The passage of Proposition 1A will allow the state to sell bonds to fund a state-of-the-art high speed rail network that will send passengers from the top of the state to the bottom in hours. It will be quite the feat, considering this isn't Rhode Island.
But like most beautiful dreams, there's one more problem to add to the list: Regular state bonds aren't selling. The Sacramento Bee reports that the state's budget crisis is stalling bond sales--a terrible predicament for any government, especially a big spender like California.
The Bee reports,
The state issued $5 billion in revenue anticipation notes, or RANs, in mid-October. But it had to pay hefty interest rates of 3.75 percent to 4.25 percent – double the rates other states have paid recently – in part because of the state's shaky financial condition, and in part because of the large size of the issuance.
Since then, the estimated deficit has at least tripled from the $3 billion figure Finance Department officials came up with at the time, making the cost of issuing new notes problematic.
This new development in the state's inability to sell bonds to the public should probably make voters think twice about approving a new $9 billion bond measure.
Currently, the state owes more than $50 billion on infrastructure bonds and still has not even sold $68 billion in authorized bonds. To top it off, California is now paying $6.7 billion per year in principle and interest on bonds.
The state cannot even sell what it has already authorized, it's in a devastating budget crisis, and special interests are trying to get tax payers to authorize another $9 billion for a service that isn't even essential?
Even if the bill were to pass, the state won't even be able to sell the bonds to fund it.
California is asking for a choo-choo train for Christmas, but it looks like Santa might never show up.