Sacramento, CA — The state made the final payment on the 2004 Proposition 57 Economic Recovery Bonds.
Pushed by then newly elected Governor Arnold Schwarzenegger, voters approved the selling of over $14-billion in long term bonds in 2004 to pay off state debt. According California Treasurer John Chiang, the final $930-million payment was made Wednesday. The overall payments totaled $14.2-billion in principal, $4.8-billion in interest and $153-million for administrative costs.
Thanks to a surplus of revenue, extra funding was included in the 2014 state budget so that the Proposition 57 bonds could be paid off one year earlier than initially anticipated. Chiang says that move saved the state approximately $60-million in debt service costs. In hopes of preventing the need for this type of bond in the future, Chiang notes that voters approved Proposition 2 in 2014 that now requires deposits into a rainy day fund whenever capital gains revenues rise to more than eight percent of the General Fund tax revenues. In addition, 1.5% of annual General Fund revenues must be set aside each year.