Free Republic

Tough Love for California.House Chamber, Washington, D.C.June 11, 2009 M. Speaker: Gov. Schwarzenegger of my home state of California has called for the federal government to underwrite as much as $15 billion of Revenue Anticipation Notes that the state has to issue to avoid insolvency. I think that would be a colossal mistake, and that such an act would not only dig the nation deeper into the hole it is in, but would actually make California’s fiscal condition worse. Today, California faces a paradox: despite record levels of spending and borrowing, it can no longer produce a decent road system,...

SAN FRANCISCO (MarketWatch) -- Fitch Ratings said late Friday it lowered its ratings outlook on the State of California to negative from stable.

Sacramento, Calif. (AP) -- If AIG was too big to fail, how about the world's eighth-largest economy? In a move with only one modern-day precedent, California Gov. Arnold Schwarzenegger and Democratic lawmakers are pressing the Obama administration and members of Congress for federal loan guarantees to help the state out of a desperate, multibillion-dollar jam. California is not asking for cash, like the tens of billions given to AIG, General Motors or Morgan Stanley. Instead, the state with the worst credit rating in the nation is asking that Washington act as a sort of co-signer on the state's borrowing, to...

Toxic Assets. Over the past year, our government has spent trillions to relieve the economy of their burden. We’ve been told time and time again that by giving $20,000,000,000 in TARP funds to Bank of America, for example, the feds were going to “fix” the mortgage crisis, and the “toxic loans” that it entails. But bailouts, like the $150,000,000,000 given to AIG, have done nothing to revive economic growth. Bailing out banks and lending institutions have not made life easier for anyone. AIG still lost $4,400,000,000 last quarter. Bear Sterns still had to merge with JP Morgan Chase out of...

SACRAMENTO - Not that Gov. Schwarzenegger and state legislators needed any more bad news, but the nonpartisan Legislative Analyst's Office Thursday said the state's budget deficit looks to be more than $24 billion. The governor's Department of Finance just last week had pegged the shortfall at $21.3 billion if a package of budget-related ballot measures went down in Tuesday's election, which they did. The analyst said it calculations indicate the number may be $3 billion higher. In unusually frank language, the analyst also sounded an alarm over a major element of the governor's plan to rebalance the state's budget. A...

SAN FRANCISCO (Reuters) – California lawmakers should reject Gov. Arnold Schwarzenegger's plan to sell $6 billion in revenue anticipation warrants to raise cash for the state government as it faces a $21.3 billion budget gap, the state's budget watchdog office said on Thursday. The California Legislative Analyst's office said in a report that Schwarzenegger's plan for the short-term debt would be a "terrible precedent and a poor fiscal policy," and "presents serious legal concerns."

California voters overwhelmingly rejected five of six budget referendums yesterday which would have approved higher taxes as a means to patch budget woes in the Golden State. Had the measures passed, the state would still have faced a $15.4 billion deficit. With the failure of the measures, the state now grapples with $21.3 billion in red ink. Out of control spending and high taxes driving business out of state are at the core of California’s budget problems. Now voters in a tax revolt have overwhelmingly rejected more of the same from California lawmakers, choosing instead a path that could force...

WASHINGTON – California's cash crunch appears ready to land on the steps of the U.S. Capitol. In coming weeks, Congress is expected to debate whether to take the unprecedented step of guaranteeing the state's emergency borrowing on a short-term basis. "California faces a tremendous budget deficit and cash flow crisis, which requires immediate attention," said Democratic Rep. Doris Matsui of Sacramento. "There is no panacea for addressing California's budget issues at the federal level. However, it's time for the federal government to step in and temporarily guarantee bonds until the economy improves." Matsui is working on a bill with Democratic...

California could face a staggering shortage of cash unless voters and legislators both address the issue before the start of the new fiscal year July 1, the Legislative Analyst's Office said today. In a report called "California's Cash Flow Crisis," the nonpartisan and independent analyst said state government could be faced with having to borrow a record $20 billion at the start of the fiscal year in order to pay its day-to-day bills. The report said failure of budget-balancing measures before voters at the May 19 special election "would increase the state's cash flow pressures substantially - potentially increasing the...

The 'Plan B' scenarios if the special election measures are defeated continue to trickle out of the administration of Governor Arnold Schwarzenegger. This afternoon, a new one: the governor is prepared to propose a $2 billion suspension of the 2004 constitutional initiative protecting city and county revenues. Talk of suspending 2004's Proposition 1A comes on the heels of a meeting yesterday where Schwarzenegger aides told the firefighting community that voters rejecting the measures on the ballot in two weeks time would result in as many as 1,700 firefighting positions. One local government official on this afternoon's call said the plan...

California has joined the lengthening queue of supplicants seeking help from Uncle Sam. State Treasurer Bill Lockyer is lobbying some in Congress to secure a federal backstop or guarantee on $12 billion to $16 billion of short-term revenue anticipation notes, or RANs, that the state may need to sell as early as July. Lockyer thinks it may not be possible to sell this debt without federal help, and is seeking to have the Troubled Assets Relief Program, or TARP, expanded to allow banks to sell municipal debt to the federal government, according to a state treasury spokesman. Barring that, he...

SAN FRANCISCO (MarketWatch) -- California's "liquidity problems" may force the state to seek federal backstops for sales of its short-term notes this summer, even though it received heavy demand from retail buyers in a recent bond sale, its state treasurer said Tuesday. California Treasurer Bill Lockyer said in an interview that the state is talking with Treasury Department staff, including Secretary Timothy Geithner, about getting federally issued letters of credit to back upcoming issues of short-term securities known as revenue anticipation notes. California Treasurer Bill Lockyer says the state will offer a "nice yield" on its upcoming bond sale, expected...

State Treasurer Bill Lockyer announced Tuesday that he stopped taking orders for the state's general obligation bond sale Tuesday after investors purchased $6.54 billion -- $2.54 billion more than the original $4 billion target. The additional money should go toward construction projects around the state that slowed or stopped after officials froze California's Pooled Money Investment Account in December. A board that oversees the account last week authorized $500 million in payments toward construction projects contingent on Lockyer selling at least $4 billion in bonds this week. The state benefited from heavy demand from individual retail investors, who purchased nearly...

Fitch Ratings downgraded California's general obligation bond rating Thursday due to concerns about the state's economy and ongoing budget problems, likely raising costs for taxpayers and dampening demand for $4 billion in bonds the state intends to sell next week. California's bond rating now ranks lowest among the 50 states, according to Fitch. The announcement came days before State Treasurer Bill Lockyer plans a bond sale starting next Wednesday to replenish the state's Pooled Money Investment Account and enable the state to begin paying out $500 million to projects that desperately need public funding to continue. Lockyer spokesman Tom Dresslar...

It's kind of hard to be surprised by bad economic and budget news in California these days. After all, there's virtual unanimty that we're in deep you-know-what. And yet, today's full analysis by the Legislature's nonpartisan budget watchers is still shocking... probably for its opinion that the problems stretch across almost every single aspect of state revenues and expenditures. The annual fiscal outlook, the first under newly minted Legislative Analyst Mac Taylor, adds some details to the gloomy projections the LAO released just nine days ago. That projection focused on a $28 billion gap by July 2010. Ready for some...

With credit markets in New York in crisis last week, California Gov. Arnold Schwarzenegger sent an extraordinary letter to Treasury Secretary Henry Paulson asking for $7 billion. Although the governor has since withdrawn that request, it testifies to the dire state of his budget. Yet days before penning his note, the governor told an audience at the Commonwealth Club of California not to worry about the state's budget crunch and to approve $9.95 billion in new debt on the November ballot to build a bullet train to connect Los Angeles to San Francisco: "Just because we have a problem with...

<p>The state has been on a spending spree for decades. Our last governor was recalled in large part because we felt something drastic had to be done to bring our fiscal house in order. Desperate for change, we went to Hollywood for our casting call and brought in the Terminator.</p>

The Golden State had a recall almost five years ago. California had a huge budget deficit at the time and soon-to-be-governor Arnold Schwarzenegger was promising to “cut up the credit card.” By the March 2004 primary, Schwarzenegger, by then governor, was promoting the passage of ballot Propositions 57 and 58. Prop. 57 was a $15 billion deficit bond designed to refinance the short-term debt California incurred under Democratic Gov. Gray Davis (with a few billion left over for future needs, the last $3 billion of which was borrowed a few months ago). Prop. 58 was a supposed spending cap of...

Sacramento -- Gov. Arnold Schwarzenegger, who promised not to sign any bills until lawmakers reach a budget deal, reversed his position today and signed a bill for a statewide bullet train system that he strongly supports. The governor also wants to make exceptions for three other proposals that he has been promoting: budget reform; changing the state lottery to allow California to borrow against future ticket sales; and a bond proposal for water infrastructure. The high-speed rail legislation will replace a $10 billion bond measure on the November ballot with a revised version of the proposal that makes the bullet...

Sacramento, CA (AP) -- Backing off his pledge to sign no bills before lawmakers adopt a state budget, Gov. Arnold Schwarzenegger on Tuesday approved legislation designed to strengthen wording of the high-speed rail bond measure on the Nov. 4 ballot.

The wildfires that have burned more than 1 million acres are the most visible symptom of another long, hot, dry summer in California. Less visible, though no less devastating, are the effects that the prolonged drought has on the state's water supply and environment. Although no one disagrees on the urgent need to fight the fires, there has long been sharp disagreement about how to address California's chronic water shortage. The time has come to break the stalemate. So, in the spirit of bipartisan cooperation, earlier this month we offered a compromise water bond package for the Legislature's consideration. We...

California: What has changed since Golden State voters ousted Gray Davis and cast their lot with Arnold Schwarzenegger's star power? Not much — except for $41 billion in new spending.What's big, blue and red all over? The great, Democrat-dominated and profligate state government of California. At a point when most state lawmakers and chief executives have put their budgets to bed, neatly balanced, and taken off for some R&R, the Legislature and governor of California are still wrangling over a budget that is roughly $15 billion out of balance. This is nothing new. We've been hearing about these budget gaps,...

SACRAMENTO – With scattered rationing punishing cities and farms statewide, Gov. Arnold Schwarzenegger and U.S. Sen. Dianne Feinstein Thursday jointly unveiled a $9.3 billion water bond proposal, convinced that fears over prolonged shortages and environmental collapse in the vital Sacramento delta will be enough to overcome resistance to building dams and a north-to-south delivery canal. Schwarzenegger, a Republican, and Feinstein, a Democrat, plan to aggressively push lawmakers to approve taking the bond measure to voters in November. The plan still faces tough odds. The ballot is already crowded with controversial initiatives addressing same-sex marriage, abortions for minors and caged farm...

SACRAMENTO, Calif. -- Gov. Arnold Schwarzenegger has placed his support behind a costly high-speed rail system in California. Schwarzenegger told NBC11 he wants California to lead the way in transporting commuters across the state at near-record speeds while reducing global warming at the same time. Critics have said the state's proposed high-speed rail system is too costly and too good to be true, NBC11's Mike Luery reported. On the very spot where the Transcontinental Railroad was established nearly 140 years ago, Schwarzenegger told Luery that a less-than-three-hour trip from San Francisco to Los Angeles represents the type of progress that...

SACRAMENTO — Gov. Arnold Schwarzenegger on Wednesday will propose borrowing against future state lottery revenue to help close a $15.2 billion budget deficit in the next fiscal year. The governor will propose raising $15 billion in the next three years by selling bonds based on anticipated lottery revenue. He will use about $5.1 billion of that for the 2008-09 fiscal year to help erase the deficit, administration officials said Tuesday. The other $10 billion would be left in a reserve fund the governor wants to create as part of a budget-reform proposal. It would be intended to ease the effect...

SACRAMENTO (AP) - Gov. Arnold Schwarzenegger will propose borrowing against future state lottery revenue to help close a $15.2 billion budget deficit in the next fiscal year. Administration officials told The Associated Press that the governor on Wednesday will propose raising $15 billion over the next three years by selling bonds based on anticipated lottery revenues and using about $5.1 billion in the 2008-08 fiscal year to help erase the deficit. The other $10 billion would be left in a rainy day fund the governor wants to create as part of a budget reform proposal to ease the effect of...

Bond measure to improve children's hospitals on ballot A $980 million bond measure aimed at modernizing and expanding children's hospitals in California has qualified for the November ballot.

Gov. Arnold Schwarzenegger has jetted up and down California in recent weeks trumpeting his own stimulus plan for the state's ailing economy. He has promised to create at least 12,500 new jobs by releasing nearly $750 million from public works bonds voters approved in 2006 for transportation, housing and flood-control projects. "People need jobs," Schwarzenegger said at a news conference last month announcing one of the largest chunks of new spending, nearly $400 million for public transit projects. "We are going to create those jobs and pump this money as quickly as possible back into the economy." An Associated Press...

Once upon a time -- a few decades ago -- California was virtually debt-free, at least in terms of state general obligation bonds. State public works projects, the old-fashioned name for what we now call infrastructure, were largely financed with user fees, such as gas taxes and water charges, or special funds such as royalties on oil production. Schools and other local facilities, meanwhile, were built with fee- or property tax-backed bonds. That began to change in 1978 when voters passed Proposition 13, which severely limited local property taxes, shifted much of the fiscal burden onto state government, and made...

State Treasurer Bill Lockyer on Tuesday proposed a $5 billion bond measure to combat global warming by getting California's largest building owner - the state government - to improve its energy efficiency. Lockyer said he wants the Legislature and Gov. Arnold Schwarzenegger to sign off on a November 2008 ballot measure to retrofit the state's massive building inventory with solar panels and other clean energy technologies. In a meeting with The Bee Capitol Bureau, Lockyer said the state needs to move "as rapidly as possible" to "green our buildings" if it is serious about its commitment to cut California's greenhouse...

Gov. Arnold Schwarzenegger's administration on Tuesday lost a long-running court battle over its plan to sell bonds to cover the state's public employee pension costs. The ruling by the 3rd District Court of Appeal could complicate negotiations over the state's already overdue budget. Republican lawmakers are holding up the $104 billion spending plan in part because they believe it will leave California with an unmanageably large budget deficit next year. Tuesday's ruling may only add to that concern, depriving the state of more than $500 million to help close the estimated $5 billion-plus deficit in the 2008-09 budget year. Schwarzenegger...

Decades of political neglect, coupled with high rates of population growth, left California with an immense backlog of unmet needs for public works -- something north of $100 billion by the most conservative estimates -- and Arnold Schwarzenegger made "infrastructure" a major goal when he was elected governor. It didn't happen precisely as Schwarzenegger intended, but last year he, the Legislature and, ultimately, voters agreed to issue more than $37 billion in general obligation bonds to finance improvements in highways, river levees, low-income housing, colleges and schools, and another $5 billion in bonds for water and parks projects were placed...

NORTH COUNTY ---- Offering a first glimpse at how state transportation bond money might be spent, the California Transportation Commission's staff on Friday recommended that the powerful panel award $304 million for road projects in San Diego County and $38 million for a project in Southwest Riverside County. The recommended San Diego County projects include the proposed retrofit of the Interstate 15 express lanes in the Miramar area to match the expansion under way to the north, as well as car-pool lane extensions on Interstates 5 and 805. The Southwest Riverside County project is the planned widening of Interstate 215...

Gov. Arnold Schwarzenegger on Tuesday proposed billions in borrowing for infrastructure needs, saying California isn't done rebuilding the state. In a more than 20-minute State of the State address that compared California to Athens and Sparta, the governor urged bipartisan support for his ideas, which include changes in state prisons and a massive health care expansion. "We are a big state and we have big needs. And we have made a big down payment. But the job is not finished," he told state legislators. Here are the highlights of his plans for 2007: More bonds: $43.3 billion in additional borrowing...

It is difficult not to be seduced by the vision for California outlined by Gov. Arnold Schwarzenegger in yesterday's State of the State address. If taxpayers just borrow more money, he said, the state could fix its crumbling roads, boost its dwindling water supply, jail every criminal, build more schools and lead the world in just about every important industry. And, for good measure, let's reform corrupt gerrymandering and mandate health insurance for every resident. Whew. California has neglected, postponed and gridlocked its way into a host of major problems. Clearly, this is a governor with great imagination and considerable...

Even as California voters approved a record bond package last year, critics questioned whether it was just too big and would come back to haunt the state's finances. Whether the $42.7 billion in borrowing for roads, schools, levees, parks and affordable housing would thrust California too far in debt was one of the leading arguments against the bonds. Now double it. Gov. Arnold Schwarzenegger on Tuesday proposed yet another massive borrowing plan, this one $43.3 billion for prisons, courts, schools, colleges and water storage. Can California afford a combined $86 billion in bond debt, especially when it continues to grapple...

SACRAMENTO – Gov. Arnold Schwarzenegger on Tuesday proposed another huge round of borrowing to build prisons, schools and dams in a state of the state speech that also called for cleaner fuels to help curb global warming. The borrowing proposals, which add up to $43.3 billion, are similar to ideas that were cut out of the enormous borrowing plan the governor put forth last year. The Legislature changed it and cut it in half, and voters eventually approved $42.7 billion in bonds in November. Addressing a joint session of the Legislature, Schwarzenegger said he was bringing the ideas back because,...

The 1A and 1B bonds were hardly the only transportation issues that California voters saw this Election Day. There were scores of measures on county and local ballots that had an impact on transportation funds--and many of the areas that passed them may have an easier time getting a share of the state bond money. Topping this list were 10 counties that had sales-tax measures for transportation. Counties with such taxes often use them to apply for state and federal matching funds. Supporters of these measures say they pay off at about a two-to-one margin. The next several years will...

Early this spring, after Gov. Arnold Schwarzenegger had unveiled his proposal for a $68 billion state spending spree on roads, schools and prisons, Assembly Speaker Fabian Núñez visited Schwarzenegger in the governor's Capitol office with a counter-proposal. The list of projects was far different than what Schwarzenegger had proposed -- Democrats had taken out prison projects, increased spending on community colleges and added funding for public transportation -- and it carried a much smaller price tag. Schwarzenegger looked over the list for a few minutes and then set it down. I can live with this, he told Núñez. But can...

Standing on a wind-swept hill overlooking the ocean in San Pedro, Gov. Arnold Schwarzenegger stumped Wednesday on behalf of a slate of statewide ballot propositions aimed at cleaning up the coastline, protecting California's supply of drinking water and rebuilding levees and highways to serve a growing population. "We still have a long way to go so that further generations can enjoy all the incredible landscape we have here in our beautiful state," Schwarzenegger told members of the media and others who gathered for the outdoor news conference. The governor, speaking near the Korean Friendship Bell at Angels Gate Park, was...

A lot of comments have been directed at this country’s “greatest generation,” those who suffered the Great Depression, fought World War II, and then rebuilt this country from the ruins of those catastrophic events. I remember, as my generation attended college and entered the workforce, a lot of debate among my peers as to what we would do when we take over. We all thought we would “do it right,” make this country a better place to work, live and raise a family. I think I can say, having inherited a sizable legacy from the “Greatest Generation,” the baby boomers...

Millions of dollars from voter-approved bonds meant for parks, water and wildlife have been vulnerable to waste and misuse because of faulty controls at state agencies, according to a series of recent audits. While agencies say the problems account for only a small fraction of the $10 billion from four environmental bonds voters passed between 2000 and 2002, state Department of Finance auditors have flagged questionable spending on public relations, lobbying and even yoga classes, documents show.In addition, some groups that received grants from the bond funds failed to properly document expenses, claimed unallowable costs and went over budget because...

SACRAMENTO - The Legislature's Democratic leaders on Tuesday abandoned plans to campaign with Gov. Arnold Schwarzenegger for the massive package of public works bonds on the November ballot, a development that signals an abrupt end to the bipartisan dealmaking that has buoyed the governor's re-election bid. It also could jeopardize the record $37.3 billion borrowing plan. Polls released last week show voters supporting the four infrastructure bonds, but just barely. Tuesday's change of direction came after Schwarzenegger and the two top legislative leaders - Assembly Speaker Fabian Nunez, D-Los Angeles, and Senate President Pro Tem Don Perata, D-Oakland - had...

No one can seriously question one of the two major assumptions behind the $38 billion worth of construction and repair bonds proposed on the Nov. 7 state ballot. Traffic relief is a must in myriad parts of California. Port security isn't a tenth as tough as it needs to be. Who can argue against battered women's shelters and housing assistance for senior citizens, veterans and working families? Overcrowded public schools need relief. And the levees in the Sacramento-San Joaquin river delta area are a disaster waiting to happen. Taken together, all those realities make up one big assumption behind the...

Californians' wariness of new debt is just one problem facing backers SACRAMENTO – After years of criticism about failing to invest in infrastructure, lawmakers now face questions about whether they are trying to do too much. The Legislature and Gov. Arnold Schwarzenegger placed a record $37.3 billion package of public-works bonds on the Nov. 7 ballot for roads, schools, housing and flood control. BIG BONDS The governor and legislative leaders have placed a record bond package on the Nov. 7 ballot: Proposition 1B – $19.9 billion for transportation Proposition 1C – $2.85 billion for housing Proposition 1D – $10.4 billion...

Up and down the November ballot, Californians face choices about vast sums of money: how much to spend, how much to borrow, how much to generate by raising taxes. Together, the proposals would open a $46-billion gusher of spending on highways, schools, levees, hospitals, housing, parkland and more. They would add $84 billion in debt and interest to state budgets over the next 30 years. Taxes, mainly on oil and tobacco, would rise by more than $3 billion a year. The torrent of money on the ballot gives voters a chance to set California's fiscal course for decades: They could...

Can california go back to the future? At a time when Americans distrust their leaders and doubt government's ability to deliver, California voters are being asked to approve massive bond issues, totaling $42.7 billion, to rebuild schools, roads and other parts of the state's crumbling infrastructure. The package of five bond issues on the November ballot, four of them the product of an elaborate compromise between Republican Gov. Arnold Schwarzenegger and the Democratic-controlled Legislature, overshadows everything else on the ballot. In terms of California's future, they are arguably more significant than the governor's race, in which Schwarzenegger has maintained a...

The California Legislature has been on a one month hiatus after six months of session. I have often compared the legislative process to a roller coaster ride, and following that analogy, the first six months of session are sort of like the part of the roller coaster where the ride takes the riders higher and higher with the chain underneath. Everyone on the ride knows that the higher the ride goes, the wilder the ride will be when the car finally goes into free fall. This year the roller coaster ride had a couple of interesting dips, the largest being...

Angelides touts bond package Treasurer agrees with governor that voters should approve $37 billion OAKLAND — They were not on stage together, but they came as close as these electoral rivals probably ever will. State Treasurer Phil Angelides set aside his bid to unseat Gov. Arnold Schwarzenegger for a few moments to agree with his Republican opponent that the state's voters should pass the $37 billion infrastructure bond package. Even the few slight jabs he did throw in Schwarzenegger's general direction failed to incite a response from the Join Arnold campaign. "This bond package will not be an issue in...

Here is the great paradox of the budget before us: despite a 23 percent increase in revenues in the last three years, we’re running the biggest deficit in California’s history. Let’s review the numbers. Income: $94.4 billion Spending: $101.3 billion Deficit: $6.9 billion We’ve enjoyed astounding 23 percent revenue growth these past three years – thanks in large part to the Governor’s determination to roll back the illegal tripling of the car tax, to hold the line on new taxes and to relieve some of the burdens of our Workers Compensation system. And the economy blossomed. We’ve taken in an...