The California Taxpayers Association was founded in 1926, their mission is to protect taxpayers from unnecessary taxes and to promote efficient, quality government services. They serve their members through research and advocacy on significant tax and spending issues in the legislative, executive and judicial branches of government.
They have this to say on evaluating the debt financing used for infrastructure:
Cal-Tax Criteria for Evaluating Bond Debt Proposals:
1. The project to be financed is a capital facility or infrastructure project and the bond funding will pay for land acquisition and capital costs, not for maintenance, operations, regional planning and other non-construction salaries or wages, or ongoing costs.
2. Non-G.O. bond financing is not a reasonable option.
3. The project costs are appropriately shared by future taxpayers because the project will have a useful life at least as long as the term of the bonds and future taxpayers will benefit from the facility that is built with the bond proceeds.
4. It is not appropriate for bond funds to pay for equipment, computers, or similar items that will not be useful for at least as long as the debt is outstanding.
5. For state bonds, projects funded must be of state-level concern and importance. State bonds should not pay for local projects that do not have significant extra-territorial impact.
6. Interest rates for indebtedness are not abnormally high and the overall state debt level will not be excessive.
7. If the bond issue is placed on the ballot by initiative, great care must be taken to ensure that special interest sponsors are not manipulating the initiative process for financial gain. A special interest should be challenged when using the initiative process for direct financial benefit.
Read the rest of this publication here.
Visit the Cal-Tax website for even more information.
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