By Paul Preston
In the early days of California settlers made their way to the region by either boat around the tip of South America or by wagon train across the vast expanse of the great untamed west. . In late fall of 1846 one such wagon train the Donner Party made up of 87 men, women and children reached the mighty eastern slop of the Sierra Nevada Mountains where they became trapped in the winter snows of 1846-47. When rescue parties reached the stranded Argonauts they discovered that 41 of them perished and 46 survived. The rescuers also discovered how the 46 survivors managed to remain alive during one of the harshest winters ever recorded in the Sierra Nevada Mountains they gained nourishment from those members who had died. Thus the ‘Donner Party’ became best known in history for eating their own dead to stay alive.
One survivor of the Donner Party, Mary Murphy made her way to an area north of Sacramento where she married Charles Covillaud. After several years developing the new land into the heart and soul of the 1850‘s gold rush the area became known as Marysville.
Today Marysville, California finds itself in the middle California’s economic collapse which is affecting municipalities and school districts all over the state. California currently has a $28 BILLION shortfall for this current fiscal year. Additionally the State owes k-12 school districts including MJUSD almost $9 BILLION in payments the State has not made over the last 10 years to these school districts. To find its way out of sure insolvency the Marysville Joint Unified School District has decided to dance with the devil and propose a ballot initiative to issue $12 million of ‘capital assessment’ bonds for the refurbishment of existing schools. The cost: $72.6 million.
The bigger picture for the State is that it currently does not have adequate dollars nor will they in the next year to properly fund California schools. This lack of funds will lead to the risk of insolvency for hundreds of school districts around California and the MJUSD could more than likely be one of these districts. There is also the long-term issue of strapping the taxpayers with this debt of $72.6 million. Not only is this a lot of money but also the signal being sent to businesses that might want to locate to Marysville is the same message that has driven businesses away from California in droves over the last 20 years.
There is another item to consider is: Who will buy these bonds? The bond rating agencies like Moody’s is not at all happy with California or it’s municipalities. In all probability these bonds will be sold at interest rates that exceed current “junk” bond rates thus driving the cost of the bonds to even more astronomical heights. FYI: Warren Buffett just liquidated his municipal bond holdings over the last two weeks in large part because of the California economic collapse that is occurring right now. The bonds are so risky that they will not be sold competitively thus there will be a single source non competitive banker who will charge enormous fees. For this deal to work it assumes the tax payer will have to believe their houses will have to go up 400% in value over the next 40 years! If real estate does not appreciate to these levels then the money to pay for these bonds will come from money destined for the kids.
Given the current state of fiscal affaires, the issuing of these bonds at these rates, plus given the ‘deal’ proposed we have here a classic example of why California is in such trouble. This is business as ‘usual’ up until now. Recently Gov. Brown approved the high speed train which obligated the California taxpayers for billions of dollars in the future at a time when taxes and regulations have crippled businesses and residents to the point that now the state is all but insolvent with little ability to borrow money. Following Gov. Jerry Brown’s lead the Marysville Joint Unified School District appears destined to devastate their taxpayers, students and it’s future. Unlike the Donner Party members who survived by eating their own dead in one of the harshest winters ever recorded in the Sierra Nevada mountains California’s leaders look to eat their own ‘alive’ during the States greatest of all economic calamities.
See the link below….It happened in Poway, CA also.
“High cost of school bond shocks Poway Unified Repayment under financing plan will be 9 times the principal”
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