California makes a bond sale

The state’s net cost, after the federal subsidy, is 65.3 basis points lower than the 5.54 percent yield on its 30-year tax-exempt general-obligation bonds reported yesterday by Municipal Market Data, said Tom Dresslar, a Lockyer spokesman.

Bloomberg

Can California government grow tax revenues by 5% to cover borrowings? No, not yet, maybe not for a long time. But the assumption here is that California will get growth back to 5% and greater within the next few years. As long as California keeps accumulating long term debt the pressure for short term growth intensifies. We can see the pressure when the Gubinator called back the legislature. Any more bond sales will require some real short term revenues gains, an impossible situation for a state that has been ruled by civil and labor judges for four months. Even this latest snag was contingent upon a trial judges ruling in the liquidation of government buildings. That fits form and function of bankruptcy.