On more than just local government

Friday, January 06, 2006

Ariel Sharon

I have never been a great fan of his, but he seems to be the only man in Israel that could be trusted to give things to the Palestinians without the potential recriminations of being too liberal. Sort of like Nixon in China.

Who will follow him? If it is Netanyahu, many will die. If it is a liberal, the country may come asunder. Hobson's choice.

Pat Robertson

I have a feeling all the blood doesn't quite go to the brain of this wacko.

Turned out pretty much as expected

At this writing, the Governor is putting the finishing touches on his State of the State message. According to reports, he will include a call for a massive bond issue to “deal with California’s infrastructure problem.” The price tag could be as big as $50 billion. More likely, it will be in the mid-$20 billion range. In either case, it is way too much…and way too little at the same time.

How can that be? The infrastructure needs of California are defined very differently depending on the group questioned about it. To developers, truckers and the motor vehicle lobby, roads and freeways need to be fixed and expanded. To transit advocates and environmentalists, public transportation needs to be beefed up. To water agencies, levees and pipelines need updating. To housing advocates, fixing the shortage of moderately priced units should be the first priority.

It goes on and on. And, at some level, all of them are true. California’s needs are massive. But, a situation that has been ignored for decades, by Governors of both political parties, will not be fixed by putting the State so far into debt that its options for future financing would be jeopardized. That’s because Wall Street, which ultimately sets the price on all this borrowing through the determination of credit worthiness, will not allow California to go that deeply in debt, especially considering the fragility of its revenue sources, without paying prices that would be less of more prudent decisions are made.

Why fragile? During the past three to four years, revenues have been increasing because of three factors. The first is the growth in incomes. An improving economy creates more jobs which add to income tax revenues. The second is sales taxes. Consumer spending numbers have increased and the State is reaping some of the benefit, although more and more is going to online retail, for which state and local tax revenues are minimal or nonexistent.

The final piece of the puzzle is property taxes. With the spurt in home buying, the state has gotten an unanticipated bump in this area. Local governments have also benefited as their small portion of the property tax revenues, and the developer fees associated with new home building, have grown.

As we saw in the early years of this decade, this bubble can burst. In fact, the housing market is already showing signs of dramatic slowdowns, due to high prices and increasing interest rates. The floating of a huge bond puts the State at greater risk of having debt service become a far too large portion of the annual budget, making it more and more difficult to provide the services the people of California demand.

A catchall bond is the easy way out. Making the hard decisions about what should and should not be financed may be hard, but it is the right way to go. The Governor has lost a year of work in this area by believing that the voters would make it easy for him to control the process. The voters told him to stop asking them and for him and the Legislature to do their jobs.

It is time he actually listened to the people.

Tuesday, January 03, 2006

OK, I'm going to try once again

Writing a blog is not difficult. Writing it regularly is.

I'm going to try again to see if I can actually keep up with a schdule of blogging. What with a weekly column and a regular job, this is not easy. But, some weeks there are more stories than can fit in one column, so I'll give it another try.

What's the over/under on how many Congresspeople will find it necessary to "spend more time with their families" over the next few weeks? Should be an interesting survey of who has/had "juice" in Congress.