Good case for responsible leadership.
Dan Walters: Borrowing cannot fill vast need
By Dan Walters - Bee Columnist
Published 12:00 am PDT Wednesday, June 20, 2007
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 on the ballot by initiative.
It sounds like a lot of money, but it's only a fraction of the need and excluded new reservoirs and other water projects sought by Schwarzenegger, along with new prisons to relieve severe inmate overcrowding. This year, Schwarzenegger and lawmakers agreed to fill the prison gap with more bonds.
Schwarzenegger says he wants to place tens of billions of dollars in additional bonds before voters next year, but even were he to muster the political support, it's highly questionable whether the state's deficit-ridden budget can afford to service the complete infrastructure package the governor envisions.
The governor's bean counters have developed a strategy for servicing more bonds, assuming that the state's economy remains vibrant and that the bonds floated by the state in 2004 to refinance its deficit can be paid off early, thereby making room in the budget for more borrowing.
Both of those assumptions, however, are shaky. As the state's own data and a new forecast from UCLA economists indicate, the state's once-soaring economy is slowing markedly, thanks to the meltdown in the housing sector, and state income tax revenues are also flattening, making deficits a near-certainty for the remainder of Schwarzenegger's governorship. The Legislature, meanwhile, has balked at the accelerated bond payoff, preferring to spend the money elsewhere on current needs.
