EDITOR: Capital appreciation bonds, or CABs, are the latest scourge in public schools financing. Once voters approve a school bond, district officials can issue either traditional current interest bonds or CABs. Unlike current interest bonds, for which repayment begins immediately upon issuance, CABs defer repayment for years allowing tremendous amounts of interest to accrue. This allows school officials to misrepresent to voters the true cost of the bond by ignoring the long-term cost.
Total repayment cost for current interest bonds, much like a homeowner's mortgage, is typically two to three times the amount borrowed. As bad as that sounds, the repayment cost for CABs is 10 to 15 times the amount borrowed. A $15 million CAB issued by the Jefferson Union High School District in Daly City, for example, will cost residents of the district more than $127 million to repay. Hundreds of CABs have been issued by school districts throughout the state and represent ticking time bombs for unsuspecting residents.
State Treasurer Bill Lockyer and state Superintendent of Schools Tom Torkelson have called for a moratorium on CABs, and legislation has been introduced in both the Assembly and Senate to ban the practice. We encourage passage of this legislation.
Executive director, Sonoma County Taxpayers Association
EDITOR: I can think of no better way to convey my personal revulsion for Petaluma City Council (or any local governing entity) wading into the nation gun control debate ("Council backs gun-control bill," Tuesday) than to quote Mike Harris, the lone Republican on the council. He cast the sole vote against this dubious edict of support for Sen. Dianne Feinstein's bill calling for a ban on assault weapons.
"It's a slippery slope if we keep taking on federal issues," Harris said. "What's next? Are we going to start discussing the atrocities in Darfur, or take a position on freeing Leonard Peltier or drone usage in Petaluma?"
Spot on, Councilman. Spot on.