Showing posts with label bonds. Show all posts
Showing posts with label bonds. Show all posts
Tuesday, May 6, 2014
No on California Proposition 41 Bond Act
California Proposition 41, which is up before the voters for the June 3, 2014 primary election, is the sort of thing every voter has seen before. Despite the state being overburdened by debt, special interests will devise a plan to borrow more while hiding their true agenda.
Veterans Housing and Homeless Prevention Bond Act of 2014 might help veterans including homeless veterans a bit, but its real victors would be the investment banks that sell the bonds; construction moguls; and land speculators.
If the people of California want to help the homeless or veterans, through the State of California, the money should come out of an annual budget, not further borrowing.
Where will this alleged housing be built? Will your city, town, or county benefit? Probably not. It will go where the most corrupt politicians and bureaucrats want it to go, where it most profits their patrons.
Where is all the housing from prior, similar bond acts? Not much of anywhere, because the interest on the bonds, and the bankers' commissions for selling the bonds, and the bureaucratic pay for planning housing, and rezoning, and fighting with the neighborhoods that usually don't want the housing anyway, will eat up most of the taxes paid.
Except that all the taxes paid, despite the astonishingly high tax rates in California, are already being eaten up, not just with ordinary state expenses, but with interest and principle payments on prior bonds. [We supported the recent tax hikes to get us out of a mess, not to reinvigorate the mess]
The tragic inability of the State of California to help people during the late Great Recession was a direct result of overspending before 2008, including endless bond measures, each titled to try to appeal to enough voters to get them passed. During the recession California cut aid to the homeless, including the newly homeless who had long histories of paying taxes.
California needs to pay down its debts and deal with the underfunding of the pensions for public workers. When that is done we can fund things like alleged housing for the poor out of budget surpluses, if necessary by stopping funding items that are less important to us.
While it can be found everywhere, homelessness should be addressed at a detailed level. Some homeless people just need a job; some need medical or psychiatric help; individuals have individual issues. These issues can best be addressed at the local level.
The only homeless persons these bonds might help are veterans. While the vast majority of homeless people in California are not veterans, they would be left out in the cold by this program.
Don't be fooled by the title. Vote NO on Proposition 41 in the June 3, 2014 primary.
See also: California Official Voter Guide Proposition 41
Tuesday, December 4, 2012
Democrats Now in Charge of California
The new California legislature has been sworn in, and the Democratic Party, or at least its elected politicians, are in charge. There are Democratic super majorities in both the State Assembly and the State Senate, and of course Governor Brown presumably stands ready to sign into law anything his fellow Democrats pass. To block any legislation Republicans would have to get at least a few Democrats to join with them.
The Democrats are limited by nothing but reality now. They owe their usual constituencies big time, but how can they pay up? The passage of Proposition 30, which increased income and sales taxes, insures that there should be enough income to balance the budget in 2013. The economy seems to be thawing, which could also boost revenue a bit. But there is little or no room to increase the budget for teachers, other civil servants, or public welfare. This is after four years of fairly drastic cutbacks. Teachers and police remain out of work, medical and dental help for the poor remains cut to the bone. As always, to raise more funds either the economy has to pick up steam or taxes need to be raised.
The Democrats could become real unpopular real quickly if they raised taxes again significantly. Don't expect it.
California is still dealing with two giant legacy issues: bonds and public employee pensions. Ever since the Great Depression, California had been able to depend on growth in population and per person income. In that situation it made sense to fund projects with bonds, since they would be relatively easy to pay off over time. The same with pensions: by promising great things in the future, current wage concessions could be minimized. The bonds carried what seemed to be low interest rates, but for years now we have been in a super-low interest rate environment, making the bonds relatively expensive and hard to pay off.
Pensions were premised on above-historical average returns in the stock market. Need we say more? To keep past promises the state government (and local governments too) would have to gut services and cut into the number of public employees even further.
California might still grow its way out of this mess, but the way forward is no longer clear. We are no longer the state that everyone wants to move to. We no longer have the world's best schools and universities. We have little buildable land that is not protected by environmentalists (and the environmentalists are right!). To the extent the population of California grows it needs to be urban growth, growth in the direction of high rise buildings, not further suburbanization. If the population stabilizes or grows slowly we need to raise wages for the average worker if we want the economy to expand. Yet raising wages can be difficult when globalized manufacturing and services is based on wages that are already lower than are paid here.
Then there is the issue of being part of the United States of America, which now has a debt so vast it is hard to imagine that it can remain solvent in the long run. California would probably be better off becoming its own nation, with its own ability to manage its economy, money, and debt system, but that won't happen. The U.S.A. has an out-of-control military and homeland security complex that is sinking our entire economy. Expect federal taxes to increase, leaving Californians less money to spend near home.
Our own tax mess hardly leaves the sense that California is governed any better than the nation. For many residents real estate taxes are low, since they are based on ancient property values. But many other residents are paying real estate taxes on expensive homes, and inflation is not easing their burden over time. We have compensated with a sales tax that gives many people pause when spending money. If you are lucky enough to have $100 to spend, you can only take $90 or so to the checkout counter, because taxes will eat up the difference. That makes a huge difference both to consumers and to the merchants that service them. Our California state income tax is quite progressive, but makes our state unattractive as a home for many upper income people.
We are short of water. We are well past the point where there is enough water to satisfy fish, farmers, and consumers. Despite having some of the best agricultural land on earth, we have so many residents that we are net food importers.
We used to have steel mills, foundries, and semiconductor fabrication plants. All gone, and unlikely to come back. Even Hollywood makes as many films as possible anywhere but California. We are strong on design, but also need to compete in the national and international markets, providing both services and real goods.
Herbert Hoover handed Franklin Delano Roosevelt a bigger mess in 1933. While economic in nature, it was a different sort of mess than confronts us today. Californians are watching the Democratic Party. Failure to deliver prosperity will almost certainly mean a cataclysm is in our future.
The Democrats are limited by nothing but reality now. They owe their usual constituencies big time, but how can they pay up? The passage of Proposition 30, which increased income and sales taxes, insures that there should be enough income to balance the budget in 2013. The economy seems to be thawing, which could also boost revenue a bit. But there is little or no room to increase the budget for teachers, other civil servants, or public welfare. This is after four years of fairly drastic cutbacks. Teachers and police remain out of work, medical and dental help for the poor remains cut to the bone. As always, to raise more funds either the economy has to pick up steam or taxes need to be raised.
The Democrats could become real unpopular real quickly if they raised taxes again significantly. Don't expect it.
California is still dealing with two giant legacy issues: bonds and public employee pensions. Ever since the Great Depression, California had been able to depend on growth in population and per person income. In that situation it made sense to fund projects with bonds, since they would be relatively easy to pay off over time. The same with pensions: by promising great things in the future, current wage concessions could be minimized. The bonds carried what seemed to be low interest rates, but for years now we have been in a super-low interest rate environment, making the bonds relatively expensive and hard to pay off.
Pensions were premised on above-historical average returns in the stock market. Need we say more? To keep past promises the state government (and local governments too) would have to gut services and cut into the number of public employees even further.
California might still grow its way out of this mess, but the way forward is no longer clear. We are no longer the state that everyone wants to move to. We no longer have the world's best schools and universities. We have little buildable land that is not protected by environmentalists (and the environmentalists are right!). To the extent the population of California grows it needs to be urban growth, growth in the direction of high rise buildings, not further suburbanization. If the population stabilizes or grows slowly we need to raise wages for the average worker if we want the economy to expand. Yet raising wages can be difficult when globalized manufacturing and services is based on wages that are already lower than are paid here.
Then there is the issue of being part of the United States of America, which now has a debt so vast it is hard to imagine that it can remain solvent in the long run. California would probably be better off becoming its own nation, with its own ability to manage its economy, money, and debt system, but that won't happen. The U.S.A. has an out-of-control military and homeland security complex that is sinking our entire economy. Expect federal taxes to increase, leaving Californians less money to spend near home.
Our own tax mess hardly leaves the sense that California is governed any better than the nation. For many residents real estate taxes are low, since they are based on ancient property values. But many other residents are paying real estate taxes on expensive homes, and inflation is not easing their burden over time. We have compensated with a sales tax that gives many people pause when spending money. If you are lucky enough to have $100 to spend, you can only take $90 or so to the checkout counter, because taxes will eat up the difference. That makes a huge difference both to consumers and to the merchants that service them. Our California state income tax is quite progressive, but makes our state unattractive as a home for many upper income people.
We are short of water. We are well past the point where there is enough water to satisfy fish, farmers, and consumers. Despite having some of the best agricultural land on earth, we have so many residents that we are net food importers.
We used to have steel mills, foundries, and semiconductor fabrication plants. All gone, and unlikely to come back. Even Hollywood makes as many films as possible anywhere but California. We are strong on design, but also need to compete in the national and international markets, providing both services and real goods.
Herbert Hoover handed Franklin Delano Roosevelt a bigger mess in 1933. While economic in nature, it was a different sort of mess than confronts us today. Californians are watching the Democratic Party. Failure to deliver prosperity will almost certainly mean a cataclysm is in our future.
Wednesday, January 13, 2010
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.
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.
Tuesday, October 6, 2009
California Green Party Proposals
The Green Party of California is considering adding a plank to its platform outlining proposed State of California reforms. While the Green Party is powerless except, in a few cases, at local levels, it does illustrate the kind of thinking people are doing about the mess called Government in this state. The failed budget process has been at the front of the news, and much of the Green proposal addresses budget issues.
The Green Party is proposing a "pay-as-we-go" system, meaning no more bond issues. Bonds are a way of borrowing money. Fees for placing them, and interest, greatly add to the cost of projects funded by the bonds. One reason there is so little money for necessities this year is that so much money is being used to make payments on bonds from the past. Bonds are often passed using the initiative/referendum process. Voters don't think about how an individual bond impacts the budget. They tend to vote for things they think are necessary or nice, like prisons, hospitals, and transportation projects. Bonds, if not abolished entirely, need to be part of a central budgeting process that does not over-estimate future taxpayer revenues.
A unicameral legislature of 360 members is proposed. I like the idea of a unicameral legislature with enough members to keep the number of consituents per member manageable. The Green Party proposal wants only 8 geographic regions. Within each region it proposes 45 members, half (23?) elected by by geographic district and half (22?) elected by proportional representation among political parties. This would pretty much assure that the Green Party would get some seats in the legislature. It sounds complicated, but it is a system similar to that used in most nations in Europe (and around the globe); voters get used to it quickly. It helps ensure that minority views get represented.
The Green Party would allow budgets to be passed by a 55% majority. In the short run this would let the tax-and-steal Democrats to run wild, but at least budgets could be balanced and passed in a timely manner.
A reserve fund would be established so that as the economy, and taxes collected, fluctuated, the state's annual budget could remain on an even keel. This has been proposed by many reformers.
The proposal also calls for "an extra 10% tax on state lottery winners." I find this to be a ridiculous way to raise small sums of money. The lottery already has an effective tax rate of over 50%, when you consider what the state gets in lottery receipts versus what it pays out to winners. Then the winners get to pay both state and federal income tax.
The Green Party wants to stop building prisons. I agree; we have a rate of incarceration that looks more like Stalin's gulag than like a healthy democracy. We may never be able to close our prisons, but we do need to use better methods to discourage crime. Young people need better guidance, and we need to make honest work more attractive than criminal methods of fund raising. More important, California needs to stop acting like every time someone has a little fun, a crime has been committed. Behavior should be treated as criminal only when someone is hurt.
The focus of law enforcement and the courts should be on career criminals and criminal organizations, including those operating under the mask of legal corporations.
More:
Green Party of California site
my Green Party pages at IIIPublishing.com
The Green Party is proposing a "pay-as-we-go" system, meaning no more bond issues. Bonds are a way of borrowing money. Fees for placing them, and interest, greatly add to the cost of projects funded by the bonds. One reason there is so little money for necessities this year is that so much money is being used to make payments on bonds from the past. Bonds are often passed using the initiative/referendum process. Voters don't think about how an individual bond impacts the budget. They tend to vote for things they think are necessary or nice, like prisons, hospitals, and transportation projects. Bonds, if not abolished entirely, need to be part of a central budgeting process that does not over-estimate future taxpayer revenues.
A unicameral legislature of 360 members is proposed. I like the idea of a unicameral legislature with enough members to keep the number of consituents per member manageable. The Green Party proposal wants only 8 geographic regions. Within each region it proposes 45 members, half (23?) elected by by geographic district and half (22?) elected by proportional representation among political parties. This would pretty much assure that the Green Party would get some seats in the legislature. It sounds complicated, but it is a system similar to that used in most nations in Europe (and around the globe); voters get used to it quickly. It helps ensure that minority views get represented.
The Green Party would allow budgets to be passed by a 55% majority. In the short run this would let the tax-and-steal Democrats to run wild, but at least budgets could be balanced and passed in a timely manner.
A reserve fund would be established so that as the economy, and taxes collected, fluctuated, the state's annual budget could remain on an even keel. This has been proposed by many reformers.
The proposal also calls for "an extra 10% tax on state lottery winners." I find this to be a ridiculous way to raise small sums of money. The lottery already has an effective tax rate of over 50%, when you consider what the state gets in lottery receipts versus what it pays out to winners. Then the winners get to pay both state and federal income tax.
The Green Party wants to stop building prisons. I agree; we have a rate of incarceration that looks more like Stalin's gulag than like a healthy democracy. We may never be able to close our prisons, but we do need to use better methods to discourage crime. Young people need better guidance, and we need to make honest work more attractive than criminal methods of fund raising. More important, California needs to stop acting like every time someone has a little fun, a crime has been committed. Behavior should be treated as criminal only when someone is hurt.
The focus of law enforcement and the courts should be on career criminals and criminal organizations, including those operating under the mask of legal corporations.
More:
Green Party of California site
my Green Party pages at IIIPublishing.com
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