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# Governor on the right track, just going in wrong direction
- URL: https://www.smdp.com/governor-on-the-right-track-just-going-in-wrong-direction-2/
- Published: 2006-01-17T16:00:00.000Z
- Updated: 2026-10-24T23:01:43.000Z
- Author: David Pisarra
- Tags: Opinion, Santa Monica, #archive-import, Homelessness

*WHAT’S THE POINT?*

We have major problems in this state. The governor’s answer to this is a characteristically Hollywood answer — throw money at the problem.

The coming crisis in California is an infrastructure one. As if we needed any greater indicator of the problems that this state faces, just look at the sewage spill this weekend that closed the beaches from Manhattan to Torrance. A local pumping station, one that normally handles 4 million gallons of sewage a day, broke down, causing backups into sewers and streets. Mistakes happen, accidents cause breakdowns, and this is not the first, nor will it be the last, sewage spill. And it is unclear right now what caused the breakdown in the first place, but what caught my eye was that a single pumping station processes 4 million gallons a day, and there are pumping stations all along the coast.

We have too many people for the size of our public assets. Public assets are those parts of society that we take for granted — the roads, the schools, police, fire and clean running water.

As a society, we purchase these public amenities through our taxes. We can either increase our taxes to pay cash for them, or we can use a credit card to pay for them, and increase our taxes later. In government finance, a bond offering is like a credit card. I personally have never met a bond offering that I liked. The reason is simple. Just like with a credit card, when the government borrows money by using a bond offering, it must pay interest. That interest is based on the state’s credit rating. California is usually a great risk, but lately our credit history has a few blemishes.

Bonds are generally perceived as great investments for little old ladies who are putting their life savings into something. When I did investment counseling, we put the most conservative people in U.S. bonds, and just below that, we would use the state bonds. The reason is that the likelihood of the U.S. government or a state not paying the bonds is almost nil.

However, if one thing is a great investment for a little old man, that means it is not going to be a good thing for the borrower. In this case, the borrower is the state, which really means the taxpaying citizens, and that is you and me.

Bonds are expensive. In general, a bond must be repaid at three times its initial issue amount. For example, a $10 million bond issued by the city of Santa Monica will generally cost $30 million over its lifetime in repayment costs, administration fees, issuing costs and other items.

The “reform” governor has proposed a $222 billion bond project to increase the infrastructure in our state. I could be wrong, but I thought when the voters sent him to Sacramento he was going to “cut up the credit cards” and make the Legislature live on a budget.

His proposal includes 600 miles of new freeways. The truth is we do need more freeways; we also need more electrical plants, more water, more sewage treatment, more landfills and waste treatment, more prisons, more police, more firefight-ers, more teachers, more schools, more doctors, nurses and hospitals, more books, more computers, more jobs, more land, more parking and more money to fund it all.

We have more people every day coming into our state, and that just increases the pressure on every aspect of life. More people mean more showers, more trash, more housing, more need for medical services, more cars, more coffee cups.

Solutions are hard to come by. It seems that the easy answer is to increase taxes across the board to pay for the infrastructure we need, which no one likes. The hard answer is to go to a more capitalistic system in our approach to government services, and make it a pay-as-you-go model. By that I mean all roads become toll roads; all police services require payment; all firefighters get paid before they put out your fire; your kids’ schooling becomes tuition based; only those who can afford access get to enjoy the beaches, the mountains, the city and state parks; and parking becomes a privilege for those who can pay for it.

The long-range effects of such a system would be that the differences between the rich and the poor would become even more pronounced. The individual costs would be prohibitive for all but the richest of the rich, billionaires like the governor. Homelessness is a problem now, and would become an absolute nightmare in such a system.

Taxes are annoying, and we all hate paying them. But they are important in our society as they provide an equalizing force between the rich and the poor. Not in the way in which they make the rich poorer, or that they make the poor richer. No, they equalize society in that they allow the poorest among us to have the protection of the fire department for their home, which prevents it from burning down the land baron’s apartment complex next door. Taxes also allow the school child from the wrong side of the tracks to get an education, which will benefit the rich person who wants to hire that child later on in life.

This governor was sent to Sacramento to save the state from the overspending, lobbyist-courting, out-of-touch politicians. However, the governor has used his star power to raise more money from lobbyists and political donations than his predecessor. He has proposed budget increases, and now he wants to spend $222 billion, which really is more than $600 billion, to build new roads for him to illegally ride his motorcycle on.

We need our leadership to act as leaders. We have a problem in this state, and we can either pay for it outright, or we can put it on our collective credit card in a bond offering.

We need a lot of things. We just don’t need the credit card mentality to finance them. (David Pisarra is a business development lawyer in the Santa Monica firm of Pisarra & Grist. He welcomes your questions and comments. He or 310-664-9969.)

*Originally published in the Santa Monica Daily Press print edition on January 17, 2006.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/011706.pdf?ref=smdp.com)