There are very few absolutes in politics, but let’s be clear about this November’s election – a vote for any of the proposed bonds, Propositions 1B – 1E and Prop 84, is a vote for the same type of fiscal recklessness that led to the recall of Governor Gray Davis in 2003.
Think about it. Since 2003, tax revenues have exploded in California – up $20 billion annually. The Governor’s Workers’ Compensation reforms are an underappreciated reason for this increase and the economic activity associated with this increase. Unfortunately, the Legislature, Democrats and some Republicans, and the Governor, have spent the entire increased baseline in revenues and then some, and the State is still running structural deficits between $4 – $6 billion annually.
Almost none of this increased spending has been allocated to increased infrastructure spending, and instead gone to education and other issues, such as health care. So our roads, schools, levees and other long deferred infrastructure have not been funded – despite the obvious needs in each area.
So now, despite the massive and unprecedented increase in State tax revenues, and despite the massive and unprecedented increase in State spending, and despite lingering structural budget deficits in the billions annually, the State legislature and Governor want you to authorize them to borrow over $40 billion to fund highways, schools, low income housing, levees and water projects. With interest, the payments on these bonds will be $80 billion. How about this dirty little secret: $30 billion of previously authorized bonds haven’t even been issued yet!
This is a bad idea. We can’t pay our bills now without borrowing.
The payments on these new bonds, once issued, will be $2.8 billion annually. The payments on the previously authorized, but unissued bonds, will be $2.0 billion annually, for a total of $4.8 billion in new annual obligations. If we are running a deficit now, how are we going to make these payments? If there is a downturn in the economy, which is inevitable given the cyclical nature of all economic activity, our structural deficit will only get worse, and with the bond payments, we are in for a budget crisis of even greater proportions than the last great crisis that led to the recall of Gray Davis.
Tax increases will be the inevitable result of this fiscal recklessness – damaging the economy and making California uncompetitive in the regional and global economy. Instead, the Legislature needs to reverse course, allocating increased revenues to infrastructure spending and saying no to the spending lobbies once and for all. We cannot have EVERTHING under the sun be priority on the spending side. It just won’t work.
Do not reward the behavior of the Legislature and Governor by supporting these bonds. Demand a balanced budget with adequate reserves first! For more information regarding the bond measures, I recommend you check in with the Reason Foundation for their excellent analysis.