Posted on 01/06/2006 6:46:05 PM PST by NormsRevenge
SACRAMENTO (AP) - Gov. Arnold Schwarzenegger is asking lawmakers to scrap a $9.95 billion high-speed rail bond measure already on the November ballot to clear the way for his massive, $222.6 billion public works program.
"We could not afford the entire package of infrastructure (in the governor's plan) if we did the $10 billion for high-speed rail," state Finance Director Mike Genest said Friday. "We did not see it being affordable in a 10-year cycle."
He called high-speed rail "a visionary idea (that's) kind of far in the future."
Democratic supporters of high-speed rail said they would try to put some funding for the project in whatever public works bond measure emerges form the Legislature. Senate President Pro Tem Don Perata, D-Oakland, has a $12.8 billion bond measure that includes $1 billion that could be used to begin buying right-of-way for the trains.
The governor's plan includes $68.8 billion in new bond measures to help pay for highway projects, flood control, transit, jails, prisons, new schools and courthouse improvements - but no money for the so-called bullet trains.
The high-speed rail bond would provide $9 billion to help pay for a line between Los Angeles and San Francisco, the first leg of a 700-mile system linking the state's major cities with trains running at speeds of more than 200 mph.
It also would provide $950 million for improvements to light rail and conventional inner-city passenger systems.
Supporters tout high-speed rail as a much-needed alternative to crowded freeways and jammed airports as the state's population increases over the next 20 years. But it's had difficulty getting rolling.
Lawmakers approved the $9.95 billion bond measure in 2002 and put it on the November 2004 ballot, then decided the state faced more pressing needs and bumped the bonds back to November 2006.
The Assembly approved a bill last year by Assemblyman Alberto Torrico, D-Fremont, that would move the bond measure to the November 2008 ballot, but that bill stalled in the Senate.
Torrico said he supports high-speed rail despite his efforts to delay the bond vote. He said he will work "very diligently" to get high-speed rail money included in any public works bond package that lawmakers approve this year.
"We're talking about investing $222 billion in infrastructure. This is the best time to talk about including high-speed rail as part of that investment," he said.
Genest said the governor wasn't proposing that lawmakers eliminate the California High-Speed Rail Authority, the nine-member board that's overseeing planning for the system. Instead, he said the administration hopes the board can devise another way of paying for it.
"There's still hope for high-speed rail," he said. "There may be another way to finance it."
The authority has been counting on getting federal government to pay a significant portion of the project's cost, but that won't happen unless the state puts up a matching amount, said Mehdi Morshed, the authority's executive director.
"I don't know of any other source or anywhere you can get that kind of money," he said.
A sampling of answers about state's debt and governor's bond plan
The Associated Press
http://www.bakersfield.com/state_wire/story/5811711p-5827880c.html
Q: What is the governor proposing?
A: Gov. Arnold Schwarzenegger is urging lawmakers to put $68 billion in general obligation bond measures on the ballot to help pay for $222.6 billion in transportation, flood control, school and certain other public works projects. The governor also is asking lawmakers to authorize the sale of another $800 million in lease revenue bonds, which don't require voter approval and sell at higher interest rates than general obligation bonds. The general obligation bond measures would be placed on ballots between 2006 and 2014.
Q: What is a general obligation bond?
A: General obligation bonds are a traditional way of paying for public works projects. Sale of the bonds needs voter approval and paying them off, with interest, is the first obligation of the state treasury.
Q: Why can't the state pay for Schwarzenegger's program without borrowing?
A: A number of legislators support using more of a pay-as-you-go approach to financing public works projects, but the sheer size of the governor's plan would make it difficult to finance just by using year-to-year state revenue.
Q: How much bond debt does the state have now?
A: As of Nov. 1, the state had nearly $53 billion in bond debt. Another $37.2 billion in bonds haven't been sold yet because the money hasn't been needed for the programs the bonds will finance.
Q: How much would Schwarzenegger's plan cost the state in interest?
A: It depends on the interest rate the state has to pay to bond buyers. For example, a 4.6 percent interest rate paid over 30 years would cost taxpayers about 85 cents in interest for every dollar in bonds sold, according to the legislative analyst's office.
Q: How good is the state's credit rating?
A: Not good, although there have been improvements in recent years. California is currently tied with Louisiana as the state with the worst ratings. That means it's paying about two-tenths of a percentage point more in interest on its bonds than states with the highest ratings. Steve Zimmermann, an official with Standard & Poor's, one of the nation's major bond rating houses, says the governor's plan shouldn't result in lower ratings and suggests California's ratings would improve if the state could eliminate persistent budget deficits.
Q: Would the governor's plan freeze out other bond proposals?
A: Possibly. Schwarzenegger also is urging lawmakers to approve a constitutional amendment that would limit annual debt service payments to no more than 6 percent of the state's general fund. Administration officials predict that debt service payments, now at 4.5 percent of general fund revenue, would climb to 5.91 percent in 2014 under the governor's plan before declining.
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Sources: Legislative analyst's office; governor's office; Standard & Poor's.
Of course it's fully funded. /s
Why spend $10B when you can get the gullible California voters to give you $200B? Arnold can suck my exhaust pipe.
Technically, the voters will only be asked to approve 68 billion dollars of bonds over 10 years, and the federal government and private interests will be expected to make up the remainder of the 154 billion dollars proposed in the 222 billion dollar plan.
Doesn't that make it more palatible and likely to succeed? :-)
Socialist Arnie can take his bond measures AND SHOVE THEM WHERE THE SUN DOESN'T SHINE.
Do you have a read on how this massive bond measure will do when it is put to an actual vote? It sounds like Arnie and everybody else look at this like it's a done deal.
If voters swallow the first offering of 25 billion, hard to say at what point they will choke or what happens when the state's economic engine is overwhelmed by the continuing escalting costs of running the state's social welfare engine.
The Gub will have long since disappeared from the political stage before we're halfway thru his plan. Maybe Maria can continue in the job 'officially' at that point.
Who will pick up the reins and either want or be able to take it from there? Your guess is as good as mine.
In the spirit of full disclosure here are the sources of revenue, beyond the $68B in general obligation bonds, in the order of their magnitutde of contribution:
1) The federal government through grants and matching funds.
2) County and municipal governments through local assesments and local bonding (roads, schools, water districts, etc)
3) Private enterprise who will be allowed to charge user for improvements to "public lands", most gained through emminent domain proceedures.
Thank You.
More local and municipal involvement when they can least afford it as things stand today.
It will be interesting to see how they much less their voters and residents respond as the additional burden comes to bear.
Toll roads, toll bridges, private water deliver systems, private waste water treatment facilities, etc. All using land confiscated from private property owners through eminent domain. In turn a whole new government oversight cadre will be necessary to "protect" the general public and set "fair" user rates. A giant Public Utility Commission whose member are appointed by whom? The political class, of course. And salaries? probably in excess of $110k /year/seat.
Herein lies a gigantic boondoggle of unintended consequences. A British company delivering your drinking water. A Bahamian corporation controlling your access to work on the local toll road. A Chinese multinational managing the new port facilities at San Pedro. Canadians sending you a bill every time you flush your toilet. It boggles the mind.
(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")
Mind boggling, yes. But are the consequences truly "unintended" or by design?
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