A firefighter monitors the Post Fire near Gorman, California, US, on Sunday, June 16, 2024. Photographer: Kyle Grillot/Bloomberg
LOS ANGELES: Voters in California this November will get a chance to decide if the state should borrow another US$20bil from Wall Street.
Lawmakers this week approved placing two bond measures on the Nov 5 ballot, one asking for US$10bil for school construction and another US$10bil to finance climate change infrastructure.
They will join eight other ballot measures on topics such as same sex marriage, rent control and crime.
The bond measures come as voters have expressed concern about adding to the amount of debt the state already owes and after the legislature and governor Gavin Newsom had to slash spending, suspend some business tax breaks and withdraw cash from reserves to fill a nearly US$50bil deficit for the fiscal year that began on July 1.
California, the most populous US state, already has about US$98bil of bond debt outstanding and more than US$32bil authorised but not yet issued, according to Moody’s Corp.
That “US$20bil is a big number,” said Matthew Butler, a vice president and senior credit officer at Moody’s. “It would be an increase in debt. It would be a material increase in liabilities.”
Proposition two would provide US$10bil for modernisation, repair and construction of school facilities in K-12 schools and community colleges.
If voters approve the bond, US$8.5bil would go to public elementary and high schools and the remaining US$1.5bil would support the state’s community colleges.
The US$10bil climate bond – proposition four – would invest in safe drinking water and help communities avoid and recover from wildfires, floods, droughts and extreme heat. It would be the single largest public investment for climate resilience in California’s history.
Senator Ben Allen, a Democrat whose district includes the wealthy enclaves of Malibu and Beverly Hills, said that borrowing billions of dollars now for climate resiliency programmes is crucial.
“This moment calls for upfront investment,” he said. “It will save money and heartache in the future.”
The bond measures were signed into law late Wednesday by Senate President Pro Tem Mike McGuire, a Democrat who is serving as acting governor while Newsom was in Washington to meet with President Joe Biden and other Democratic governors. — Bloomberg
