Lawmaker Wants California to Float Bonds for Defense

A Los Angeles lawmaker plans to introduce legislation today that would allow California to float up to $500 million in “homeland defense bonds” to help local police and fire departments protect the public from terrorism.

With local governments now expected to spend hundreds of millions of dollars dealing with the countless security concerns raised by the Sept. 11 terrorist attacks, Democratic Assemblyman Dario Frommer (Los Feliz) said the state should follow Washington’s example and appeal to the public.

The U.S. Treasury Department has begun offering “Patriot Bonds” to help the federal government raise money to fight terrorism, continuing a long tradition of selling securities during wars and trying economic times. With California facing new security demands at the same time it is saddled with a $12-billion budget deficit, state officials should borrow the concept, Frommer said.

“There is a sense of patriotism right now, of supporting the home front,” said Frommer, who will unveil his legislation today at a news conference in Burbank with Los Angeles County Sheriff Lee Baca and other law enforcement leaders. “I have spoken to a lot of people in my district about this, and I have gotten a positive response.”

Law enforcement groups had been pushing a ballot measure to raise sales taxes by one-quarter of a cent to assist police and fire departments. That effort fizzled last week, however, and some of the groups are getting behind Frommer’s effort, which would also have to be approved by voters. Frommer said he aims to place the proposal on the November ballot.

Frommer has met with state Treasurer Phil Angelides, whose office would administer the bond sale, and is still developing the details of the proposal. Unlike proceeds from the federal bonds, which can be used for any purpose, the state bonds would have to benefit police and fire departments, emergency medical services, and other government departments that face new fiscal challenges due to the terrorism threat.

Angelides would be permitted to sell up to $500 million in bonds. They would earn 90% of the yield of five-year Treasury securities, which is currently about 4%.