Issuing debt rarely reduces a government project's overall cost, but it is an efficient way to spread the cost across generations. Most economists believe it is sound public policy for government to issue debt to fund large infrastructure projects. The problem is when a state issues debt to pay for current expenditures. Some analysts believe that this growth is excessive. They assert that the several tax cuts enacted during the 1990s are being funded in part by issuing debt.
Many analysts argue a more subtle point against Michigan's current debt policy.
The Michigan Constitution's drafters clearly were worried about excessive state debt, and they set out very strict restrictions on the state's issuance of general-obligation bonds. They hoped that requiring a popular vote before bonds may be issued would be an effective check on state debt. And, as the exhibit shows, Michigan's general-obligation debt remains very low, both in absolute terms and relative to other states. The exhibit also shows, however, an explosion in other debt, both direct and indirect. Some analysts believe that all debt bearing the state's name should require voter approval.