A few weeks ago, just prior to the election, I posted about California Policy Center’s study of some local Orange County school bond tax measures and who is financing the yes campaigns (Pay to Play in School Bond Measures in the OC). Of the 10 school bond tax measures on the ballot in Orange County, 8 passed. Only 2 failed. That means the organizations (architectural, engineering and construction firms that build projects for the Districts) and the attorneys who support those efforts will be awash in bond tax money as they get contracts from these local districts.
But Orange County is not unique in voters giving mismanaged school boards bail outs in the form of bond tax measures. Californian’s have just voted overwhelmingly to place themselves, their children and grandchildren in debt for many years to come. The amount: approximately $5 Billion additional taxes per year. All. Voter. Approved.
In California Policy Center’s Union Watch web site’s latest article Californians Approve $5.0 Billion per Year in New Taxes, Ed Ring notes that:
“With only a couple of measures still too close to call (TCTC), as can be seen, 94% of the 193 proposed local bonds passed, and 71% of the proposed local taxes passed. Two years ago, 81% of the local bond proposals passed, and 68% of the local tax proposals passed.”
I am sure on election day in the offices of these yes on bond tax measure supporters (as well as on Wall Street for bond issuers) the champaign bottles were being uncorked to celebrate the passage of billions of dollars in bond tax measures. They will reap the benefits in the form of millions of dollars of contracts from their small $1,000 and $1o,000 yes campaign investments for many years to come – all at the expense of the citizens who will be paying these bond taxes for 30 or 40 years to come.
Mr. Ring goes on to note that this is a house of cards and financial reality will set in when market corrections eventually occur.
“Despite the increase in consumer confidence since the surprising victory of Donald Trump in the U.S. presidential election, the stock and asset bubble that has been engineered through thirty years of expanding credit and lowering rates of interest is going to pop.”
When that happens who will be left holding the bag of debt? Naturally the taxpayers who must foot the bill for this debt spending spree. The school board politicians who passed these taxes? Since they will have moved on by that time, probably not. The bond issuers / holders? Only if the school board is not able to pay its debts and files Chapter 9 bankruptcy – that is what happened to most of the bond issuers / holders in the City of Stockton bankruptcy. They received much less than 100 cents on the dollar owed them. I have no sympathy for them.
But the entities that financed the yes campaigns – the architects, engineers and attorneys who made huge profits from these projects? Nope – they will be happily counting their profits from their multimillion dollar contracts for these projects. All from their small yes campaign investments.
Not a bad return on your investment!
I commend this article to you and suggest you subscribe to Union Watch’s e-mail list.