Published: Wednesday, Dec. 16, 2009 – 12:00 am | Page 20A

Like parents lecturing a group of overindulgent kids, state Treasurer Bill Lockyer and Legislative Analyst Mac Taylor warned an Assembly committee this week that the state’s growing debt load threatens to further imperil California’s ailing general fund.

Over the last 10 years, the general fund grew by 22 percent while its debt service payments shot up an astonishing 143 percent. Interest payments on the state’s debt topped $6 billion this year – double that of a decade ago.

If bonds are issued at the same rate they have been in the past, our debt payments could grow to more than $10 billion within a few years, consuming close to 10 percent of the general fund budget.

That’s the highest in state history and double what some financial experts say is prudent.

On top of the size of the debt, Lockyer complained that California pays billions more in interest to service its debt than it should. Why? Because legislators have not balanced the state budget in a dozen years.

Failure to match revenues to expenditures has saddled the state with the lowest credit rating of any state in the nation – just three notches above junk bond status, according to Moody’s.

As a result, California pays 21 percent more in interest than states with the highest credit ratings.

Legislators cannot cancel the bonds voters already have approved, but they can control the timing of when borrowing actually takes place.

More than $43 billion of bonds approved by voters have not yet been issued. Both Lockyer and Taylor advised lawmakers to use their power to slow the issuance of those bonds and take pressure off the general fund.

That would require legislators to set hard priorities – that is, to decide which infrastructure projects should be funded now and which can be safely delayed.

It does not mean stopping all borrowing. To remain economically vibrant and to take advantage of federal funding, particularly the stimulus money available now, California needs to borrow to invest in its future, to repair roads, build libraries, strengthen levees and put new roofs on schools and hospitals.

But there must be a limit.

Historically the state has borrowed $7 billion to $8 billion a year. This past fiscal year the state treasurer reports that the state issued $35 billion in bonds.

That’s a staggering sum that must be reduced.

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