California’s Infrastructure Financing Proposal Raises Concerns Over Potential Risks
SACRAMENTO, CA – California’s history of enacting major programs without adequately assessing potential risks could repeat itself with the introduction of Senate Bill 769. Sponsored by Sen. Anna Caballero, this legislation aims to create the Golden State Infrastructure Corporation, which would have the authority to borrow money and issue bonds for infrastructure projects without clear financial limits.
In the past, California has witnessed the fallout from similar oversight. The 1996 deregulation of the electric industry, led by Gov. Pete Wilson, promised lower consumer prices but ultimately resulted in an energy crisis. A subsequent review in 2003 revealed that the reforms led to significant financial distress for utilities and a $42 billion drain on the state’s general fund.
Other costly ventures include the problematic bullet train project and overly generous pension expansions, which have strained local budgets and resulted in debts such as the $20 billion owed to the federal government for unemployment insurance.
SB 769 is presented as a solution to modernizing infrastructure, promising benefits like job creation and improved resiliency in climate, water, and transportation systems. However, critics highlight alarming aspects of the proposal. The corporation could accumulate unlimited debt without accountability, as it is exempt from some transparency laws. This poses a risk of fiscal irresponsibility and potential favoritism in funding decisions, reminiscent of past scandals in state government.
Experts warn that without robust safeguards and public oversight, California might be on the brink of another financial misstep. The proposal currently lacks necessary checks and balances, raising questions about its implications for the state’s future.
Addressing these concerns is crucial to ensure that California builds responsibly, rather than risking more entrenched problems in its infrastructure financing strategies.
This article was originally published by CalMatters.
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