California Should Sell Its Own Bonds

I am, generally speaking, opposed to the use of bonds for California finances. I believe that it is wiser to pay for all projects out of general funds, rather than increase the total cost by paying interest on borrowed money. I believe bonds can lead to waste; people, including politicians and bureaucrats, are not as careful with borrowed money. Another cost of bonds that is seldom considered is that the interest paid on them is exempt from taxation, which lowers the state's revenues. This creates hidden costs, with the hidden benefits going mainly to the wealthiest citizens of the state.

Even when projects have a high value to the citizens of California, there can be too many of them, borrowing too much. I believe we are long past that point, and should have a ten year moratorium on all new statewide bonds. Localities and school districts could issue bonds at their discretion.

If we do issue bonds, we should create an in-house California brokerage office to sell the bonds and to create an aftermarket in the bonds. There is no reason why professionals from corporate brokerage houses can't be hired to do this. The cost to the state of issuing bonds would drop, and the corrupt practices that have evolved around bond issues could be brought under control.

Some people think private enterprises always do a better job than government bureaus at any given task. These people apparently don't have much work experience in private enterprise. You can run either badly, and you can run either well. If both are run well, I believe the citizens of this state would get quite an advantage from doing bond sales in house.

In general I am for a smaller government of California. But in some cases a few government workers can do quality, necessary work for the taxpayers far cheaper than is done by private companies.

The government of California needs to shrink, but it needs to shrink to fit, not shrink to being useless.