From Sacramento — There's a small, innocuous bond proposal at the tail end of Tuesday's state ballot that could get trampled if voters are in a knee-jerk, no-spending mood. And that would be a shame.
Proposition 12, a $900-million bond to continue the Cal-Vet home loan program for California veterans, is the only spending measure on the ballot that would pay for itself.
All the rest would feed out of the chronically deficit-plagued general fund, piling more spending onto a state government that already can't live within its means.
The economy is in the dumps, and there's no recovery in sight. But that's only part of Sacramento's dilemma. Capitol politicians -- the governor and Legislature -- simply can't manage a budget. They can't agree on how to assure that there's enough coming in to match what's going out.
And until they figure that out, it seems imprudent to launch new spending programs.
The one exception is Prop. 12.
To start with, Cal-Vet is not a new program. It dates back 87 years and has proven to be self-financing. Since 1921, more than 420,000 veterans have bought a home or farm through the program at favorable interest rates. They've paid off the bonds and covered the state's administrative costs through their mortgages.
If there's any cost to the state, it's indirect. The bonds are tax free, so Sacramento loses out on revenue from bond-buyers' profits. But investors looking for tax-free bonds will find them somewhere, with or without Cal-Vet.
The program basically works this way:
Most any veteran -- whether on active duty or honorably discharged -- is eligible if he or she has served anywhere while American forces were in combat. That includes members of the National Guard if their unit was called up by the president.
The vet finds a house to buy and applies for a Cal-Vet loan. The state lends the money at slightly below going rates -- from a quarter to a half point under -- and holds the mortgage until it's paid off.
No subprime. All fixed rates, usually for 30 years. Minimal closing costs. No refinancing. The house has to be the buyer's personal residence.
"We do foreclose, but not a lot," says J.P. Tremblay, deputy secretary of the state Department of Veterans Affairs. "Last I checked, there were 16 mortgages in default out of 14,000 we were serving."
