Mass. Spending by state prompts warnings

The Boston Globe reports:

The state has to borrow an additional $600 million this month to address a short-term cash-flow shortage and meet end-of-the-year local aid payments to cities and towns, prompting warnings from the Romney administration and the state treasurer that the Commonwealth is spending at a perilous pace.

Treasurer Timothy P. Cahill and Thomas H. Trimarco, the secretary of administration and finance, sent a joint letter to lawmakers late yesterday outlining a plan to borrow the $600 million, which would be in addition to $300 million the state borrowed last month for the same purpose.

The $900 million total the state is borrowing to cover its current obligations is the highest such amount in at least six years and will cost taxpayers $12 million in borrowing costs. The reason for the borrowing is that the state has bills due now, but won't receive much of its revenue until the first six months of 2007.

What better proof that governments don't cut spending during economic expansions.