Posted on 05/09/2005 9:00:45 AM PDT by NormsRevenge
SACRAMENTO - California has put a lot of expenses on plastic lately and may add billions more next year.
In March 2004, voters approved $27 billion worth of borrowing, including a $15 billion bond to refinance state debt.
Last fall, they passed a $3 billion bond to pay for research into stem-cell technology, along with $750 million for seismic improvements at children's hospitals.
Since then, legislation to place almost $30 billion in new borrowing on next year's fall ballot has passed initial committee tests.
The bonds -- which could pay for projects ranging from a new courthouse in downtown San Bernardino to Inland area highway projects -- would take advantage of low interest rates.
But borrowing also would saddle the state's still-troubled general fund with additional interest payments.
Over time, it costs the state about $1.25 for every dollar borrowed. Debt service on all bonds -- $3.63 billion in 2004-05 -- will consume an estimated 6 percent of general-fund revenue. That amount is projected to reach 7 percent by 2009-10.
"We are at the high end of where we have been historically," said Brad Williams, chief economist for the Legislative Analyst's Office.
Consideration of new bonds, meanwhile, comes as the Schwarzenegger administration has twice failed to produce an annual strategy for building and paying for new highways, parks and other big-dollar infrastructure items.
Supporters of new bonds say the state and its growing population have massive infrastructure needs. Previous voter-approved bonds -- particularly for schools -- will be exhausted in the next few years and bond proponents say there is not enough general fund revenue to pick up the slack.
"I really just look at the objective and what it's going to accomplish. Hopefully it will all be for the best and the betterment of our state," said state Sen. Nell Soto, D-Pomona, the author of legislation to place the $3 billion "Build California Bond Act" on next year's ballot.
Democrats are not the only proponents of borrowing. In March, state Sen. Bob Dutton, R-Rancho Cucamonga, voted in committee for a bill to put a $3 billion natural-resources bond before voters.
"I feel like, in our area, a lot of water districts had to give up a lot of their reserves to help with the deficit problem in last year's budget. It is my hope that we can structure the bond so we can get the money returned to the water districts . . . for infrastructure," Dutton said.
Other Republicans, though, said the state shouldn't borrow more. Debt-Service Worries
State Sen. Dennis Hollingsworth, R-Murrieta, voted to oppose the bond measure Dutton supported.
"With everything that's been proposed, and what's already been sold, our debt service is going to be rising toward 9 percent," Hollingsworth said. He didn't rule out that Republicans would provide the needed votes to place some of the proposed bonds on a future ballot.
Recent years have seen a surge in state borrowing, with voters rarely saying no to bond initiatives.
Today, the state has about $34 billion in outstanding general government debt, not counting the almost $11 billion spent so far from Gov. Schwarzenegger's "Economic Recovery Act." Some authorized bonds, moreover, have not been sold yet.
Past statewide borrowing has yielded millions of dollars for Inland works.
Public agencies in Riverside County have received $113 million from Prop. 40, a parks bond passed in 2002. That includes $15 million for the Western Community Center Foundation, which is building a paleontology museum in Hemet.
In San Bernardino County, Prop. 40 has provided $35 million, including about $665,000 to improve the Calico House Restaurant in Calico Ghost Town.
Even with all the borrowing by the Golden State, lenders aren't shying away, Williams said.
A big reason is that the state's fiscal situation has stabilized, improving its credit rating. That, in turn, reduces the cost of borrowing.
Call for Priorities
Steven Zimmermann, the western region managing director for Standard & Poor's, the rating agency, said California still has room to borrow but noted that the state seems to lack an overall strategy.
"There's no question that California has needs for infrastructure improvements. But the state needs to prioritize what it's going to use its bonding capacity for," he said.
Former Gov. Davis issued the last infrastructure plan, in 2003. Department of Finance spokesman H.D. Palmer said the administration hopes to issue its first report shortly after Schwarzenegger presents his revised budget plan Friday.
PILING IT ON
Bonds approved for upcoming ballots:
June 2006: $600 million bond for library construction and modernization
November 2006: $9.95 billion for construction of a high-speed train.
MORE PROPOSED
Bonds begin considered by the Legislature for the November 2006 ballot:
Safe Facilities, Improved Mobility, and Clean Air Bond Act of 2005
Amount: $7.75 billion
Clean Air, Clean Water, Coastal Protection and Parks Bond of 2006
Amount: Unspecified
Earthquake Safety and Hospital Preservation Bond Act
Amount: $5 billion
Clean Water, Clean Air and Coastal Protection Bond Act
Amount: $3 billion
California Court Facilities Bond Act of 2006
Amount: unspecified, but supporters have said they want the measure to allow about $9 billion in borrowing.
California Clean Air Bond Act
Amount: $5.15 billion
Build California Bond Act of 2006
Amount: $3 billion
Kingergarten-University Public Education Bond Act
Amount: unspecified
Possible other bonds:
Transportation: Assembly Democrats proposed selling $10 billion in bonds for transportation. Legislation has not been introduced.
Too bad Chrissy Wallace didn't ask one friggin' question of RINOld about the MASSIVE spending in Sacramento during his puff kissathon interview yesterday on Fox News Sunday, instead of whether RINOld was going to run for reelection...the only thing RINOld needs to do is make sure the Hummer is packed and pointed South on the 5 Freeway come January 2007!
Liars. They mention $3 Billion yet forget to mention the interest that will also have to be repaid. Total cost $6 billion.
And the $9.5 Billion for the train? Who are they kidding? This will easily top $15 billion with all the cost overruns that will happen. So can we assume this will really be $30 billion since they like to leave out the interest on these reports?
No doubt the dunder-head from Austria will back some of this new borrowing.
All this posturing and rhetoric could be eliminated by introducing RINOld to the "line item veto!"
Coulda, shoulda, woulda. He had his chance last year and instead of doing what is right he played ball with the Dems in the assembly. And look what it got him. He's now a joke and the dem's don't fear him anymore. They realize he is nothing but hot air and so does much of the state, as witnessed by his poll numbers.
If he had ripped the heart out of the spending, like the liar said he was going to do, he would be dominating the legislature. Now he's losing badly to them. A lot of Arnold supporters have buyers regret and I'm just glad I didn't vote for the idiot.
No kidding. And could that be because THE LEGISLATURE IS STEALING THE MONEY FROM THE TRUST FUNDS? Every year the highway fund, which is supposed to go to build and maintain roads, is looted and the money spent on what ought to be general fund items. To his discredit, Schwarzenegger is going along with it just like his predecessor, while the roads choke up to near immobility and deteriorate. The telephone tax that's supposed to be going to improved 911 availability and upkeep is likewise being stolen for other purposes.
THe next time some politico starts talking about establishing some new trust fund, spit in his face and gesture appropriately.
I think that the unions spending tens of millions on anti-Arnold advertising recently might have a little something to do with that.
The time for taxpayers to start bailing out of CA began about 5 years ago and continues to accelerate. These spending bills will only increase the rate of that exodus.
"Never hurt your enemy a little"-The Art of War.
I guess Arnold is learning the hard way what the Dem's already know.
His main opponents are public employee unions, and he was in no position to line-item budget items that would damage them. The most promising thing I see coming to curb union power is the "Paycheck Protection" initative that's gathering signatures. If passed, it requires explicit permission from union members for deductions that will be used for political purposes. That would take a big chunk out of the union warchests. I'd also like to see a measure that would allow political donations only by natural persons (i.e. no corporations, pacs, unions), and only from legal residents of the U.S.
Stop the Insanity!
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