In order to get our finances in order and our debt in check, there must be a body that audits the way the government and institutions within the government spend their finances. In the state of Arizona for example, the Appropriations Subcommittees have the mandate to monitor this. Cutting wasteful government spending, reviewing regulations, reforming entitlements, and instituting pro-growth tax reform, which broadens the base, lowers rates, raises revenues, and reduces the debt is the sole purpose of such establishments. Appropriations Subcommittees in Arizona will shepherd tax-dollars in a responsible, frugal, and common sense way to help address the state’s financial challenges. The committees are committed to reducing our deficits, helping Arizona residents get back to work, and ensuring a sound financial future. If the projects they have are successful in the state level, then the whole country may borrow from their method and ensure all Americans have a secure financial future that is free from fraud, excessive spending and huge debts.
The state of Arizona has several outstanding debts. State governments normally finance their capital project requirements using three options: paying for projects with cash, borrowing for projects and repaying debts incurred overtime, and leasing facilities. The last two options require states or their independent authorities to enter the bond market. Here state debt secured with lottery funds and general obligation debts are used to finance projects and institutional developments in the state level. A general obligation bond is a frequently used category of municipal bond in the US that is received by a state or a local government's assurance to use lawfully available resources that include tax revenues in order to repay bond holders. A state debt is the debt owed by a state or provincial government, municipal or local government. The total outstanding state debt/lease%u2010purchase financing is $8.5 billion while the total outstanding general fund debt/ lease%u2010purchase financing is $3.8 billion. If the general fund is not used in the act of securing debt then non-general fund sources such as lottery revenue, highway user fees and university tuition are used. In the financial year 2010, a total of $1.0 billion has been generated from the sale and lease back of 22 state properties for example the state hospital, the state prison complexes and the state fair coliseum with an estimated 5% interest rate.
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Total Outstanding State Debt/Lease%u2010Purchase Financing Reflects Multiple Payment Sources Including the State General Fund, Highway User Fees, Lottery Proceeds and University Tuition. This debt has amounted to $8.5 billion. On the other hand, the total outstanding general fund debt/lease-purchase financing is $3.8billion. Debts are obligations owed by debtors on one side to creditors on the other. The diverse categories of debt can normally be classified into a 3 broader subsection of secured and unsecured debt, private and public debt and syndicated and bilateral debt. General Fund Debt Service/Lease%u2010Purchase Financing Will Cost $293 million in FY 2012. Of the total financial year 2012 general fund budget of $8.3 billion, this represents a 3.53% use for debt service/lease purchase. Levels of state debt have the ability to impact on the amount of local debt as well. Significant amounts of state debts are related to capital facilities. Financing of debts has funded both new schools and repairs. Adverse changes in state funding may affect the amount of local funding used for other facilities. Hence statute allows school districts to issue Class B bonds to finance capital needs. The current tax rates are higher than the rates estimated in the publicity pamphlets in the financial years 2007 and 2008 due to the economic and financial weakness experienced in this period. Additionally, structural imbalances and over reliance on one time solutions and limits from the constitution within states on raising revenues and reducing spending are involved. There is also the issue of continued economic weakness and the normal concerns about the housing sector. Such economic concerns have largely impacted on the current tax rates bringing uncertainty regarding the implementation of the enacted financial year 2012 budget reductions. Such actions are seen to have come a little too late and the flexibility on the part of the economy and finance created as a result is questionable. The impact of the federal downgrade on the state of Arizona is quite uncertain at the moment. Shortly after the August federal deficit reduction legislation was approved, Standard & Poor's (S&P) downgraded the United States’ credit rating from AAA to AA+. The other major credit rating agency (Moody’s) lowered its outlook on the U.S. credit rating to negative. It is quite hard to make a prediction of what results these occurrences will have on the budget of the state of Arizona and most economists suggest that states with a high proportion of medicare spending or economic activities that are dependent on federal spending will most likely experience immense pressure on their credit rating and budget. This will be as a result of activities aimed at reducing the future deficit.
Much has been said concerning the downgrade of Arizona’s credit rating. Specialists’ opinions about bond risks and budget behavior can have a imperative social role and should not be criticized in a political manner. Given that the public lack the time and knowledge to scrupulously weigh up these financial instruments, handing over this task to experts makes sense. Additional, accurate and realistic expert opinions on fixed income securities encourage a proper alignment of interest rates to risk, ensuring that the society's limited capital is efficiently deployed.
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