I’m all for providing funds to build more schools. However, Proposition 55 on the March 2, 2004 ballot is the fiscally irresponsible way to do it.
Proposition 55 will give California $12.3 billion to build new and renovate old schools. The money will come from a bond (loan) that will be repaid through the General Budget. However, at a 5.25% variable interest rate over 30 years, it’s going to cost Californians $12.4 billion in interest when the bond is repaid. In other words, the $12 billion we would use to construct schools is going to cost us $25 billion. There’s a better way.
In 2003, California allocated $3.5 billion to school construction. That is only 3.5% of our state’s $101.2 billion budget. Instead of borrowing $12 billion that’s going to cost us twice as much, we should mandate 5% of the state’s budget over the next three years towards school construction. That would provide more than Prop 55 and cost taxpayers $10 billion less. Or, we can keep the 3.5% and hold that rate for the next four years.
Prop 55 is fiscally irresponsible when there are more efficient alternatives.