Capitol Alert

Big government borrowing means payback time – someday

In May 2006, Assembly Speaker Fabian Nuñez, Assembly Republican Leader, George Plescia, Senate Republican Leader Dick Ackerman and Senate Pro Tem, Don Perata, meet before the Legislature voted on a $35 billion public-works bond package. State and local governments have sold $1.5 trillion in debt since the mid-1980s, according to new data from the state treasurer’s office.
In May 2006, Assembly Speaker Fabian Nuñez, Assembly Republican Leader, George Plescia, Senate Republican Leader Dick Ackerman and Senate Pro Tem, Don Perata, meet before the Legislature voted on a $35 billion public-works bond package. State and local governments have sold $1.5 trillion in debt since the mid-1980s, according to new data from the state treasurer’s office. Sacramento Bee Staff Photo

There is no such thing as free money.

That chestnut of fiscal wisdom sometimes gets overlooked amid local or statewide campaigns to authorize borrowing to pay for public works projects, avoid spending cuts, or cover other endeavors without raising taxes.

But a huge new set of government borrowing data from the California Treasurer’s Office for the first time details how government entities – from the state on down to counties, cities and special districts – planned to repay $1.5 trillion in bonds sold since the mid-1980s.

Some of the borrowing has been financed with special taxes, or from the growth in property tax revenue in now-defunct redevelopment areas.

But about 40 percent of the debt listed the general fund as the repayment source. Committing that money, which also pays for most governmental services, meant it hasn’t been available for costs such as hiring more police officers (in cities and counties) or giving cost-of-living increases to the blind, elderly and disabled (at the state level.)

Treasurer John Chiang, at Monday’s unveiling of the interactive DebtWatch site, said some borrowing is “absolutely critical.” But Chiang noted there are trade-offs. “It’s not free money. It has to be paid back, and we want to make sure we’re handling this debt properly,” he said.

Of the $337 billion in state government debt sold over the past 30 years, all but about $10 billion had the state general fund as the repayment source, filings show. That represents almost three times the entire state general fund for the current fiscal year.

At the local level, the general fund was the repayment source for about 45 percent of the $336.4 billion in non-redevelopment debt for cities and counties. In the Sacramento region, cities’ general funds were the repayment source for about a third of the debt.

“If you’re fortunate enough to have money set aside … that’s a more efficient way to do things. But not everybody can afford to do that,” said Michael Coleman, a municipal finance expert.

Local government debt since the mid-1980s has helped pay for bridges, public buildings and other projects. Yet the two largest reasons for borrowing were to meet cash-flow needs and to cover insurance and pension costs – with no new community centers or schools to show for the expense.

The website doesn’t show how much of the debt has been paid off or remains outstanding – that’s information local governments do not have to report to the state. Chiang’s office said it may sponsor legislation next year to require the data.

The Sacramento Bee’s Data Tracker is a weekly feature that offers a deeper look at the numbers behind today’s news. Jeremy B. White contributed to this report. Jim Miller: 916-326-5521, @jimmiller2.

Chart of government borrowing 

Other districts

These special districts have had the most general fund-financed debt. Dollars in millions:

K-14 school districts

Repaid from general fund

Pct. of total

Sacramento City Unified

$693

42%

San Juan Unified

493

35

Western Placer Unified

385

89

Natomas Unified

201

32

Auburn Union

177

98

Elk Grove Unified

172

88

Los Rios Comm. College

165

22

Rocklin Unified School

145

61

Davis Joint Unified

143

76

Roseville City

130

63

Special districts

Repaid from general fund

Pct. of total

Sacramento Metro Fire

$254

100%

American River Fire

45

100

Southgate Rec. and Park

19

32

North Tahoe Fire

15

100

Florin Resource Conservation

13

9

Elk Grove Comm. Services

10

100

Cosumnes Comm. Services

9

100

El Dorado Irrigation District

8

71

Note: The data are self-reported by the governmental entities to the California Treasurer's Office. Totals include any borrowing through the California Statewide Communities Development Authority.

Source: debtwatch.treasurer.ca.gov

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