This is how far out of whack things have gotten in Sacramento: Jerry Brown is now the one who sounds sane.
Earlier this week, Brown canceled the planned sale of 11 state-owned office complexes to a group of private investors calling themselves, ironically enough, California First. The deal would have netted the state about $1.2 billion, equal to roughly 5% of the state budget deficit.
I hated the idea and said so last April. The Legislature didn't think much of the sale either, but members held their noses and voted for it as part of the state budget package. Arnold Schwarzenegger, who was a savvy real estate investor before he became governor, gave lawmakers no choice. Rather, the governor who claimed to spurn budget gimmicks charged forward with the plan to sell commercial real estate in a lousy market and to spend the one-time proceeds on continuing expenses. Thankfully, former members of state building authorities in Los Angeles and San Francisco – whom Schwarzenegger fired for daring to disagree with him – tied up the sale in court long enough for Brown to kill the scheme.
In canceling the deal, Brown cited a Legislative Analyst's Office study that equated the sale to a 35-year loan at 10.2% interest, or double the interest rate the state pays on its general obligation bonds. According to the LAO study released in November, the sale would end up costing the state an extra $6 billion over 35 years.
Brown charitably called Schwarzenegger's plan "short-sited" and "not prudent." Instead, the new/old governor proposes borrowing $1.2 billion from special fund reserves and paying the money back over three years at a total cost to the general fund of about $18 million.
Now, remind me again which governor is the fiscally responsible Republican and which one is the tax-and-spend Democrat with far-out ideas.
– Paul Shigley