California Pays Off $14 Billion in Costly Debt from 2004

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California is making its final payment on $14.2 billion in costly borrowing voters approved 11 years ago, closing an ugly chapter in the state’s budget woes.

State Treasurer John Chiang and Director of Finance Michael Cohen announced the final payment of nearly $929 million toward the state’s Economic Recovery Bonds on Wednesday.

Selling the borrowing to the public was one of the first acts in office of then-Gov. Arnold Schwarzenegger. He led a bipartisan campaign pitching the refinancing as a way to avoid public service cuts and tax increases.

Voters overwhelmingly approved Proposition 57, authorizing long-term borrowing to cover short-term debt, but the borrowing only worsened California’s financial outlook.

It cost taxpayers $5 billion in interest and administrative costs.

Chiang blamed a lack of political will to make tough choices.

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