Opinion: Prop 4 wastes half the money on interest, promises nothing to local counties

Certainly, the climate crisis is real and deserves a considered response. However, Proposition 4 is representative of the failed statewide financial planning characteristic of Newsom's administration, and wastes most of the money that should be made available for a valid priority, says MCC Vice Chair Gregg Dieguez in the excellent Coastside News.

As has become all too common in recent ballot measures, the ballot language and analysis presented is a combination of incomplete and deceptive (see for example, the recently removed Regional Measure 4). The text of the Prop. 4 ballot measure points to a $10 billion bond, with 40 years of $400 million payments, which would total $16 billion. The legislative analyst failed to note that total cost, AND failed to recognize that the interest rate implied by those annual payments would be only 2.57%. That interest rate is more than 1% LOWER than could be obtained in the market today, which rate is probably 4%.

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Note that California, because of excessive debt, is only AA rated, and that a 40-year bond is an unusually long maturity. Twenty-five states have a better bond rating than California. The longer the bond duration, the greater the proportion of payments wasted on interest. With a realistic interest rate, the full cost of those Prop. 4 bonds would be over $20 billion, plus issuance fees and administrative costs. This means over $10 billion, as much money as the bond provides, would be wasted on interest and fees.

Shockingly(?), the bond (Senate Bill No. 867) lacks project specifics - though it does segregate many funds by geographic area and state department. In spite of the fact that "San Mateo" appears NOWHERE in this bond, a number of San Mateo County agencies have endorsed Prop. 4. The ambiguity of recipients in this measure is likely intentional, to keep voters a-wishing and a-hoping money will come their way - but without any statutory guarantees.

Read the whole thing here.

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Related:

• State Sen. Brian Jones: Prop 4 misleads voters on environmental “infrastructure” and serves Wall Street better than the planet

• Will "bond fatigue" sink RM4 and the wave of new taxes on November statewide ballot?

• Tax-fatigue hits LA, too; new homelessness tax gets lukewarm reception

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