Posted on 08/18/2002 4:55:44 AM PDT by snopercod
Bonds and the Budget
AN OVERVIEW OF THE ADMINISTRATION'S BORROWING PROPOSALS
The 2002-03 Governor's Budget reflects 11 separate borrowing proposals, including one that is already on the March 2002 Ballot (Proposition 40, Clean Water Bonds). As shown in Table 1, eight of these borrowing proposals are intended to provide resources for the budget in 2002-03, while the other four address ongoing infrastructure or energy crisis issues. The total amount of the borrowing proposals is approximately $58 billion, although not all of this amount would be borrowed during 2002-03.
For each of the borrowing proposals, the table shows three figures. First, the table identifies the nominal amount of the borrowing that is proposed by the administration. Second, the annual cost of paying for the borrowing is identified. These amounts reflect the yearly cost associated with paying off the principal and interest on a bond. Because bonds are typically sold over time, this annual cost figure represents the approximate payment, including interest, once all of the bonds are sold. In the case of the short-term loans, the figure represents the expected cost of the repayment including interest. Most of these loans are to be repaid in 2003-04, although the repayment date for some was not specified. Finally, the table identifies the total cost of the borrowing over time, including interest expenses. Thus, in the case of the K-12/Higher Education Bonds, the Administration proposes a total authorization of $30 billion over three election cycles. These bonds will require an annual payment of about $2.4 billion once all of the bonds have been sold, and the state will pay out a total of $53 billion over the life of the bonds.
In the aggregate, the $58 Billion worth of borrowing reflected in the budget will result in total costs of $108 billion over the 30-year life of the borrowings. If all of the transactions are in fact concluded, the state could face much higher costs for debt service, peaking at about $5 billion (all funds) annually in 2006-07. In every year after the budget year, these additional costs are significant and make the state's long-term structural budget deficit worse. The Legislative Analyst's most recent estimates indicate that the General Fund's structural budget deficit is about $4 billion for the 2003-04 fiscal year. These borrowings could add almost $2 billion in General Fund costs to that 2003-04 deficit.
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| Amount | Annual Cost1 | Total Cost | |
| Bonds: | |||
| K-12/Higher Ed GO Bonds | $30 Billion | $2.4 Billion | $53 Billion |
| Proposition 40 – Clean Water GO Bonds | $2.6 Billion | $200 Million | $4.6 Billion |
| Housing GO Bonds | $2 Billion | $160 Million | $3.2 Billion |
| Economic Stimulus lease-revenue bonds | $678 Million | $68 Million | $1.2 Billion |
| UC & Other Projects Lease-Revenue Bonds | $371 Million | $37 Million | $571 Million |
| Tobacco Settlement revenue bonds | $2.4 Billion | $192 Million | $4.2 Billion |
| Electrical Energy Revenue Bonds | $14 Billion | $1.1 Billion | $30 Billion |
| Revenue Anticipation Notes | $2.5 Billion | $100 Million | $100 Million |
| Other Borrowing: | |||
| PERS Loan | $1.029 Billion | $231 Million | $7 Billion |
| STRS Loan | $950 | $114 Million | $3.4 Billion |
| TCRP Loan | $672 Million | $40 Million | $712 Million |
| Other Special Fund loans | $579 Million | $35 Million | $614 Million |
| $58 Billion | NMF | $108 Billion |
1Represents initial annual cost following completion of bond sales.
Ernest_at_the_Beach noticed the "PERS loan" at the bottom of the table, and questioned whether Davis was "borrowing" from CalPERS, the retirement plan for state employees.
It seems like he has been dipping into the CalPERS till, and the State Teachers Retirement System [STRS] to boot.
So I am spinning this off as a seperate thread regarding the fiscal rape of California working people.
STRS=State Teachers Retirement System
TCRP=Transportation Congestion Relief Program
Also, there was a thread a while back about Davis "borrowing" from the Dentists retirement plan.
Chapter 783, Statues of 1999 (AB 1012, Torlakson)
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares all of the following: (1) The voters at the November 3, 1998, general election passed Proposition 2 to stop future diversion of transportation funds for nontransportation purposes by a 75 percent majority vote, thus indicating overwhelming support for using these funds on needed transportation improvements.
Do Davis's "emergency powers" allow him to disregard a voter iniative like Prop. 2?
It might be useful to forward your info and analysis to Dan Walters at the SacBee. He's written some good columns explosing the corruption and mismanagement of the Davis Administration.
I'm surprised Davis has only borrowed a billion or two from the state worker's and teacher's funds. Perhaps he didn't want it to be noticed. Or perhaps he got permission and sanction from the CalPERS board to do this. I wonder, because didn't he insult them by asking them for campaign donations before he granted them a favor they were asking of him? Maybe borrowing from the pension fund was part of the quid pro quo.
As of April 30, 2002, approximately 16.0 percent of CalPERS total assets are invested in California. The following breakdown illustrates CalPERS investments in California:
- Equities: $9.2 Billion
- Fixed Income: $4.6 Billion
- Real Estate: $10.1 Billion
- Total California Investments & Commitments: $23.9 Billion
Interesting that as fiduciaries, they would use the word "committments".
It would probably be better for somebody who actually lives in CA to contact Waters. I'm skeptical about those presstitutes, anyway.
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Either way, it's a sign that we as a state are headed for default. Most of the private money in the state will leave rather than face the massive tax increases required just to service the $58B in loans. Our budget deficit larger than the Federal deficit on an aggregate population basis.
No problem with that?
Do we count the illegals or just the taxpayers?
She is not happy to hear about the Governor raiding them!
I suspect many other teachers will feel the same way!
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