NEW: Stealth Bonds Building New Prisons

From: Cal WatchDog, via Twitter:

DEC. 16, 2011
By Wayne Lusvardi

Welcome to pilotless California Budget Airlines Flight 22, a drone aircraft on total autopilot, departing from Sacramento and arriving back at Sacramento after hovering in circles for hours. But can it land safety in a budget storm with major malfunctions while losing jet fuel fast? And because it is a stealth aircraft, neither radar nor flight controllers can see it.

This scene out of a Hollywood sci-fi movie is apparently what is being played out under the dome of the state capitol in Sacramento when it comes to the construction of new prisons under Gov. Jerry Brown’s realignment of government and the triggering of automated budget cuts for other state programs and services.

The financing is coming from “lease-revenue bonds” that hide the actions of the government. This allows the construction legally to get around the requirement under Proposition 13 for the voter approval of bonds.

Rather than being funded from general obligation bonds, the new prisons are being funded with lease-revenue bonds typically intended for revenue-producing projects such as convention centers, toll roads and parking facilities. But prisons do not produce revenue from the users. They generate taxes per bed.

Citizens United for a Responsible Budget asserts that the last two times prison construction bonds were put to a vote they lost.

But lease-revenue bonds have been used to finance prison construction in California since the 1980s. Other states that use lease-revenue bonds for prisons are New York, Texas, Michigan, Florida and Alaska.

CURB opposed using lease-revenue bonds for building prisons authorized under Assembly Bill 900, the Public Safety and Offender Rehabilitation Services Act of 2007, which was sponsored by Assemblyman Jose Solorio, D-Santa Ana.

Lease Revenue Bonds are an Exotic Hybrid

Read the rest here.

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