Another bond issue!! People who know me are aware that I oppose almost every bond issue that the State proposes. Why? Because the State of California is already $443 Billion in debt, including unfunded pension liabilities, of which $126 Billion is represented by previously issued bonds on which the State is paying interest and principal. Enough debt! It is becoming unsustainable. As more and more of the State Budget goes to paying principal and interest on outstanding bonds, it reduces the amount available for necessary State services.
So, why in the world would I, in 2016, support a bond issue? Here is why.
Our public schools are deteriorating at a rapid pace. Most of the schools in the State were built during the period from 1930 through 1950. Many schools present an actual danger to students. Others are in such bad condition that it is not conducive to a successful teaching environment. The money to rebuild new schools and repair deteriorating schools is not an expenditure that can be kicked down the road. Money for maintaining our schools is money that should have been allocated from the State budget on an annual basis to keep up the infrastructure. That would be the smart way to take care of not only our schools but also other infrastructure like roads, freeways, bridges, etc. But allocating money for infrastructure doesn’t buy a legislator votes. Legislators would much rather spend State money in giveaways which will cause the recipients of that money to vote for the legislator, or his political party.
As I said, we need to spend the money to repair schools and to build new ones. Where will the money come from? Some have suggested that it is the local school district’s problem, and they should raise the money locally to repair their schools. How do they raise the money locally? There are a few options. One is by assessment against real property, or by a parcel tax on real property. Another is by having housing developers fund school improvements. Both of those options have the net effect of increasing housing prices. Housing prices in the State of California are some of the highest in the nation. High housing prices mean that, by and large, employees can’t afford to buy housing to raise their families, so they will leave the state to find more affordable housing. Or it will mean that employers have to pay their employees more money so they can stay in California. Both of those solutions hurt small businesses in California. Some local communities have no real way to pay for school infrastructure, so their children will not get improved schools. Yes, some local cities can issue bonds to do the infrastructure, but the repayment also comes from tax assessments against homeowners in the community. Most local communities can’t afford to issue bonds. The schools in the worst physical condition are those in low-income areas. There is no possibility of those local communities raising the money to repair the schools.
The money has to be spent. It can no longer be deferred. So the only question is does the money come from local communities, or is it better to have it spent by the state through a bond issue that will be paid off over 35 years. I believe it is better for the State to issue the bonds.
You will almost never hear me say I think the State should issue bonds. I think this is the exception. The debt service on the bonds will be $500 Million per year. That is less than one-half of one percent (0.05%) of the annual State budget.
We need the schools repaired. It won’t happen without this bond issue. We should vote YES on Proposition 51.