SACRAMENTO, Calif. (AP) -- California is on track to pay off a $15 billion bond that was championed a decade ago by then-Gov. Arnold Schwarzenegger as one of his first major actions in office.
In his revised budget released this week, Democratic Gov. Jerry Brown proposed spending $1.6 billion from a projected surplus to make the final payment during the fiscal year that starts July 1. If the state doesn't make the extra payment, the bond won't be paid off until April 2016.
Brown's finance department estimates the total cost to the state to repay the bond will be $19.5 billion, which includes $4.5 billion in interest.
Schwarzenegger, a Republican, led a bipartisan campaign in 2004 and successfully persuaded voters to approve the Economic Recovery Bond to close the state's budget deficit. At the time, Schwarzenegger pitched the plan to refinance the deficit as a way to avoid enormous public service cuts and possibly higher taxes.
He had been voted into office the year before during the recall of then-Gov. Gray Davis.
California voters approved Schwarzenegger's Proposition 57, but budget deficits quickly reappeared. The borrowing also added to future budget problems because of the debt payments it required.
The bonds “were a low point in state fiscal management,” said Tom Dresslar, a spokesman for the state treasurer's office. “The sooner we get it behind, the better.”
As of May 1, the state still owed $4.6 billion on the bond, but it has made payments ahead of schedule, according to the treasurer's office.
Messages left Wednesday with spokesmen for the former governor were not immediately returned.