California's debt continues to climb

Before the economy went bust, California voters authorized multibillion-dollar charges on the state's infrastructure credit card.

They approved generational investments in roads, schools and levees, as well as hospitals and stem-cell research. At the time, fiscal experts projected that California at most would have to spend roughly 6 percent of its annual budget on payments.

But after an economic collapse, estimates now show that debt service could consume as much as 10 percent of the annual general fund budget by 2014-15 — an "unprecedented" ratio, according to the Legislative Analyst's Office.

The latest debt warning comes weeks after lawmakers and Schwarzenegger placed a new $11.1 billion water bond on next November's ballot. Backers of the measure say the state desperately needs a water system overhaul.

Until this year, the state had not spent more than 5.7 percent of its general fund on debt, according to Department of Finance records dating back to 1976. The ratio now stands at 6.7 percent.

Treasurer Bill Lockyer warned in a report last month that a 10 percent debt ratio "would require cutting even deeper into crucial services already reeling from billions of dollars in reductions." Fiscal conservatives warn that it also increases pressure on lawmakers to raise taxes.

"It's a zero-sum game," added Lockyer spokesman Tom Dresslar. "Every additional dollar you spend on debt service is a dollar you cannot spend to educate your kids, provide health care, protect the environment or fight fires."

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