Sunday, July 15, 2018

A Good Sign for California's Stem Cell Agency? Californians Like to Say Yes to More Bonds

An ambitious campaign to stave off the death of the California stem cell agency with a $5 billion jolt of state borrowing could have an easy ride in a couple of years. 

At least that would seem to be the case if one bets on the odds as perceived in a column carried today in the Los Angeles Times. 

The headline on the piece by John Myers, the Times' Capitol Bureau chief in Sacramento, said,
"California voters almost always say yes to bonds..."
Myers wrote, 
"It’s the closest thing to a sure bet that exists in statewide campaigns, with an approval rate hovering around 90%."
Myers, however, focused mainly on this November's ballot -- not 2020. And he did not comment directly on the plan to present a $5 billion bond measure to voters in November 2020 to keep the stem cell agency alive.

The agency, formally known as the California Institute for Regenerative Medicine (CIRM), expects to run out of cash for new awards by the end of next year. Its only significant source of funding is money that the state borrows (bonds), which roughly double the costs of its operations because of interest expense. The borrowing was approved by 59 percent of the voters in 2004.

Myers related the current condition of the Golden State's indebtedness:
"State general obligation bond measures approved since 1986 total more than $167.7 billion. Lenders must be repaid with interest, averaging about 5% a year, over a span of several decades. Most general obligation bond payments come from the same bank account that provides cash for services such as education, healthcare and prisons." 
He continued, 
"A recent report by the nonpartisan Legislative Analyst’s Office estimated that California’s general fund is currently paying off $83 billion in bond obligations. Annual debt payments total about $6 billion. That’s roughly equal to a year and a half in general fund spending on the University of California system, or about triple what the state spends on firefighting."
"'When we make these decisions, we have to look at the big-picture context,' state Sen. Bob Hertzberg (D-Van Nuys) said during a legislative hearing last month on November’s slate of bond measures."
State Sen. Bob Hertzberg, News Growl photo
Hertzberg zeroed in on backers of a clean water measure on the fall ballot. The Times piece reported,
"'You’ve got to tell the truth,' he said to the measure’s proponents. 'You back up an armored car to the treasury, and you can take $430 million out of the back door because you can poll [on] something, spend a few million dollars because it’s an issue that looks sexy to voters, and draw the dough.'"

Myers continued,
"Voters are rarely asked to think about which needs government should meet. In 2004, they agreed to borrow $3 billion for stem cell research. In 2008, voters said yes to $9.9 billion in seed money for high-speed rail. Even though the (rail) bonds have only recently begun being sold to Wall Street investors, it’s debatable whether voters would make the same choice if asked again.
"And campaigns rarely offer enough information to fully consider the pros and cons of a bond measure. Voters must do their own homework, beginning with the understanding that a bond is a mandatory expense, an investment decision that can have profound impacts for more than a generation."
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