In a column for the San Francisco Chronicle, Reason Vice President Adrian Moore writes:
California Gov. Arnold Schwarzenegger says he may go begging to the federal government for a $7 billion bailout so the state can pay its bills in the coming weeks. And yet the state still wants to borrow $16.8 billion through the various bond initiatives on the ballot, including Proposition 3.
Prop. 3 asks for $980 million to expand children's hospitals - undoubtedly a great cause. It's such a wonderful cause that California taxpayers borrowed three-quarters of a billion dollars for it just four years ago.
In 2004, voters passed Proposition 61, authorizing $750 million in bonds to help children's hospitals. As of June 1, 2008, just over $400 million of Proposition 61's funds had actually been awarded to eligible hospitals. That leaves nearly $350 million unspent. Why?
Including interest payments, Prop. 3 will cost taxpayers $2 billion. The state budget deficit is $15 billion. Schwarzenegger may borrow another $7 billion from the feds.
And thanks to bond initiatives like this, California has been on a wild borrowing spree for years.
The state's authorized general obligation bond debt has nearly tripled over the last six years, from $42 billion in 2001-02 to a massive $120 billion in 2007-08.
Borrowing is way up because state lawmakers don't want to make difficult budget decisions.
When times are tough, families cut costs. We stop eating out, carpool, or cancel cable TV service to save money. Politicians just ask for higher credit limits.
Legislators could free up some funds for escalating hospital construction costs and the need for advanced medical technologies, or just make children's hospitals a higher priority in the annual budget.
Instead they want to put this on the credit card.
Eight private and five University of California children's hospitals stand to reap the rewards of Prop. 3. The Chronicle reports the private hospitals are spending about $900,000 each, $7.2 million total, to pass Prop. 3. Why not spend that $7.2 million caring for kids?
Because they think it's an investment. Each of the eight private hospitals would get about $98 million if Prop. 3 passes. In this economy, with $750 million in bonds recently approved for children's hospitals (and more than $300 million still unspent), taxpayers should say no.
It is time to cut up the credit cards and pay as we go.