California Pays Off $15 Billion In Costly Debt From 2004

SACRAMENTO (AP) — California is set to make its final payment on $15 billion in costly borrowing championed a decade ago by then-Gov. Arnold Schwarzenegger.

State Treasurer John Chiang and Director of Finance Michael Cohen are expected to mark the final $928 million payment on Wednesday.

As one of his first major actions in office, the Republican governor led a bipartisan campaign in 2004 to persuade voters to approve the Economic Recovery Bonds to close the state’s budget deficit.

He pitched the debt refinancing campaign as a way to avoid enormous public service cuts and possible tax increases. Voters approved Proposition 57, but the budget deficits quickly reappeared and the debt service from the bonds added to California’s fiscal woes.

The state treasurer’s office estimates the bonds cost the state $19.1 billion.

(© Copyright 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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