Free Republic

As California prepares to commit tens of billions of dollars to an ambitious high-speed rail line from San Francisco to Southern California, Congress' political will to provide the bulk of the funding is disappearing, leaving the possibility that the state could end up stuck with a crushing financial burden. State voters have agreed to issue more than $9 billion in bonds to build the system, but that's a fraction of the $43 billion projected tab for the initial phase. And those costs could swell to $65 billion or more, by some estimates. Should federal funds dry up after the scheduled...

California school districts are using construction bond money to cover day-to-day operations and in other ways that regulators say misuse taxpayer money and violate state and federal law. In recent weeks, the state attorney general's office and county treasurers have issued warning letters to school officials after seeing an uptick in unauthorized district bond deals that saddle communities with higher debt payments. Two audits at the Sweetwater Union High School District in Chula Vista, for example, found the district borrowed and repaid $40 million from its construction bond money in the 2009-10 school year and is looking to borrow $58...

Gov. Jerry Brown says California has a "wall of debt" that must be reduced – and is now using it as his chief rationale for a temporary boost in taxes. At the same time, however, he is proposing to borrow billions more by issuing some of the bonds that voters have authorized for public works projects. And therein lies a rub. Brown's "wall of debt" refers mostly to an estimated $35 billion in loans and deferred payments that former Gov. Arnold Schwarzenegger and the Legislature adopted to paper over the state budget's chronic deficits. However, Brown's revised budget also notes...

In the event of a major earthquake or flood and many levees failing simultaneously in California's Sacramento-San Joaquin River Delta, as many as 515,000 residents and 520,000 acres of land would be in immediate danger; the long term effects could be even more widespread, as nearly 28 million residents depend on the Delta for water and irrigation; California lawmakers have increasingly turned their attention to securing the Sacramento-San Joaquin River Delta's levees, but experts say that only little progress has been made After witnessing the destructive potential of broken levees during Hurricane Katrina, California lawmakers have increasingly turned their attention...

Local redevelopment agencies have pushed through nearly $690 million in bonds sales during the first two months of this year -- that's more than half of the $1.2 billion in debt those agencies took on in all of 2010, according to figures the state treasurer's office compiled. Furthermore, given the shaky market, local governments are borrowing money at high rates -- increasing the amount of property tax revenue that will go to lenders, said Tom Dresslar, a treasury department spokesman. "They're flooding the market with these bonds at a time when the market sucks from an issuer's perspective," Dresslar said....

Schools, taxes, state workers' pensions, prisons - all of these topics get plenty of airtime in Sacramento when our elected leaders are wrestling with the state budget. But there's one big line item that doesn't get much attention, even though it's eating California alive: the cost of our debt service. In the next budget, the state will spend $6.6 billion on debt repayment. According to Moody's Investors Service, California's debt has tripled over the past decade. We wouldn't have to talk about slashing children's medical insurance and older people's in-home care or closing state parks if we weren't paying off...

Just for grins, let's assume that Jerry Brown beats the long political odds and persuades the Legislature and voters to enact his tough-love plan to close the state budget gap. What's next for the septuagenarian retread? Walking on water? Yes, in a manner of speaking. If Brown can put the budget crisis behind him, at least for a few years, California's other long- festering political sore will almost certainly move to the top of his agenda. Predecessor Arnold Schwarzenegger supposedly settled California's water wars before leaving office. In fact, he didn't. He merely put in place a complex mechanism to...

Buried in Gov. Jerry Brown's new state budget proposal – one aimed at closing chronic operating deficits – is a decision to suspend sales of state bonds, at least for six months, this coming spring. It's an implicit, and long overdue, official recognition that California has built itself a mountain of debt over the last decade, much of it acquired to paper over its budget deficits, and needs a breather. Some of the debt is official – bonds issued by the state and local governments, with and without voter approval, to pay for public works, subsidize private development projects, refinance...

He has been, in many ways, a governor of firsts:• The first to take office as a result of a recall election.• The first to commute, on an almost daily basis and via private jet, between the Capitol and his Southern California mansion. • The first to have served in the Austrian army, the first to have won the Mr. Olympia body-building title seven times, and - as far as we know - the first California chief executive to have nude photos of himself widely available on the World Wide Web.But "first" does not necessarily mean "great," or even "good."And...

The US state of California on Wednesday said it would restructure upcoming bond issues as it tries to raise $14 billion in the middle of a sell-off in the municipal bond market. ................................................... The decision to shift more of the sale to a government-subsidized market for municipal bonds would lower the cost of the new debt. ..................................................... The state on Wednesday said it would cut the size of a sale of traditional tax-exempt bonds by $750 million to $1 billion, shifting the borrowing to a planned sale of taxable debt, which will price on Friday. Of the $2.75 billion of...

The plan to sell California state office buildings contained in this year's budget will cost taxpayers $1.4 billion over 35 years, the nonpartisan legislative analyst said Wednesday. The analysis released this week says the state will pay an effective interest rate of 10.2 percent to lease back the parcels, which include 24 separate buildings, from the new owner. That is about double what the state pays on existing bonds used to build its offices. "There are long-run costs and short-term benefits," said Mark Whitaker, who wrote the 12-page analysis for the Joint Legislative Budget Committee. "It's going to cost a...

California's now-resolved $19 billion budget shortfall got plenty of attention in recent months, but a state report released Wednesday highlights the state's other massive deficit - in the unemployment insurance fund, which will be $10.3 billion in the hole by year's end.The report by the nonpartisan Legislative Analyst's Office warns of dire consequences if California's leaders do not tackle the fund's insolvency: The federal government could impose steep taxes on California businesses beginning in 2012, and the state could lose $400 million in federal dollars annually.The deficit is the result of the state paying out more in unemployment benefits than...

Add a multibillion-dollar state bond sale and thousands of construction projects to the list of potential victims if the budget impasse drags on much longer. State Treasurer Bill Lockyer is concerned that the state could miss an opportunity to sell bonds this fall to finance public works projects if state lawmakers and Gov. Arnold Schwarzenegger don't enact a budget soon. "The treasurer said the first week of October is a critical week," said Lockyer spokesman Joe DeAnda. "Beyond that, it really puts a cramp on the amount of time that's left to put that deal together." The problem is, the...

In 2004, Gov. Arnold Schwarzenegger barnstormed around the state for Proposition 58, using an oversized credit card as a prop and vowing that it was time for the state to "tear up its credit card." Now Attorney General Jerry Brown has concluded that Assembly Democrats' plan to borrow billions to help ease the state's $19.1 billion deficit could be deemed illegal under that ballot measure if challenged in court. "We conclude that a court could reasonably determine that the proposed transaction violates Proposition 58," the attorney general's office said in a letter to Schwarzenegger's legal affairs secretary. Assembly Speaker John...

Gov. Arnold Schwarzenegger on Thursday defended $11.1 billion in new borrowing as a critical investment in the state's water future while at the same time insisting California must cut its way toward a balanced budget in the short term. In an interview with The Bee's editorial board, the Republican governor also took aim at the state's prison employees and advocated for a constitutional change allowing California to rely more on private workers. After reaching a deal last week with state lawmakers to bolster California's water infrastructure, Schwarzenegger is trying to build popular support for the plan, knowing voters will have...

Sacramento - -- The $11 billion water bond that California voters will be asked to approve next year contains nearly $2 billion in earmarks that lawmakers candidly acknowledge were included in the proposal to win the votes that were needed to pass the plan out of the Legislature. More News * Dems, GOP split on NY trials of alleged terrorists 11.15.09 * Pelosi exhibits leadership, protects colleagues 11.15.09 * Tower of films to recall Alcatraz takeover 11.15.09 * Three Questions For: Mary McCue / Guardian of public space 11.15.09 Hundreds of millions of dollars of those earmarks - which some...

Tough Love for California.House Chamber, Washington, D.C.June 11, 2009 M. Speaker: Gov. Schwarzenegger of my home state of California has called for the federal government to underwrite as much as $15 billion of Revenue Anticipation Notes that the state has to issue to avoid insolvency. I think that would be a colossal mistake, and that such an act would not only dig the nation deeper into the hole it is in, but would actually make California’s fiscal condition worse. Today, California faces a paradox: despite record levels of spending and borrowing, it can no longer produce a decent road system,...

SAN FRANCISCO (MarketWatch) -- Fitch Ratings said late Friday it lowered its ratings outlook on the State of California to negative from stable.

Sacramento, Calif. (AP) -- If AIG was too big to fail, how about the world's eighth-largest economy? In a move with only one modern-day precedent, California Gov. Arnold Schwarzenegger and Democratic lawmakers are pressing the Obama administration and members of Congress for federal loan guarantees to help the state out of a desperate, multibillion-dollar jam. California is not asking for cash, like the tens of billions given to AIG, General Motors or Morgan Stanley. Instead, the state with the worst credit rating in the nation is asking that Washington act as a sort of co-signer on the state's borrowing, to...

Toxic Assets. Over the past year, our government has spent trillions to relieve the economy of their burden. We’ve been told time and time again that by giving $20,000,000,000 in TARP funds to Bank of America, for example, the feds were going to “fix” the mortgage crisis, and the “toxic loans” that it entails. But bailouts, like the $150,000,000,000 given to AIG, have done nothing to revive economic growth. Bailing out banks and lending institutions have not made life easier for anyone. AIG still lost $4,400,000,000 last quarter. Bear Sterns still had to merge with JP Morgan Chase out of...