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Home loan bond for vets OKd

Legislature backs the governor's proposal to ask voters to approve a $900-million assist to returning military.

July 11, 2008|Jordan Rau and Nancy Vogel | Times Staff Writers

SACRAMENTO — California veterans returning from Afghanistan and Iraq would become eligible for loans to purchase homes and farms through a $900-million bond act that state lawmakers are asking voters to approve in November.

If signed as expected by Gov. Arnold Schwarzenegger, whose administration proposed the measure, the bond would become the 12th item on the Nov. 4 ballot. In a season of great political discord in Sacramento over how to solve a $15.2-billion shortfall, the bond measure, SB 1572 offered by Sen. Mark Wyland (R-Escondido), passed both chambers of the Legislature unanimously.

There is much more contention about another bond measure for water projects, which Schwarzenegger requested lawmakers Thursday to add to the November ballot. That proposal is for a $9.3-billion bond jointly crafted by Schwarzenegger and U.S. Sen. Dianne Feinstein (D-Calif.), who has long had a keen interest in securing adequate water supplies for California.

The Democrats have rejected similar proposals from the governor in the past because, like this one, they include money to build more dams, which environmentalists strongly oppose.

Though the new proposal from the Republican governor and the Democratic U.S. senator includes up to $3 billion for dams, both said they hope legislative leaders will put it before voters because California is facing the most significant water crisis in its history.

Most Democrats say the state can stretch its water supplies more cheaply, with less environmental destruction, by using conservation and recycling and by detoxifying groundwater basins. Most Republicans insist that the state needs new or bigger reservoirs to expand supplies and cope with the uncertainty of climate change. The measure needs votes from both parties to get to the ballot.

The Schwarzenegger-Feinstein proposal attempts to compromise on some contentious issues by using a commission, rather than the Legislature, to allocate bond money for dam construction and by limiting the state's share of dam construction costs to 50%. Water agencies that would use the new reservoir would pick up the remainder.

"The goal of this plan is to break the long-standing stalemate on water," said Feinstein.

Since Schwarzenegger last asked legislators to put a water bond on the ballot, California's water supply has grown more precarious. Reservoirs are falling after the driest spring in recorded history, and a federal judge has crimped the export of Sacramento and San Joaquin river water to Southern California in order to protect the delta smelt, a threatened native fish species.

In a written response to the plan, Senate President Pro Tem Don Perata (D-Oakland) said that before lawmakers consider the water bond, the state needs to spend the $9 billion voters agreed to borrow in 2006 for water, parks and flood control projects, then pass a "responsible budget that can pay for the debt service on a new bond."

"Once we do that, we'll sit down with the governor and Republicans to draft a bond measure to secure the state's long-term water supply," said Perata.

The Farm and Home Loan Program of the California Department of Veterans Affairs, commonly known as the CalVet Home Loan program, gave out its first loan in 1921. California voters have agreed 26 times to additional borrowing to replenish the fund, which has been used by 430,000 veterans. All but about $102 million of the bonding authority from the last ballot measure, approved in 2000, has been spent.

The money is used to give low-interest loans to veterans, but until last month was restricted under federal law to those who served on active duty before 1977. President Bush in June signed a law allowing the tax-free bonds to be extended to finance loans for veterans who served in the last 31 years.

If approved by voters, the $900-million in bonds would not affect the state's general finances unless payments from veterans fall short of the amount to cover the bond principal and interest payments, which has not occurred in the history of the program.

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jordan.rau@latimes.com

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nancy.vogel@latimes.com

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