[posted by Justin Levine]
I have come across many who say they intend to vote against Prop. 12 in California because they understandably feel that the state can’t afford any more bond debt.
That’s unfortunate. What they don’t seem to understand is that Prop. 12 won’t likely cost state taxpayers anything. Not one cent.
Prop. 12 will sell $900-million in bonds to help fund a program that allows California veterans to take out low-interest home loans. It would likely be able to help out up to 3,600 veterans. However, unlike most bond sales, the taxpayers aren’t responsible for paying back these bonds – the veterans who take out the home loans are.
The only way that this will cost California taxpayers is if the veterans who take out these loans manage to default on their mortgages. All 3,600 veterans would have to default on their loans in order to stick taxpayers with the full costs of Prop. 12 bonds. Even then, the state would be able to recoup much of the costs by selling the properties to someone else.
This program has been around since 1921 and veterans have shown that they have a very low rate of default.
If you haven’t voted yet – Yes on 12.
[I suspect that Patterico will be particularly annoyed with me if I don't allow comments on this particular thread. So have at it.]
- Justin Levine