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Wanted: A plan for the next generation, not the next election

Our levees need repairing. Our hospitals need retrofitting. Our schools need
modernizing and rebuilding. And between 2000 and 2020, our state is expected
to add 10 million people, equivalent to moving the entire population of
Michigan to California. All of these people will need water, public transit,
roads, and housing.

Clearly, the governor and legislators proposing a massive public works plan
are on to something important: the state needs long-term investment in its
infrastructure if it’s going to meet the needs of a growing California.

But California’s leaders need to exercise caution and care, or this public
works plan will become a bond boondoggle. Lawmakers and the governor should
start small and manageable, so California can still afford to pay for
schools and teachers, and retain financial flexibility to meet unforeseen
challenges. They need a thoughtful plan based on public input and an
assessment of California’s needs. And they need to do all they can to avoid
leaving an already debt-ridden state drowning further in red ink. That means
having the courage to increase taxes and fees to fund a public works
proposal, even in an election year.

Current law requires the governor to annually submit a five-year plan to the
Legislature, outlining California’s infrastructure needs and funding
sources. When the California Business Roundtable sponsored the bill
requiring this plan in 1999, they envisioned it as a way to “establish a
clear set of priorities” that would “serve as a budget blueprint for
financing those priorities over the next decade.” If the governor is so
concerned about California’s infrastructure, why hasn’t he submitted this
legally required plan since he has been in office? Without a careful
assessment and public input, any public works plan threatens to become an
ineffective political patchwork that won’t meet the state’s most pressing
needs.

To help pay for his public works project, the governor is proposing $68
billion in new general obligation bonds. Bonds are loans, and like loans,
they must be repaid with interest. Every dollar the state borrows results in
two dollars in costs–one dollar to repay what was borrowed, and one dollar
for interest.

Now, consider the debt that already burdens California: The governor
recently proposed a budget that only deepens California’s deficits over
time. California’s debt service levels, the amount it pays on already issued
bonds, are already at record amounts. An additional $68 billion of general
obligation bonds would add $4.4 billion per year in debt service, an amount
that exceeds annual state spending on the community college system. Even the
smaller $20 billion-to-$30 billion bond package proposed by Assembly Speaker
Fabian Nu

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