For the 27th time since 1922, California voters will be asked to authorize bonds for a program that makes low-interest home loans to California veterans. Proponents say the Cal-Vet program has helped some 420,000 California veterans stretching back to World War I.
What it does: Authorizes $900 million in bonds to feed an 87-year-old program that provides low-interest home loans to California veterans. The bond sale would allow about 3,600 additional veterans to purchase homes. Under the program, the California Department of Veterans Affairs uses the bond funds to purchase homes and then resells them to veterans. Monthly payments cover all costs of the program, including bond principal and interest.
History: California began the veterans' home loan programs in the 1920s, and voters have approved all 26 bond measures to replenish the pot - $8.4 billion worth of bonds in all. The Legislature voted unanimously to place the 27th bond, Proposition 12, on the ballot. At $900 million, it would be the largest Cal-Vet bond ever approved.
What it costs: Taxpayers are on the hook only if the mortgage payments made by veterans fail to cover the state's annual debt service, which is estimated at $59 million a year for 30 years for the $900 million in principal and $856 million in interest.
Money watch: No campaign committees have been formed on either side of the debate.
SUPPORTERS
• Veterans groups
• California Department of Veterans Affairs
• Several state lawmakers
What they say:
• The program costs taxpayers nothing and helps veterans, to whom Californians owe a "special debt" for their service.
• The program helps the economy by providing jobs in the housing industry.
OPPONENTS
• Gary Wesley, a Mountain View attorney who often writes dissenting ballot measure arguments.
What he says:
• Enlistees should be paid more and receive better benefits.
• The program costs taxpayers, because investors who buy the low-interest bonds don't have to pay taxes on their earnings.
• The declining housing market increases the possibility veteran homeowners will be unable to sell the property and could default on their loans.
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