Enclosed is Senator McClintock's speech that he delivered on the floor of the California State Senate a few days ago.
Last year, I and many others on this floor believed it was a bad idea to borrow $13 billion to paper over the state’s deficit.
And today, I believe it is still a bad idea to borrow $15 billion to paper over that same deficit.
I am not going to get into the debate over whether it is better to borrow that money over 13-years or 30-years. The only distinction in that debate is between bad public policy and really bad public policy.
There are only three ways to remedy a deficit. You can raise taxes – in a state that already suffers one of the heaviest tax burdens in the nation. You can borrow money – in a state that is already up to its eyeballs in debt. Or you can rein in spending -- in a state that is now spending a larger portion of people’s earnings than at any time in its history.
I would think the choice would be self-evident.
We need to suspend the state’s spending mandates and restore to the Governor the power he had from 1939 to 1983 to make mid-year spending reductions. A 13.5 percent reduction effective January 1st would cure the entire deficit in 18 months and allow California to begin the next budget year debt free, with a clean slate, and $12 billion of breathing room going into 2005.
And it would still provide annual general fund spending 15 percent above what we were spending the day Gray Davis took the oath of office.
If we succumb to the Siren song of borrowing, I fear that this will not be the end of it. New York City tried this – and just this year they rolled over their now 25-year-old debt yet again.
Let us be honest. This proposal is set at $15 billion to assure that the underlying problem can be ignored for 2003. Let me remind the members that the LAO’s November report predicts a $15 billion gap between estimated expenditures and estimated revenues again in 2004.
If we are going to borrow $15 billion because we don’t want to address the problem this year – right now – with the full impact of an historic election fresh in mind – how can we seriously believe that somehow we will muster the political resolve to do so next year in the middle of an election?
So far, only $1.3 billion of actual cuts have been proposed this year and only $1.4 billion for next year. Ladies and Gentlemen: that's barely enough to cover the annual debt service on the bond now before us.
The only way this bond can be issued constitutionally is to temporarily repeal one of the oldest provisions in the state constitution that dates back to the original document of 1849.
Why did the Founders place that provision in the law? They were very clear. Let me share the words of the State Supreme Court just seven years later in 1856:
"The Framers of the State Constitution were mostly men fresh in the experience of the errors into which other states had fallen. They had witnessed the unhappy results that followed extravagant legislation, and were anxious to rear a bulwark here, which would protect us against similar disasters...they were aware that years would scarcely repair the follies of a single day, and that the high rate of taxes imposed in many of the States, to pay the interest of the debts so improvidently contracted, had the effect to drive capital and population from their shores."
The next year, the court wrote:
"The framers (of the Constitution) knew that it was not the practice of governments, well conducted, to borrow money for the ordinary expenses of government...the framers of the Constitution knew that if they permitted the Legislature to borrow money to defray the ordinary expenses of the government, it would not be long before the State must be brought practically to rely upon the yearly revenue...Besides this, the Convention doubtless thought it unjust to throw the burden of paying the present expense of the government upon posterity, who would be compelled, in addition, to pay their own expenses, or resort to the same method of postponement."
These are the warnings of a generation of giants who built our state. They have been heeded by every generation that has followed until this one.
And of this one, what can be said? Words are vain. Reason is vain. With this vote you now set in motion the classic spiral of spend-borrow-and-tax that California's Founders had anticipated, feared, and protected against.
There's a thread here on FR with it!
McClintock Floor Speech on AB9 Deficit(California Bond Issue)
The only way this bond can be issued constitutionally is to temporarily repeal one of the oldest provisions in the state constitution that dates back to the original document of 1849.
I think this is the purpose of Prop 58 (which also reaffirms the balanced budget requirement). Without the repeal (temporary or not), it would be unconstitutional to issue a bond such as the Prop 57 $15 Billion bond, because the bond wouldn't be for a specific project. If Prop 58 passes, the legislature will be free to "throw the burden of paying the present expense of the government upon posterity."