Is Gray Davis Looting California Retirement Funds?

California State Assembly Republican Caucus ^ | August 18, 2002 | the calpowercrisis gang

[snopercod]

Bonds and the Budget
AN OVERVIEW OF THE ADMINISTRATION'S BORROWING PROPOSALS

The 2002-03 Governor's Budget reflects 11 separate borrowing proposals, including one that is already on the March 2002 Ballot (Proposition 40, Clean Water Bonds). As shown in Table 1, eight of these borrowing proposals are intended to provide resources for the budget in 2002-03, while the other four address ongoing infrastructure or energy crisis issues. The total amount of the borrowing proposals is approximately $58 billion, although not all of this amount would be borrowed during 2002-03.

For each of the borrowing proposals, the table shows three figures. First, the table identifies the nominal amount of the borrowing that is proposed by the administration. Second, the annual cost of paying for the borrowing is identified. These amounts reflect the yearly cost associated with paying off the principal and interest on a bond. Because bonds are typically sold over time, this annual cost figure represents the approximate payment, including interest, once all of the bonds are sold. In the case of the short-term loans, the figure represents the expected cost of the repayment including interest. Most of these loans are to be repaid in 2003-04, although the repayment date for some was not specified. Finally, the table identifies the total cost of the borrowing over time, including interest expenses. Thus, in the case of the K-12/Higher Education Bonds, the Administration proposes a total authorization of $30 billion over three election cycles. These bonds will require an annual payment of about $2.4 billion once all of the bonds have been sold, and the state will pay out a total of $53 billion over the life of the bonds.

In the aggregate, the $58 Billion worth of borrowing reflected in the budget will result in total costs of $108 billion over the 30-year life of the borrowings. If all of the transactions are in fact concluded, the state could face much higher costs for debt service, peaking at about $5 billion (all funds) annually in 2006-07. In every year after the budget year, these additional costs are significant and make the state's long-term structural budget deficit worse. The Legislative Analyst's most recent estimates indicate that the General Fund's structural budget deficit is about $4 billion for the 2003-04 fiscal year. These borrowings could add almost $2 billion in General Fund costs to that 2003-04 deficit.

	Amount	Annual Cost1	Total Cost
Bonds:
K-12/Higher Ed GO Bonds	$30 Billion	$2.4 Billion	$53 Billion
Proposition 40 – Clean Water GO Bonds	$2.6 Billion	$200 Million	$4.6 Billion
Housing GO Bonds	$2 Billion	$160 Million	$3.2 Billion
Economic Stimulus lease-revenue bonds	$678 Million	$68 Million	$1.2 Billion
UC & Other Projects Lease-Revenue Bonds	$371 Million	$37 Million	$571 Million
Tobacco Settlement revenue bonds	$2.4 Billion	$192 Million	$4.2 Billion
Electrical Energy Revenue Bonds	$14 Billion	$1.1 Billion	$30 Billion
Revenue Anticipation Notes	$2.5 Billion	$100 Million	$100 Million
Other Borrowing:
PERS Loan	$1.029 Billion	$231 Million	$7 Billion
STRS Loan	$950	$114 Million	$3.4 Billion
TCRP Loan	$672 Million	$40 Million	$712 Million
Other Special Fund loans	$579 Million	$35 Million	$614 Million
	$58 Billion	NMF	$108 Billion

¹Represents initial annual cost following completion of bond sales.

[Grampa Dave]

We just passed another prop to stop the looting and diversion of our gasoline taxes.

You must realize with the Attorney General in his pocket, the Rat controlled legislature and the pro rat Fish Wraps, there is NO CONTROLLING LEGAL AUTHORITY FOR HERR DAVIS!

He is Kalifornia's version of the NO CONTROLLING LEGAL AUTHORITY FOR THE CLINTOON AND GORON!

He also has the judges on his side to do whatever he wants to a State Prop..

[snopercod]

Is he borrowing FROM the retirement accounts?

Yes. The retirement accounts are "loaning" the state their participant's money.

[Grampa Dave]

I'm flagging Liz on this reply. She had some interesting saves on Cal Pers and some of the Clintoons buddies and Davis's buds and some real scams they had slipped to the investors of Cal Pers.

Backhoe, what have you saved on this issue?

[snopercod]

Thanks. Also, does anybody remember the thread about Davis stealing from the Dentists retirement fund about a month ago?

[snopercod]

Hey, it was your find. I was focused on the electricity bonds and didn't even notice the PERS loan at the bottom.

Thank YOU!

[Grampa Dave]

What if these "loans" from CalPers and the various state departments were the result of a recognition that the grade Z Kali Junk Bonds for used Electricity would not sell on Wall Street. So Herr Davis and his SS chronies forced various state agencies and Cal Pers to "loan" money to the state for the short fall that is/will be created without these junker bonds.

There have been enough posts just on Free Republic warning that CalPers might have to pick up these worthless bonds for electricity used last year. This alone might prevent CalPers from swallowing up a large amount of these junker bonds as the word would be out.

So an state of emergency is kept open, then the governor can "borrow: money from various state agencies to pay back the electricity costs for the electricity purchased and used by us last year.

To hide this even deeper, these "borrowed" funds go into the general funds. Then checks are written each month to pay the providers for the used electricity. Then, after the election, all remaining costs will be just rolled over into the general funds. Then, CalPers and the " other loaners" will get paid back sometime next year.

Herr Davis and his little SS Chronies are making Arthur Andersen, Enron and World Com look lilly white re their accounting procedures. Davis's accounting procedures seem to be coming from an unpublished Stephen King book, "Accounting Procedures for Governors from the Dark Side of Liberal Hell!"

[Ernest_at_the_Beach]

This system is so great for doing cooperative work!

I just want Davis out of there!

[Ernest_at_the_Beach]

Nice description of the scam scheme!

Now if Simon can get his advisors to let him attack Davis over this, we can get a real campaign going!

[Ernest_at_the_Beach]

I put a note on the California board about this thread also!

[Grampa Dave]

The problem with this is that 99.99% of Kalis would not understand any of this. Just look at the confusion here on FR with some very sharp individuals. We are picking up some of the puzzle pieces and understanding what they may mean.

If this looting of the retirement systems is being done, it has to be pictured as Davis Enroning the Cal Pers system and other agencies to pay the bills he has accumulated.

This may be why Davis has started early in spending millions to try and paint Simon as a crook on Davis's tv hit ads. Usually, those expensive hit ads are saved until well after Labor Day with the short memories of the moderate Kali voter.

[snopercod]

I think you nailed it, Gramps. Davis had to come up with some fast cash to satisfy Wall Street.

You saw Davis' latest EO, didn't you? It says:

IT IS ORDERED that Paragraph B of Executive Order D-42-01 is amended to read: "The Department is authorized and directed to utilize the proceeds of the loans to make payments to purchase electric power and natural gas for generation of electric power to mitigate the effects of the emergency, or to reimburse the Electric Power Fund for expenditures made prior to the date hereof for such purchases, and for costs related thereto and to fund capitalized interest and reserves required in connection with such loans."

[backhoe]

Dave, I don't have anything handy... the unfortunately now-gone American Spectator archives had a mid-1990's article on how clinton & his corrupt pals looted Arkansas's pension funds when he was Governor. Naturally, nobody gave a rat's rip about it when he was President.

I have the hard copy somewhere-- I might be up to abstracting bits of it later, for general-pupose knowledge of how it can be done.

[Kozak]

Sorry but which unions are the backbone of the Califroni (or national) Democratic Party? Public employee unions and teachers. Lie down with dogs and you get fleas...

[Liz]

Gramps, here's a link that might be helpful:

http://www.freerepublic.com/focus/news/663807/posts?page=38

[DiamondDon1]

Good Work, post this thing everywhere...

Are there liberal forums we can dump this on?

There must at least one liberal out there that is not completely stupid...well there might be one...

DD

[willyone]

I guess they want to loot everything of value before they turn the state over to Mexico. They will feel more at home that way. Poverty and corruption.

[willyone]

As of now there is still no state budget. This means that state employees are being paid minimum wage. So far the pubbies have held out. This state is going down the tubes so fast it is hard to believe. This will be a practice run for when all the deficits catch up to the feds.

[Robert357]

If you look at all the borrowings you will note that the " total cost" is about 1.5 to 2.5 times the "amount borrowed," except for the PERS and STRS loans. For the teachers the factor is over 3. For the PERS loan it is almost a factor of 7.

What this means is that something is very strange about these loans. The loans are either for an exceptionally long period of time (like 30 or 40 years) or the loans have no principal or interest payments for the first few years. There is something about these loans that makes them more expensive in terms of interest cost, based on total payment.

That should be a red flag that says politics is involved.

[monkeyshine]

LOL.

[monkeyshine]

Carping mostly. But they are holding fast against raising taxes. They defeated the car licensing increase proposal and the $3 per pack cigarette tax by not approving it as a budget item. They have not caved yet, and are demanding that Davis repeal the new spending he approved 3 years ago.