California Pays Dearly for All That Borrowing
California has paid $230.7 million in fees to Wall Street investment firms over the last year — a largely hidden cost to taxpayers of the huge borrowings needed to keep state government afloat.

An examination of how officials managed the heaviest borrowing in state history shows that the fees and commissions California has paid were in some cases higher than those charged to other state governments.

On one massive loan, officials agreed to fees that were 42% higher per bond than Illinois had paid last year for a similarly large borrowing.

On another, California paid fees at a rate about 25% higher than Washington had paid in the mid-1980s while that state was being penalized for the costliest municipal bond default in U.S. history.

In all, California took on $27.4 billion in debt to cover past and present budget shortfalls. While about half of that amount has been repaid, the ultimate price for the financing could include as much as $8.9 billion in interest. And the state budget now awaiting action in Sacramento contemplates nearly $1 billion more borrowing later this year.


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In case you were feeling guilty about your credit card statement, this should put it in perspective. $27.4 billion borrowed. $8.9 billion in interest...a mere 32.48% of the principal. What a bargain. Think about that the next time you see one of these grinning California legislators on the tube. Tar and feathers, anyone?