Article Image

IPFS News Link • Government Debt & Financing

Debt takes a huge chunk out of California's beleaguered budget

Closing California's deficit this year would be immeasurably easier if the state weren't paying for a 10-year borrowing binge. Without that tab, officials could scrap plans to close state parks, force nearly a million low-income children to go without eye care and take in-home aid away from hundreds of thousands of elderly, blind and disabled residents. But the state has had an insatiable appetite for debt in recent years. In the last decade, the debt per resident has tripled, to $2,362, according to the credit-rating agency Moody's Investors Service. That means for every household of four, California owes nearly $9,500 — more than the government spends to put a child through a year of school. In the next budget, the amount devoted to debt repayment is expected to exceed the money invested in California's prized public universities. Borrowed money has proved politically irresistible in Sacramento, a safe middle ground for politicians in the constant war between Democrats and Republicans over taxes and service cuts. Campaigns for bonds often herald them for providing projects and services without new taxes.

Free Talk Live