This kind of bait and switch spending problem is rampant throughout California. This is why the Securities and Exchange Commission just last week announced plans to force better disclosures from states and cities in the $3.7 trillion municipal-bond market.
It’s being called a loan not even a subprime lender would make.
A school district north of San Diego, Poway Unified, borrowed $105 million over 40 years by selling a bond so unusual that the State of Michigan outlawed it years ago. Taxpayers in the area will end up with a nearly $1 billion bill at the end of this deal.
The Poway school district is not the only one — three other California school districts in San Diego are set to gouge taxpayers in similar fashion. The San Diego Unified School district borrowed $164 million up front, but will owe a whopping $1.3 billion at the end of its long-term bond. Oceanside Unified sold a $30 million bond, but will owe nearly ten times as much decades later, $280 million total. And Escondido Union School District likewise borrowed $27 million and will owe $247 million total. (Will Carless and Joel Thurtell at the Voice of San Diego, a local blogger, has been tracking these bond developments.)
The bonds are a “kick the can” move to avoid dinging taxpayers now with higher property taxes.
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