Treasurer Bill Lockyer: California’s Unsung Champion of the Underserved

California’s credit risk is as solid as they come. The state has never defaulted on a bond. In fact, California is constitutionally required to repay on its bonds. This means that the “risk” of California defaulting on its bonds is essentially zero. Mr. Lockyer, half-jokingly, said that the only thing that can make California default “would be global thermonuclear war where everything shut down. If that happened, our worst problem would not be the bond market.”

The problem is that California bonds always get stuck with undeservedly high interest rates even though the state has never defaulted on a bond. The higher interest rate means taxpayers have to pay more to repay the bonds. How much more? $4 billion over the 30-year life of $61 billion in state bonds already approved by voters. That’s more than $100 million a year lining the pockets of Wall Street investors instead of helping to pay for more teachers and better roads.

Bill Lockyer’s Crusade for Taxpayers

Seeing this injustice, Mr. Lockyer has been on a crusade to get the three main Wall Street rating agencies that determine interest rates – Moody’s, Fitch, and Standard and Poor’s – to fairly rate California’s risk. He’s even organized a national coalition of local and state leaders, who were too afraid to speak up on their own, to advocate for fair assessment of government ratings.

As a result of Mr. Lockyer’s leadership in California and on the national stage, Moody’s and Fitch are making progress towards instituting a more fair ratings system for California and other governments. Although reluctant, Standard & Poor may soon fold under the heavy pressure that Mr. Lockyer has exerted on behalf of California’s taxpayers.

So while the state struggles to meet its fiscal obligations, Treasurer Lockyer has been waging, and winning, a battle that will generate billions of dollars in savings to California’s taxpayers. These savings could not come at a more critical time, as more hospitals continue to close and more of our teachers get pink slips. In short, these billions of dollars in savings will go a long way towards helping California keep teachers in the classroom and hospitals open.

Good ideas on how to tackle the budget deficit may be in short supply, but California Treasurer Bill Lockyer has proven that the budget debate doesn’t have to be a zero-sum game between fiscal responsibility and protecting the public interest. Both can be achieved. It just takes leadership.

Samuel S. Kang is Legal Counsel to the Greenlining Institute, a multi-ethnic advocacy, research, leadership development, and public policy organization whose ultimate goal is to increase the role that low-income and minority Californians play in the civic arena in order to create equitable policies and improve quality of life for all communities.