The Thawing of California Bonds
by CA Pol Junkie
California is America's leader in fiscal dysfunction, but it is finally showing signs of being a fully functional state once again. The state didn't have a functional budget for this year until February, so it had to improvise to pay the bills. Funds from selling bonds were diverted from their intended uses to keep the state afloat. As of December 17th, 2008 most bond-funded projects came to a screeching halt.
Many nonprofits took a big hit since they were relying on bond funded grants and had no warning they would not be paid. Thousands were laid off as a result. These nonprofit organizations weren't even paid for the work they had done up to when the bond freeze was announced.
Since California got its budget, it has been able to sell bonds again. This week California completed its second round of bond sales, raising $6.9 billion. $5.2 billion of that were federally subsidized Build America Bonds which were part of the stimulus package. The subsidy makes it easier for the state to borrow, even though California has the country's worst credit rating of any state.
With the state bond funds flowing again, 5,000 projects can restart and workers can be re-hired. California has an 11.2% unemployment rate, so we can use the restoration of these jobs. For this boost to the economy, we can thank President Obama and all those (mostly Democrats) who voted for the economic stimulus package.