Governor proposes more infrastructure investments

By CMTA Staff

Capitol Update, Jan. 11, 2007 Share this on FacebookTweet thisEmail this to a friend

Governor Arnold Schwarzenegger delivered his fourth State of the State address Tuesday, calling in part for another major expansion in public works spending.  Telling lawmakers that bonds passed in November 2006 are a "good down payment," he wants an additional $29.4 billion in bonds for dams, schools and courthouses to be approved by the voters in the 2008 and 2010 elections.  He will also ask lawmakers for $13.9 billion in revenue bonds for prisons, water storage and smaller expenses such as a new DNA laboratory.

The new construction would be to prepare for a projected 30% surge in population over the next twenty years. Schwarzenegger urged lawmakers to put California's broad interests first. A bipartisan effort will be necessary. In order to send his borrowing plan to the ballot he will need a two-thirds vote of the Legislature.  Such a vote can be achieved only with Democrat and Republican consent.

In addition, there is a limit to the state’s ability to issue bonds of any amount. Bond companies suggest states should avoid borrowing when yearly carrying costs exceeds 6% of their budgets.  However, by 2009, 8.4% of California’s budget will go exclusively to paying off debt — much of it the result of a multibillion-dollar bond sale that Schwarzenegger pushed in 2004 as a means to balance the budget. It remains to be seen how legislators will respond to his proposal for significant new borrowing.

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