CA: State Deficit Could Deter Bond Issue (Can state shoulder debt of a infrastructure program?)

LA Times ^ | 11/15/05 | Tom Petruno

[NormsRevenge]

A potential borrowing campaign to fund new roads, schools and other public facilities in California drew a generally positive response on Wall Street on Monday, but with a caveat: Sacramento should get its budget balanced first, many investors say.

--snip--

In 2004, many on Wall Street were critical of a $15-billion bond deal that California voters approved to cover the state's accumulated budget deficits. But analysts noted that the new borrowing proposal would be more in line with the accepted use of bond financing to pay for long-lasting investments such as highways, levees and other infrastructure projects.

And as the most populous state, California could justify such an investing program as well as any state, some say.

"If you're going to borrow, it should be for capital investment," said Tim Blake, who tracks California municipal debt for credit rating firm Moody's Investors Service in New York.

What's more, the state's current debt load isn't burdensome by some Wall Street yardsticks, leaving room for additional borrowing.

California has about $55 billion in bonds outstanding, counting those issues backed by general fund tax revenue. A Moody's study this year of the 50 states said California's debt load amounted to about 4.7% of the personal income of the state's residents, using 2003 data.

That was above the median state figure of 2.4%, but below the levels of some other populous states, including New Jersey (7.4%) and Illinois (6.2%).

California's bond debt per capita, at $1,545, ranks fourth among the 10 most populous states and ninth among all the states, Moody's said.

Because many investors have judged the state's debt levels to be reasonable, California has been able to issue new bonds with relative ease in recent years, despite ongoing budget woes.

[NormsRevenge]

$55 billion current outstanding debt plus borrowing another 60 to 70 billion the next few years is no big deal , according to some.

[ecomcon]

Apparently, one should keep borrowing till it is "burdensome".

[Puppage]

$55 billion current outstanding debt plus borrowing another 60 to 70 billion the next few years is no big deal , according to some

Only if it's for the children/sarc

[AZRepublican]

Nothing another 5 million aliens moving to CA cannot cure. The scary part is that Govt. thinks this is the answer.

[newzjunkey]

I have no issue with a bond issue for infrustruction since, holy crap, that's actually well within the perview of government! I will not vote for the bond if there is a chance in hell the money will be stolen and used for light rail, trolly, tram, trains or buses. It must build ROADS, not headquarters for CalTrans.

Arnold tried to rework the spending mandates that are murdering any seriously attempts to reign things in. He lost at the ballot box. It's insane.

I'll definitely wait and see the specific language and see what bellweathers like McClintock have to say before I throw a fit.

Bill "Lost to Loser Davis" Simon Jr (R), talked up bringing the private sector and toll roads into the mix. Won't happen. That's politically dead. Beyond dead since the unions were so adept as flexing their muscle in the special election. No way they'd let private business, rather than their union stooge employees build highways and roadways. Worse Simon suggests state-fund subsidized toll roads.

We still need to break the legislature and move it somewhere vaguely near reason and away from the radicalism that embodies it and is driving California to utter ruin. The public employee unions need reduction back down to size as well.

In case you folks have seen it, Pookie had this in today's cartoon thread:

[Carry_Okie]

That sign is on a road that is LEAVING San Francisco. IOW, the message is diametrically backwards.

As to the borrowing for roads, we wouldn't need to do if the governor and the legislature weren't raiding funds for other projects. If this money goes to more "mass transit" (IOW urban real estate subsidies), which it probably will, it will have been a nearly total waste.

But Willie Green will be happy.

[calcowgirl]

http://www.nctimes.com/articles/2005/11/15/news/californian/111405191708.txt

Meanwhile, on Monday officials said Gov. Arnold Schwarzenegger is preparing a massive bond in the tens of billions of dollars to pay for not only transportation, but schools, hospitals and cleanup of polluted waterways as well. The governor's plan, expected to take shape in coming weeks, would become the largest bond measure in California history, eclipsing the record $15 billion issue floated in 2004 to balance a red-ink-riddled state budget. The governor is said to be looking to launch the biggest public works expansion in California since the 1960s.

"This is a governor who thinks big," said H.D. Palmer, spokesman for the California Department of Finance.

[John Jorsett]

Hi, my name is California. I've been on a spending spree and living beyond my means. I hate business, fiscal restraint, and infrastructure. Can you lend me some money?

Who could resist a pitch like that?

[Amerigomag]

I'll definitely wait and see the specific language and see what bellweathers like McClintock have to say before I throw a fit.

I'd suggest patience.

Right now the CAGOP has a hammerlock on McClintock. If McClintock hopes to win in 2006 he needs the backing of the CAGOP. He will loose that support if he crosses the party. The CAGOP is floating an image of Fiorina specifically to keep McClintock in line. He's hogged tied until the election.