State and Local Debt Skyrocketing

The Tax Policy Studies division of the Cato Institute recently published a report showing huge increases in state and local government debt. Since 2000, total state and local debt has increased 55 percent from $1.19 to $1.85 trillion. One of the primary causes is the large number of projects state and local governments finance by issuing bonds. While debt financing is often used responsibly for capital projects in the private sector, governments tend to overuse this method because it allows them to fund projects without taxing current voters.