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Calif. bond debt eats up bigger chunk of General Fund

3:47 PM, Oct 1, 2012   |    comments
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SACRAMENTO, CA - California has been on a borrowing binge over the last decade ... from road projects, to high speed rail to stem cell research ... all financed courtesy of taxpayers at a premium through bonds.

For every dollar borrowed, it takes $2 to pay back with interest.

"Unfortunately, the debt is a good way for today's politicians to pay for things on the backs of tomorrow's taxpayers," said Jon Coupal with Howard Jarvis Taypayers Association.

A new report from the Treasurer's Office shows that just a decade ago, bond debt was just over 3.5 percent of the state's General Fund, costing every Californian about $800 a year to pay it off.

Next year, it's estimated to jump to nearly 9 percent, costing taxpayer three times more.

The big spike includes $42 billion in bond monies ... half of it to transportation projects, which voters approved in 2006 before the Great Recession hit.

The Treasurer's Office has been warning state leaders debt could reach more than 10 percent of the General Fund. Wall Street likes it generally around 5 percent.

"Every dollar you pay in principal and interest on bonds is $1 you can't spend on schools, public safety, environmental protection and social services ... the whole gamut of critical services," said Tom Dresslar, spokesman for the Treasurer's Office.

Gov. Brown actually slowed the bonding spending down when he took office. 

Bond supporters point out, though, California needs to invest in infrastructure to keep the economy vibrant.

"It's understandable that people would be concerned<' said Hilda Martinez with the California Alliance for Jobs. "What they need to remember is that not all debt is bad debt. There is some good debt that is necessary to keep our economy going and keep people employed."

But if you look at the off-the-books debt, California is in bigger trouble. The State Budget Crisis Task Force points out there's more liability that doesn't get counted.

That includes government retiree pension and health care costs and the billions more lawmakers raided from public schools and universities that'll have to be eventually paid back.

The Brown administration says it's fully aware of the "wall of debt". Internal budget borrowing is accounted for in the current state budget and newly-enacted pension reform will eventually save the state $55 billion over 30 years.

Nannette Miranda
ABC7

ABC7

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