Daily Archives: February 27, 2006

Bay Area

Gov. Muscles and Rebuilding Calif…who’s Issue?

The funniest part to me of Gov. Muscles attempt to get back in the public favor is his adopting of the rebuilding of the infrastructure California using the levee system as his first focus.

Why levee’s? New Orleans. It is valid. You bet. Our So Cal water system partly depends on them as does the entire Delta system.

But whose issue should it have been? Democrats!

Why wasn’t it? Because of the same heat Gov. Muscles is now taking from his own party. $$ Cost. Yet the reality is that our great state is falling apart in so many ways we can’t even count them as casual observers.

So Gov. Muscles makes several strong apprearances advocating that which cannot be denied, infrastructure rebuilding, as perhaps…maybe…scores major points.

The Democrats in Sacramento were afraid to do the same thing for fear of be slaughtered by the opposistion as big spenders. Now Muscles may have the political ‘muscle’ (no pun intended) to pull it off.

It took the rabid anti-communist Nixon to open dialogue with Communist China. Will it take a Republican Governor…hopefully soon to be replaced….to start the process of rebuilding California?

Arnold Schwarzenegger

The Six Percent Solution: Schwarzenegger’s Debt Cap

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I’ve been avoiding writing about the Schwarzenegger vs. Perata fight over the big bond package.  At the moment, I just don’t feel sufficiently informed about the details, and I reckon things will heat up in March, after the June 6 ballot deadline.  But one item in particular kept sticking out in most of the articles about Schwarzenegger’s bond proposal:

[Democrats] Murray, Laird and Chu also criticized Schwarzenegger’s call for a constitutional amendment that would limit annual bond payments to 6 percent of the state’s main budget account, the general fund.

Imposing a cap, administration officials say, would keep California from going too deeply into the red.

“We wanted to have some sort of limit on debt services, although I admit 6 percent is not a magic number,” [State Finance Director Mike] Genest told the [state legislature conference] committee.

If six percent isn’t a magic number, I thought, then why pick that number in particular?  Surely the number wasn’t just pulled out of the air.  I mean, it’s a Constitutional Amendment, after all.  Daniel Weintraub (of all people) rides to the rescue:

Gov. Schwarzenegger’s numbers crunchers have been circulating some figures to legislative leaders and others that compare the debt service cost of his $68 billion infrastructure borrowing plan to the outline floated by Assembly Speaker Fabian Nunez for a $30 billion package.

According to the figures from the Department of Finance, if the state authorizes no more borrowing, the debt service on general obligation and revenue bonds will peak at about 5 percent of general fund revenues in 2010, then decline over time to 1.89 percent 20 years from now. With the governor’s plan to sell $68 billion in bonds, that debt service would eventually reach about 6 percent of the general fund, compared to about 4.73 percent today.

Well, look at that.  Six percent is a magic number.  It’s the number at which nobody after Governor Schwarzenegger can ever borrow money until Schwarzenegger’s debt is paid down.  It’s a low-rent starve-the-beast Norquist-style strategy for the state government.  (Weintraub conveniently forgot to mention this astonishing coincidence in his entry on the topic, though he does manage to find time to craft a paragraph to snipe at the Democrats in the state legislature — priorities are important.)