses, such as expanding a congested highway or replacing defunct wastewater treatment plants. By distributing the cost of a large investment over many years, governments can free up cash on hand to meet their current day-to-day expenses. Borrowing for long-lasting infrastructure, primarily by issuing bonds, also spreads the cost over generations of taxpayers, enabling states to finance multiple pressing needs simultaneously. As debt financing continues to be an attractive option for states seeking to bolster aging public facilities, utilities, and services, it is important for policymakers to understand just how much debt they can afford to issue.

However, policymakers often lack the data needed to make informed decisions about their debt—from appropriate borrowing levels to the way the debt is structured. Compounding this challenge, many states do not have systematic ways to collect, evaluate, and monitor debt-related data.

To address these difficulties, The Pew Charitable Trusts conducts research on all states to help them better understand and administer their debt. To do that, we encourage states to conduct a debt affordability study on a regular basis. This critical tool helps states evaluate their capacity to repay existing obligations and make informed decisions on issuing and structuring any new debt.

Report

Strategies for Managing State Debt

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Report

As state budgets recover from the effects of the Great Recession of 2007-09, lawmakers are looking for ways to prepare for the next downturn. At the same time, states are increasingly interested in taking advantage of low interest rates to borrow money for key infrastructure projects that may have been put on hold during the recession

Fact Sheet

How States Can Assess the Affordability of Their Debt: 2017

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Fact Sheet

When a state government faces a large expense, officials often choose to borrow the money to pay for the project, freeing up cash on hand to meet day-to-day expenses. Borrowing for long-lasting infrastructure also spreads the cost over the generations of taxpayers who benefit from its use.

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