“I’ll gladly pay you Tuesday for a hamburger today.” That was the catchphrase of J. Wellington Wimpy, simply known as just “Wimpy” on the “Popeye” cartoon show. For good reason, the proprietor of the diner rejected Wimpy’s request because of his reputation for not paying on Tuesday.
The inability to repay one’s debts can come with severe consequences, as anyone who has borrowed money from a loan shark can attest. California, despite record revenue coming into the state treasury, has a real problem with debt. High on that list, of course, is the state’s multi-billion-dollar unfunded liabilities for its pension obligations. But we have a problem with bond debt as well.
State-issued bonds can be a legitimate method to finance public projects that have a long useful life. But key to bond financing is a clear and predictable plan to repay those bonds.
California is now on the verge of adopting a second massive boondoggle plagued with financing issues. We are all familiar with the notorious high-speed rail project that was sold to voters as a safe and economical alternative to air travel between Northern and Southern California. A third of the money was to come from the private sector, a third from the feds and the rest from the sale of Proposition 1A bonds. All three of those revenue sources have disappeared in a puff of smoke and, instead, the HSR project is kept on life support through “cap-and-trade” revenue that didn’t even exist when voters approved the original bond.
The second mega-project destined to adopt the boondoggle label is Gov. Jerry Brown’s “twin tunnels” project, intended to transport water from the Sacramento River to the pumping stations at the south end of the delta. Bear in mind that the project will not provide a new water source but would be built ostensibly for environmental reasons.
However, like the high-speed rail project, the financing for the twin tunnels is illusory. Virtually all the potential major wholesale customers of water from the twin tunnels are highly skeptical of its viability and balk at paying for it. The one exception is the Metropolitan Water District in the greater L.A. area, which is considering the adoption of a plan to finance a scaled-down version of the project — meaning one tunnel instead of two.
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This article was originally published by the Orange County Register
The state treasury needs to be audited. So much money in taxes has been collected and there is very little if anything to show for it. “Pie in the sky” projects that are all pork for special interests, money going to illegals to keep them coming in, state pension plans robbed, roads not repaired, levees not kept up, dams not cared for the list goes on. A one inch fish that would have died out on its own decades ago has more rights than the residents do, water is left to go out to the ocean instead of caught in reservoirs. Common sense seems to be a rare commodity and accountability nonexistent.
Oh those lucky DWP customers! Already saddled with high water and electric bills, let’s hang this one on their plate also!