PROP 10 – Vote NO
Background:
There are four general obligation bond measures on the November 5th ballot, totaling $16.8 billion in new authorizations. Bond financing is a type of long-term borrowing that the state uses to raise money for various purposes. The state obtains this money by selling bonds to investors. In exchange, it agrees to repay this money, with interest, according to a specified schedule. Generally, the total cost over the life of a bond issuance is about twice the authorized amount since interest must be paid in addition to the principle. Note also that for each bond measure approved, a portion of the state’s annual revenues must be set aside for debt-service payments on the bonds and therefore are not available for other state programs. This means that in order to pay for any bond measure approved, the legislature would either have to raise taxes or cut expenses elsewhere in the budget.
This Proposal:
This bond measure is called the ALTERNATIVE FUEL VEHICLES AND RENEWABLE ENERGY BOND ACT. It provides for a bond issue of $5 billion primarily to provide rebates up to $50,000 for the purchase of alternative fuel vehicles including natural gas vehicles, and to fund research into alternative fuel technology.
The total cost of approving this bond measure would be about $10 billion to pay off both principal ($5 billion) and interest ($5 billion). In addition, if the demand for natural gas increases due to this program, rates business and homeowners pay for natural gas to heat their homes could increase significantly.
Recommendation:
My recommendation is to vote NO. First, the State of California is currently facing a huge budget crisis and in order not to run out of money is being forced to offer for sale billions of dollars of new general obligation bonds. There has also been speculation that the State may have to borrow billions of additional dollars from the Federal Government in order to remain solvent and it would be irresponsible to incur additional debt at this time. Second, this ballot initiative was put forth by T. Boone Pickens, the Texas billionaire oilman who has been promoting natural gas as a way to wean ourselves off of foreign oil. Pickens plan is to have heavy trucks which use about 25% of our oil consumption switch to natural gas which is primarily available from US sources. Pickens has publicly said that his plan cannot work unless the public subsidizes the switch to natural gas vehicles. What’s in it for him? Pickens has invested heavily in the production and supply of natural gas and should there be any major shift to this fuel, he stands to reap billions in profits. While it may be a good idea for us to wean ourselves off foreign oil, having the public subsidize (through government bonds) one particular industry is not the way to do it. Interestingly, Pickens has been a lifelong Republican yet seems to have no problem with the government subsidizing private business, so long as he is the one to benefit.
For more information: Voter Information Guide – Prop 10
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by David Boaz or 
by David Bergland, both excellent books on libertarian thought.
