Sacred Economics in Practice: Opposing CA Prop 13?
$11B of interest on a $15B investment in public schools is hard to swallow.
My economic philosophy has been evolving lately. I’ve become a bit more anti-growth, a bit more pro-local, and a whole lot more interested in debt and interest as key pieces of the puzzle to make capitalism work better. I covered some of this in a recent blog post. Now my fledgling philosophy is being put to the test via California’s Public Preschool, K-12, and College Health and Safety Bond Act of 2020, aka Prop 13.
In short, the ballot measure dedicates $15B to rebuild crumbling school facilities across the state, with priority towards schools with large percentages of low-income students, foster youth, and English-as-a-second-language students. It is a supremely worthy investment, and ultimately my heart might not let me vote no. But we should at least understand the financials.
The funding mechanism is state bonds, which CA must pay interest on. An estimated $11B of interest. That money will come from the general fund. The CA Voter Guide is fantastic in providing detailed, detached analysis. They have one graph that is helpful in explaining this funding mechanism:
When I saw this, I thought, That looks like such a teeny part of the general fund. Why can’t we pay for the most needed school improvements directly from the general fund instead then, without needing to take on debt?
But elsewhere in the voter guide, it explains that the debt would be paid off over 35 years (at $750M per year). So the graph should actually look more like this:
Presumably then, it’s not so easy to take a big chunk out of the general fund in a given year to invest in something like construction projects. It seems like there must be a better deal than this though.
“We can do better for our kids and grandkids.”
I don’t love the writing of the argument against Prop 13 in the voter guide, but that closing sentence sums up my feelings.
The trouble is, I’m not sure whether it is practically possible to get a better measure on a future ballot and pass it in a reasonable time frame to do right by CA’s youth. It feels a bit like no-deal Brexit: in the Economist’s words, “The metaphor is not buying a car, it is buying a parachute — having already leapt out of the aeroplane.” I welcome any thoughts in the comments.
