International Ink

It is usually a sign that California politics has gone mainstream when Time, Newsweek, U.S. World and News Report, or the Economist start picking up state stories. Well, Schwarzenegger’s bond proposal has gone mainstream. This week’s Economist features a brief piece on the governor’s bond proposal (it is premium content for those who don’t subscribe). The problem is that the magazine (which is one of the best reads around) mangles quite a few of the facts, most of which is in a single paragraph: The governor's director of finance, Michael Genest, insists this is manageable. The state's structural deficit—some $14 billion in his boss's first budget, for 2004-05—will be $4.7 billion in 2006-07 and probably disappear altogether in 2007-08. As for the ten-year plan's $223 billion price-tag, some 70% of that will come from the private sector and the federal government. The rest will come from $68 billion in taxpayers' bonds. Rather than go away, the administration is estimating that the structural deficit will grow next year to some $5.4 billion. And 70 percent does not come from the private sector and federal government. Some $47 billion (of the $222 billion total) will come from state gas taxes already collected and dedicated (via Proposition 42) to transportation projects. Another $68 from bonds. And there is more money expected from local governments as well, including some $15 billion in water infrastructure. That said, the Economist is always worth a read.