Free Republic

As California prepares to commit tens of billions of dollars to an ambitious high-speed rail line from San Francisco to Southern California, Congress' political will to provide the bulk of the funding is disappearing, leaving the possibility that the state could end up stuck with a crushing financial burden. State voters have agreed to issue more than $9 billion in bonds to build the system, but that's a fraction of the $43 billion projected tab for the initial phase. And those costs could swell to $65 billion or more, by some estimates. Should federal funds dry up after the scheduled...

California school districts are using construction bond money to cover day-to-day operations and in other ways that regulators say misuse taxpayer money and violate state and federal law. In recent weeks, the state attorney general's office and county treasurers have issued warning letters to school officials after seeing an uptick in unauthorized district bond deals that saddle communities with higher debt payments. Two audits at the Sweetwater Union High School District in Chula Vista, for example, found the district borrowed and repaid $40 million from its construction bond money in the 2009-10 school year and is looking to borrow $58...

Gov. Jerry Brown says California has a "wall of debt" that must be reduced – and is now using it as his chief rationale for a temporary boost in taxes. At the same time, however, he is proposing to borrow billions more by issuing some of the bonds that voters have authorized for public works projects. And therein lies a rub. Brown's "wall of debt" refers mostly to an estimated $35 billion in loans and deferred payments that former Gov. Arnold Schwarzenegger and the Legislature adopted to paper over the state budget's chronic deficits. However, Brown's revised budget also notes...

In the event of a major earthquake or flood and many levees failing simultaneously in California's Sacramento-San Joaquin River Delta, as many as 515,000 residents and 520,000 acres of land would be in immediate danger; the long term effects could be even more widespread, as nearly 28 million residents depend on the Delta for water and irrigation; California lawmakers have increasingly turned their attention to securing the Sacramento-San Joaquin River Delta's levees, but experts say that only little progress has been made After witnessing the destructive potential of broken levees during Hurricane Katrina, California lawmakers have increasingly turned their attention...

Local redevelopment agencies have pushed through nearly $690 million in bonds sales during the first two months of this year -- that's more than half of the $1.2 billion in debt those agencies took on in all of 2010, according to figures the state treasurer's office compiled. Furthermore, given the shaky market, local governments are borrowing money at high rates -- increasing the amount of property tax revenue that will go to lenders, said Tom Dresslar, a treasury department spokesman. "They're flooding the market with these bonds at a time when the market sucks from an issuer's perspective," Dresslar said....

Schools, taxes, state workers' pensions, prisons - all of these topics get plenty of airtime in Sacramento when our elected leaders are wrestling with the state budget. But there's one big line item that doesn't get much attention, even though it's eating California alive: the cost of our debt service. In the next budget, the state will spend $6.6 billion on debt repayment. According to Moody's Investors Service, California's debt has tripled over the past decade. We wouldn't have to talk about slashing children's medical insurance and older people's in-home care or closing state parks if we weren't paying off...

Just for grins, let's assume that Jerry Brown beats the long political odds and persuades the Legislature and voters to enact his tough-love plan to close the state budget gap. What's next for the septuagenarian retread? Walking on water? Yes, in a manner of speaking. If Brown can put the budget crisis behind him, at least for a few years, California's other long- festering political sore will almost certainly move to the top of his agenda. Predecessor Arnold Schwarzenegger supposedly settled California's water wars before leaving office. In fact, he didn't. He merely put in place a complex mechanism to...

Buried in Gov. Jerry Brown's new state budget proposal – one aimed at closing chronic operating deficits – is a decision to suspend sales of state bonds, at least for six months, this coming spring. It's an implicit, and long overdue, official recognition that California has built itself a mountain of debt over the last decade, much of it acquired to paper over its budget deficits, and needs a breather. Some of the debt is official – bonds issued by the state and local governments, with and without voter approval, to pay for public works, subsidize private development projects, refinance...

He has been, in many ways, a governor of firsts:• The first to take office as a result of a recall election.• The first to commute, on an almost daily basis and via private jet, between the Capitol and his Southern California mansion. • The first to have served in the Austrian army, the first to have won the Mr. Olympia body-building title seven times, and - as far as we know - the first California chief executive to have nude photos of himself widely available on the World Wide Web.But "first" does not necessarily mean "great," or even "good."And...

The US state of California on Wednesday said it would restructure upcoming bond issues as it tries to raise $14 billion in the middle of a sell-off in the municipal bond market. ................................................... The decision to shift more of the sale to a government-subsidized market for municipal bonds would lower the cost of the new debt. ..................................................... The state on Wednesday said it would cut the size of a sale of traditional tax-exempt bonds by $750 million to $1 billion, shifting the borrowing to a planned sale of taxable debt, which will price on Friday. Of the $2.75 billion of...

The plan to sell California state office buildings contained in this year's budget will cost taxpayers $1.4 billion over 35 years, the nonpartisan legislative analyst said Wednesday. The analysis released this week says the state will pay an effective interest rate of 10.2 percent to lease back the parcels, which include 24 separate buildings, from the new owner. That is about double what the state pays on existing bonds used to build its offices. "There are long-run costs and short-term benefits," said Mark Whitaker, who wrote the 12-page analysis for the Joint Legislative Budget Committee. "It's going to cost a...

California's now-resolved $19 billion budget shortfall got plenty of attention in recent months, but a state report released Wednesday highlights the state's other massive deficit - in the unemployment insurance fund, which will be $10.3 billion in the hole by year's end.The report by the nonpartisan Legislative Analyst's Office warns of dire consequences if California's leaders do not tackle the fund's insolvency: The federal government could impose steep taxes on California businesses beginning in 2012, and the state could lose $400 million in federal dollars annually.The deficit is the result of the state paying out more in unemployment benefits than...

Add a multibillion-dollar state bond sale and thousands of construction projects to the list of potential victims if the budget impasse drags on much longer. State Treasurer Bill Lockyer is concerned that the state could miss an opportunity to sell bonds this fall to finance public works projects if state lawmakers and Gov. Arnold Schwarzenegger don't enact a budget soon. "The treasurer said the first week of October is a critical week," said Lockyer spokesman Joe DeAnda. "Beyond that, it really puts a cramp on the amount of time that's left to put that deal together." The problem is, the...

In 2004, Gov. Arnold Schwarzenegger barnstormed around the state for Proposition 58, using an oversized credit card as a prop and vowing that it was time for the state to "tear up its credit card." Now Attorney General Jerry Brown has concluded that Assembly Democrats' plan to borrow billions to help ease the state's $19.1 billion deficit could be deemed illegal under that ballot measure if challenged in court. "We conclude that a court could reasonably determine that the proposed transaction violates Proposition 58," the attorney general's office said in a letter to Schwarzenegger's legal affairs secretary. Assembly Speaker John...

Gov. Arnold Schwarzenegger on Thursday defended $11.1 billion in new borrowing as a critical investment in the state's water future while at the same time insisting California must cut its way toward a balanced budget in the short term. In an interview with The Bee's editorial board, the Republican governor also took aim at the state's prison employees and advocated for a constitutional change allowing California to rely more on private workers. After reaching a deal last week with state lawmakers to bolster California's water infrastructure, Schwarzenegger is trying to build popular support for the plan, knowing voters will have...

Sacramento - -- The $11 billion water bond that California voters will be asked to approve next year contains nearly $2 billion in earmarks that lawmakers candidly acknowledge were included in the proposal to win the votes that were needed to pass the plan out of the Legislature. More News * Dems, GOP split on NY trials of alleged terrorists 11.15.09 * Pelosi exhibits leadership, protects colleagues 11.15.09 * Tower of films to recall Alcatraz takeover 11.15.09 * Three Questions For: Mary McCue / Guardian of public space 11.15.09 Hundreds of millions of dollars of those earmarks - which some...

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...