This timing problem requires the state to borrow money that it repays as the balance of the revenue comes in. Sometimes the state issues debt without its general-obligation pledge but with the backing of a specific revenue source. For example, the Michigan Department of Transportation issues debt backed by gasoline tax and vehicle registration revenue. Revenue-backed debt does not require a vote of the electorate. It is in this category that most outstanding state debt falls.
Indirect debt is issued by a state authority in behalf of an entity other than state government.
The Michigan Strategic Fund issues debt on behalf of private corporations, and the Michigan Hospital Finance Authority issues debt backed solely by nonprofit hospitals. In total, direct and indirect state debt has grown by 56 percent since the start of the decade. In comparison, Michigan personal income grew 33 percent, and the state population grew 2 percent. For long-term investments, taxes generated to pay for a project should match the useful life of the asset. For example, it is unfair to require current taxpayers to pay the full cost for constructing a building that will be used for many years.