Posted on 02/05/2004 2:07:48 PM PST by NormsRevenge
SACRAMENTO – If voters reject Gov. Arnold Schwarzenegger's $15 billion fiscal-recovery bond measure in March, his administration said yesterday, a backup bond plan would be smaller than originally thought and would leave a larger budget gap.
The governor's top budget aide, Donna Arduin, notified legislators yesterday that the amount of the backup bond, if it survives a court challenge, would drop from $10.7 billion to $8.6 billion.
Arduin said the amount of the bond is determined by the deficit at the end of the fiscal year last June, and the deficit has recently been recalculated to be about $2 billion smaller because of unanticipated tax revenue and new spending figures.
"Based on the latest available data, the accumulated deficit would now be certified at $8.6 billion," Arduin said in a letter to legislative fiscal committees.
The governor is mounting a full-scale campaign for passage of Proposition 57, the $15 billion fiscal-recovery bond measure, and a companion balanced-budget amendment, Proposition 58.
Schwarzenegger, a Republican, and Democratic state Controller Steve Westly held a third in a series of rallies for the ballot measures yesterday at a retirement community in Walnut Creek.
A similar rally has been tentatively scheduled for San Diego on Tuesday.
The two ballot measures, trailing in polls taken this month, are linked, and one cannot take effect without passage of the other.
"We are not borrowing new money," Schwarzenegger said yesterday. "We are refinancing inherited debt."
The current state budget signed by former Gov. Gray Davis, who was replaced by Schwarzenegger in the October recall election, was balanced with $10.7 billion in bonds. But those bonds are being challenged in court because they were not approved by voters.
Schwarzenegger is seeking voter approval of the new bond package to avoid the risk of court rejection. The amount of his bond measure, $15 billion, reflects Arduin's previous estimate of the inherited debt at the end of the current fiscal year on June 30.
If voters reject the governor's bond measure, Arduin said that relying on the earlier, "Plan B" bonds would add about $5 billion to the budget gap because of borrowing costs and other factors.
I have , in fact, heard that we may not need anywhere 15 billion, but you won't hear it from the media and the Gov's folks, I wonder why?
I believe the proposed budget submitted by AS took about $3 billion of the bond proceeds not to pay off any debt, but to 'balance' the budget and avoid cuts. That was before this announcement... so, with a $15 billion bond, they would actually be able to spend $5 billion more than revenues.
A prior article by Mendel pointed out that we won't go bankrupt in June, as the state already paid for a 'guarantee' to extend the short term borrowing if required. While short term borrowing will carry high interest, the interest on the $15 billion bond over 15 years far exceeds that amount. It also exceeds the 5 year $10.7 billion bond approved by Davis.
For a state with a constitution that prohibits debt, this all amazes me.
There. I feel better.
They always pull these 3 most demonized industries out and plug them in to their ads to try so hard to poison any opposition!!! Trouble is... I works everytime it's tried, or they'd quit it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.