Quote:
Originally Posted by Slava
That's an entirely separate issue though; we're talking about the budget for capital expenditures here, and you're talking about the operating budget. I'm not advocating borrowing for operations.
Well its true that we have ongoing needs, look at this new hospital. The major expense is the initial build and furnishing. Of course down the line we have to maintain and renovate this and there are operational expenses. I'm not for a second saying that we shouldn't consider those expenses (and we all do that for our homes as well). All I'm saying is that to fund the initial $1.5B (or however much it cost to build and get the hospital running) that we are better off borrowing that money.
I feel the same way about highway 63 being twinned, although my hope is that they would get a private company in there to toll it and maintain it.
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One year we build a billion dollar hospital in Calgary, then twin an expensive highway in the North, then next year it'll be LRT expansions, then ring road funding, then a new hospital in Ft Mac, then...
The province's capital budget is different than one families, because they have more than one major need. There will be a continuous stream of required major projects. If we borrow to pay for this years hospital, then next year we have to pay interest on the debt plus pay for next year's highway 63 twinning.
Of course, we could borrow to pay for that, but then the next year when we need LRT expansions we'll be trying to pay for the interest on two tranches of debt, plus an LRT expansion. Of course, we COULD just borrow for that also.
Once you start, it's very difficult to stop the cycle, which is why debt payoff has happened very rarely in other jurisdictions.