Even in the best of times, the three major bond proposals on the
November ballot would merit a thumbs down. Propositions 1A, 3, and
10 would put taxpayers another $16 billion in debt to fund some
dubious projects.
Proposition 1A spends $10 billion as a down payment on a massive
bullet train project. Promoters, which includes the company
responsible for Boston’s infamous "Big Dig" disaster, claim the
project can be completed for about $50 billion. However, a just
released study by transportations experts, which includes a former
president of the High Speed Rail Association and a former member of
the Amtrak Reform Council, show that actual costs could easily
exceed $80 billion.
The study also shows that backers have radically exaggerated the
potential ridership and that the travel time between San Francisco
and Los Angeles would be much greater than advertised. Study authors
actually support sound high speed rail projects, but they reject the
Proposition 1A plan as a fantasy that could cost taxpayers
additional billions of dollars for a much diminished outcome. The
California High Speed Rail Proposal: A Due Diligence Report was
sponsored by the Howard Jarvis Taxpayers Foundation, the Reason
Foundation and Citizens Against Government waste and can be viewed
at www.hjta.org.
Promoters of Proposition 3 know the best way to gain support for a
spending measure is connect it to children. Since its purported
purpose is to expand childrens’ hospitals, its passage might seem a
certainty. However, the primary beneficiaries of this billion dollar
bond will be five private hospitals. Is anyone surprised that the
campaign that placed Proposition 3 on the ballot was paid for by
these private interests? After all, it is a great return on
investment — a few million dollars upfront to collect signatures in
return for hundreds of millions of taxpayers’ dollars later.
Proposition 10 is a clever scheme. It is designed to ride on the
hysteria over global warming by claiming to reduce emissions of
greenhouse gases. However, it is really a $5 billion subsidy to
those who buy vehicles that use alternative fuels, especially
natural gas. A company owned by billionaire T. Boon Pickens, a major
supplier of natural gas, paid to gather the signatures to put
Proposition 10 before voters. Without guaranteeing any net reduction
in emissions, Proposition 10 will help to make a very rich man even
richer.
Yes, in the best of times, these measures would leave taxpayers
holding their noses. However, at a time when the state and nation
are in the midst of fiscal crisis, the propositions move into a
category under the heading of "You’ve got to be kidding!"
California is already massively in debt — we approved another $42
billion in bonds just two years ago. These new bonds, would add
another $16 billion to a debt that must be repaid from our state
general fund, which has an ongoing structural deficit. Currently,
more than 5% of budget goes to retire bond debt, money that is then
unavailable for important state services like education, healthcare,
transportation and law enforcement.
But it gets even worse. California is suffering 7.7% unemployment
and is setting records for home foreclosures. The State Department
of Finance says that California has experienced a net out-migration
of citizens over the last decade as taxpayers and jobs are moving to
other states and even other countries. Our state is already regarded
as a bad credit risk and with the failure of some of our nation’s
largest financial institutions the cost of borrowing is going even
higher.
Usually, government bonds cost taxpayers double their face value
when interest over 30 years is added. However, with the high cost of
borrowing and our state’s poor credit rating, taxpayers could be on
the hook for 220% or 240% of bond face value, rates that might make
Tony Soprano look like a compassionate lender.
Even without going further into debt, State Treasurer Bill Lockyer
warned the state will be hard pressed to pay its bills. Our state’s
credit situation is so bad the governor has requested a $7 billion
bailout from the federal government.
Propositions 1A, 3, and 10 mean more debt, and California needs more
debt like a drowning man needs a brick.