3 state bond issues make ballot most expensive ever - $36 Billion in debt may be coming to CA

California voters go to the polls next Tuesday with one hand on the voting machine and the other on their wallets.

Voters will face the most expensive ballot in state history in an election that's as much about money -- piles and piles of it, all debt -- as it is about candidates.

Three statewide bond measures, if approved, together would spend $18.5 billion on new schools, water projects and low-income housing. The total price tag for taxpayers to pay all three measures off over the next 30 years, with interest, would reach $36 billion.

With the dot-com meltdown, a lingering recession and the state budget suffering a gaping deficit, an age-old political question this fall is taking on a new urgency: How much debt is too much?

Last year, rating agencies such as Standard & Poor's and Moody's downgraded California's credit rating to basement levels because of its energy crisis and its budget woes. In the S&P listings, for example, only Louisiana has a lower credit rating than California.

Supporters of the bond measures, including most Democratic leaders, call them long-overdue investments that are desperately needed for California to keep pace with population growth.

``Deteriorating schools, broken toilets and leaky roofs, overcrowded classrooms -- if we don't address these things now, do these problems go away? No,'' said Nick DeLuca, a spokesman for the Yes on Proposition 47 campaign, the $13 billion school bond measure.

Critics, including taxpayer rights groups and many of the state's Republican leaders, say California is piling up debt at a rate that places the state's financial health at risk.

``It's a frightening situation. It's like opening up a bag of cash in a tornado,'' said John Coupal, president of the Howard Jarvis Taxpayers Association, in Sacramento.

``We look at the November statewide ballot and say it is the same as somebody who has lost their job going out and running up their credit card bill.''

• Proposition 46, a $2.1 billion bond measure to build housing for battered women, low-income seniors and homeless families. It was placed on the ballot by Democratic leaders in Sacramento.

• Proposition 47, a $13 billion school bond put on the ballot by state lawmakers, mostly with Democratic support, but also with some Republican backing. It would provide money for new facilities at public schools, community colleges, the California State University system and University of California campuses.

• Proposition 50, a $3.4 billion water bond put on the ballot by environmental groups and developers who paid to collect voter signatures. The measure would buy wetlands and upgrade drinking water treatment plants.

There are at least an additional 104 school bonds in local areas that total $10.2 billion, and a range of other local bond measures totaling an additional $3.6 billion. These bonds, while not adding to the state debt, do put local governments in the red.

Gov. Gray Davis and the Legislature already have placed two other huge bond measures on the 2004 ballot -- $12.3 billion education bond for the March ballot, and a $9.95 billion bond for November that would build a high-speed rail system statewide.

California's state treasurer says that even if all five statewide bond measures passed, California wouldn't fall too deeply into debt.

``We have the ability to finance these,'' said Treasurer Phil Angelides, a Democrat. ``It is a smart investment. Our state is at a point where we need to make these investments.''

In a letter to Gov. Davis three weeks ago, Angelides said if all five measures pass between now and 2004, California's ratio of debt service to its general fund would increase from the current 4.24 percent to 5.43 percent by 2008.

As a general rule, many economists say, states should not gobble up more than 6 percent of their general funds paying off debts. Some say 5 percent is a better benchmark. Why? As with a credit card or mortgage, every dollar spent on interest payments is a dollar less that can be spent on other priorities.

No state has defaulted on paying off its bonds since the Civil War. But if its credit rating falls too far, it must pay more interest to attract investors. Currently, California must offer investors up to 0.25 percent more in interest on its bonds than other states.

Several key independent analysts agree California's debt levels, while rising, are still manageable.

``It doesn't look like these bonds alone will cause a huge concern on our part,'' said Steven Zimmermann, managing director of the San Francisco regional office of Standard & Poor's, a credit rating agency.

``There is some availability in the budget to pay for them. But it is a choice. If you pay for these bonds now, then you have less money to pay for other things.''

Governments sell them to investors over a fixed period, usually 20 to 30 years, to raise large sums for projects such as highways, schools, parks and prisons. They repay the debt with interest, currently at about 5 percent a year.

``These bonds are like mortgages,'' said Jean Ross, executive director of the non-profit State Budget Project

in Sacramento. ``Most homeowners, even in Silicon Valley, don't pay cash for their house. This is the same thing.''

Right now, California has about $26 billion of outstanding bond debt. Last week, the state also began selling $12 billion in energy bonds, the second-largest offering in U.S. history. That debt is being sold to repay the money California borrowed to buy emergency supplies of electricity during the energy crisis of 2000-2001. Unlike the bonds on the Nov. 5 ballot, which would be repaid from the general fund, the energy bonds will be repaid over time with money from ratepayers' bills.

The GOP challenger for state treasurer, Greg Conlon, says current leaders have let things slip too far.

``We have a financial crisis that overshadows the energy crisis,'' said Conlon, a certified public accountant. ``I don't think people realize the significance of that. If this Legislature and governor don't shape up financially, California will be rated at junk bond status and we may not even be able to sell bonds.''

In years past, voters have been more comfortable opening their wallets on Election Day when the economy is good. The last time all the bonds failed on a statewide ballot was in 1994, when California struggled out of its last recession.

Nevertheless, Proposition 47, the education bond, leads in the polls, with about 60 percent of voters supporting it. It is endorsed by the California Chamber of Commerce and Silicon Valley Manufacturing Group. A simple majority is required to pass Proposition 47 and the other two state-wide bond measures.

``During recessions, voters are less likely to pay for things,'' said Kim Rueben, an economist with the non-profit Public Policy Institute of California. ``I think the support for Prop. 47 has to do with how important voters think education is.''

Click here to download the California Republican Liberty Caucus' tri-fold pamphlet on the governor's race!

It's a .pdf file, so you'll need Acrobat Reader... it's free, and chances are good you already have it on your computer. Try the link and see.

Print it using the printer-icon button in the Acrobat toolbar in your browser (not File|Print in your browser's menu). It's intended for double-sided printing using single pieces of paper-- no stapling needed if you do it that way, and saves trees! ;-) Print one side, then invert the paper and feed it through a second time for the second side. Fold, and sally forth to get out the vote!

Give this to friends, walk your neighborhood, take it to stores, give a wad of 'em to your school, hand some out at your house of worship, at clubs, at stores and small businesses...

Let's retire Gray Davis!

Let's show the media and RINOs that "It's the base, stupid!"

Let's show Gray Davis that money can't buy him love ...or re-election!

Freepers and RLC activists can claim considerable credit for nominating Bill Simon, so now let's elect him!

I have been trying to sort out the election options on bonds.

There are many additional options on the local ballots to raise money for various ideas,

Calpowercrisis:

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Memories:

California Power Crisis animations featuring Governor Gray Davis

AND......................

...to see what bad, bad things Davis has done... - CLICK HERE

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Several key independent analysts agree California's debt levels, while rising, are still manageable.

``It doesn't look like these bonds alone will cause a huge concern on our part,'' said Steven Zimmermann, managing director of the San Francisco regional office of Standard & Poor's, a credit rating agency.

``There is some availability in the budget to pay for them. But it is a choice. If you pay for these bonds now, then you have less money to pay for other things.''

Bonds are like IOUs.

Yikes!

This equates to only $1,200 for every man, woman, and child in the state.

Of course, if you're not a child, or an illegal alien, you'll have to pick up their share. And it wouldn't be fair to tax low-income people, so you'll have to pick up their share, too.

Every single election we have another school tax proposal that would be added on to the property tax. Prop 13, which limits our property taxes, is moot at this point as the various school taxes &c tend to pass in my area and add 10% a year to my property taxes anyway. (Oh, of course it isn't a property tax, but go ahead and not pay it and try to tell the difference when they send you the foreclosure notice.)

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