Document:California Press Release 13 October 2000 Government Report Proves Prop 32 Unnecessary

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14547 Titus Street, Suite 214
Panorama City, CA 91402
For immediate release: October 13, 2000
For additional information:
Juan Ros, Executive Director
Phone: (818) 782-8400

Government report proves Prop. 32 is unnecessary, Libertarians show

PANORAMA CITY -- A little-publicized report issued by the non-partisan Legislative Analyst's Office (LAO) in 1998 calls for the phasing-out of California's Cal-Vet loan program -- underscoring the need to oppose Proposition 32 on the November 7 ballot, according to the Libertarian Party of California.

It's great when you can point to a government report that backs up your argument against what would be a taxpayer boondoggle," announced Libertarian state executive director Juan Ros.

Proposition 32, if passed, would provide a bond issue of $500 million for the California Veteran Farm and Home Purchase Program, known as Cal-Vet, which was established in 1921 to help World War I veterans acquire farms and homes.

But according to the LAO report, entitled "Rethinking the Cal-Vet Program," Cal-Vet has outlived its usefulness and should be eliminated. "The LAO is a well-respected office that has provided nonpartisan advice to the Legislature for over 55 years," noted Ros. "Apparently the Legislature ignored this advice when they voted unanimously to put Prop. 32 on the ballot."

Among the conclusions reached by the LAO:

  • Cal-Vet is not competitive with other private or public sector lenders. "Veterans can get far better interest rates from private lenders," Ros pointed out. In December 1997 for example, when private sector loans were bearing 7%, Cal-Vet loans carried an 8% rate.
  • The Cal-Vet program has lost money for the last five years and has eroded $200 million in equity since 1986. In fact, Cal-Vet suffered losses in eight of the 11 years from 1986 to 1997, reducing state equity in Cal-Vet by 44% in that time.
  • Veteran needs for Cal-Vet loans are diminishing. "Participation by aging war time veterans is quickly declining," Ros pointed out. "So why should voters approve another $500 million, which would provide housing for only 2,500 veterans?"

The LAO report recommended the complete phase-out of new Cal-Vet loans by 2007. "If the Legislature's own analysis says this program should go, who are we to argue? That's the best reason to vote no on Proposition 32," Ros concluded.