California Legislature seeks voter approval to borrow $20 billion for climate and schools.

The California Legislature, grappling with multi-billion dollar budget deficits, took a significant step on Wednesday by seeking support from voters. Lawmakers made the decision to place two $10 billion bonds on the upcoming November ballot. If approved, these funds would be allocated towards the construction of new schools and assisting communities in preparing for the impacts of climate change.

California’s financial landscape has seen a dramatic shift in recent years, transitioning from budget surpluses exceeding $100 billion to grappling with deficits totaling more than $78 billion over the last two years. The state had to implement spending cuts to offset the decline in revenues, attributed to rising inflation and an economic slowdown in the crucial technology sector.

The proposed bonds aim to mitigate some of the previous funding cuts while financing various essential projects across the state in the foreseeable future. However, it’s essential to note that this financial assistance comes at a cost. The climate bond alone is expected to amount to over $19 billion, with yearly payments of $650 million, adding further strain to the state’s finances.

In the absence of Governor Gavin Newsom, who was engaged in discussions with President Joe Biden and Democratic governors in Washington, Senate President Pro Tempore Mike McGuire assumed the role of acting governor and signed the bills into law. The legislative session that culminated in this decision was marked by disruptions from protesters advocating for peace in the Israel-Hamas conflict.

The proposition of borrowing substantial sums through voter-approved bonds carries inherent risks, particularly when multiple proposals are presented simultaneously. Alongside the statewide bonds, voters will likely face numerous local borrowing initiatives, including a substantial $20 billion housing bond for the nine counties surrounding the San Francisco Bay. Recent voting patterns indicate a potential weariness among voters regarding these financial propositions, as evidenced by the rejection of a $15 billion education borrowing proposal in 2020 and the narrow approval of Proposition 1 earlier this year.