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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction -- Ignore unavailable to you. Want to Upgrade?

To: Lazarus_Long who wrote (12314)	7/28/2004 1:38:15 AM
From: Orcastraiter	Respond to of 90947

Looks like Arnold is a borrower too: Posted on Sun, Jul. 25, 2004 State paid $231 million in fees on loans from Wall Street firms ASSOCIATED PRESS SACRAMENTO - California paid $231 million over the last year to Wall Street investment firms that arranged billions of dollars in loans to keep the government afloat -- sometimes paying more in fees and commissions than other states were charged for similar transactions. California paid fees 42 percent higher than Illinois did for a similar massive loan, and it paid fees about 25 percent higher than Washington paid in the mid-1980s when Washington was being penalized for the priciest municipal bond default ever, according to an examination by the Los Angeles Times. The fees and commissions are a largely hidden cost to taxpayers for the $27.4 billion California has borrowed to keep state government running as it tries to recover from a record budget deficit. Taxpayers will pay as much as $8.9 billion in interest on the loans. "I don't think our elected leaders have made an honest accounting of the total cost of all of the borrowing," Jean Ross, executive director of the nonprofit California Budget Project in Sacramento, told the Los Angeles Times. State Controller Steve Westly and Treasurer Phil Angelides said California's credit rating, the nation's worst, prompted the high borrowing costs. "Being as dependent as California has been on lenders to finance its deficit is not fundamentally a healthy relationship," Angelides said. "You never want to be at the knees of lenders." Some outside experts questioned Angelides' decision to negotiate fees with bond firms instead of requiring them to competitively bid for the state's bond business. Experts said the overall immense costs are a result of decisions by legislators, Gov. Arnold Schwarzenegger and former Gov. Gray Davis to borrow to cover operational expenses instead of cutting spending. Cody Press, managing director of the public finance department of Citigroup, said the investment fees were justified because of the amount of risk involved in propping up California's government. The borrowing is likely to continue. Another $1 billion loan is included in the budget now being debated by stalemated legislators and Schwarzenegger. contracostatimes.com Orca