reclaimucsd

UC to Borrow Money FOR California

In California on February 14, 2012 at 11:21 pm

The UC is going to borrow $200 million for the state after the state took away $100 million dollars from the UC over winter break. [1] The state still owes the UC $1.7 billion dollars from previous loans. [2]

The California government is fiscally self-destructive: it is designed to be unable to fund itself. Proposition 13 requires a two-thirds vote to raise taxes, but allows a simple 50 percent majority to lower taxes and introduce loopholes. [3] Proposition 13 caps the tax-rate on corporate property at 1%, the revenues from which are allocated by the state government rather than local municipal governing bodies. [4]

UC spokesperson Dianne Klein: “The university is in a better position (than the state) to do that [borrow money], frankly because we have a better credit rating. The university is able to secure a better interest rate for that money” [5] In 2011, Fitch rating agency cited “Continued tuition and fee setting flexibility” as a key factor for the UC’s strong AA+ credit rating. [6]

THE UC IS NOW BORROWING MONEY, IN PART BECAUSE IT IS BETTER ABLE TO TAX STUDENTS THAN THE STATE CAN TAX CITIZENS AND CORPORATIONS.

WE SHOULD NOT PAY FOR A DISFUNCTIONAL STATE. WE SHOULD DEMAND AN END TO PROP 13s VOTING REQUIREMENTS.

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[1] http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/13/MNFV1MBVNN.DTL#ixzz1gX6X2RwB

[2] http://www.dailycal.org/2012/02/06/state-looks-to-borrow-from-uc-due-to-predicted-cash-flow-shortfall/

[3] Shrag, Peter. Paradise Lost: California’s Experience, America’s Future. London: University of California Press, 1999. p. 156

[4] http://www.lao.ca.gov/reports/2011/calfacts/calfacts_010511.aspx#zzee_link_2_1294170707

[5] http://www.dailycal.org/2012/02/06/state-looks-to-borrow-from-uc-due-to-predicted-cash-flow-shortfall/

[6] http://www.businesswire.com/news/home/20110708005988/en/Fitch-Rates-University-California-General-Rev-Bonds

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