The Arkanssouri Blog.: Good question.

Friday, January 13, 2006

Fired Up! Missouri asks a good question: If Bluntman thinks the Missouri budget is so rosy, why is he shopping for an $85 million loan?

Tom Hanna said...: Well, the $150 million "loan" they refer to was a transfer from Budget Reserve to General Revenue "for cash flow purposes." Seems that's what you might have a budget reserve for and the explanation is pretty simple - for cash flow purposes. That is, tax receipts tend to cluster at certain times, while expenditures may come at other times. The budget may be in surplus for the year and still require short term borrowing intrayear.

As for putting out bids, it might be that bidding is required by law? For all the liberal screeching about "no bid contracts" to Haliburton, I'd expect they'd understand the concept.

As a rule, I wouldn't go to liberals for fiscal policy commentary.; 3:43 PM
Tom Hanna said...: A bit more from the bid package explains the "why" on the lease financing package - it's to save money.

"Historically, the State of Missouri has incorporated lease/purchase requirements into the same competitive bids in which the equipment was acquired. As a result, the state was receiving lease/purchase terms from the equipment supplier and not directly from financial institutions that may have been able to provide more favorable rates and terms. This RFP seeks to secure financing terms independent of the acquisition process for statewide agencies to acquire tangible property, software and energy performance services via lease/purchase financing."; 3:49 PM