No one can seriously question one of the two major assumptions
behind the $38 billion worth of construction and repair bonds
proposed on the Nov. 7 state ballot.
No one can seriously question one of the two major assumptions behind the $38 billion worth of construction and repair bonds proposed on the Nov. 7 state ballot.
Traffic relief is a must in myriad parts of California. Port security isn’t a tenth as tough as it needs to be. Who can argue against battered women’s shelters and housing assistance for senior citizens, veterans and working families? Overcrowded public schools need relief. And the levees in the Sacramento-San Joaquin river delta area are a disaster waiting to happen.
Taken together, all those realities make up one big assumption behind the bonds, namely that the projects they would fund are needed.
The rub comes in the second assumption, which can be summed up this way: California politicians don’t have the patience and determination to fund the needed work with ongoing revenues.
Interestingly, it’s the politicians themselves who are behind the current bond propositions, numbered 1A through 1E on the ballot. They have totally rejected the entire notion of pay-as-you-go for funding the same work.
That’s a sign of their weakness, starting with Republican Gov. Arnold Schwarzenegger and his Democratic opponent, state Treasurer Phil Angelides, both of whom totally embrace every dollar of the proposed bonding.
It might be wise for the voters to get tough and tell both the state legislators who devised the bond measures and the gubernatorial hopefuls who ardently support them that further mortgaging of the state’s future is unacceptable.
For a mortgage is exactly what bonds are. If the bond measures pass, Californians will fork over more than $70 billion in principal and interest to repay them over the next 30 years. In short, the $38 billion price tag voters see today is only about half the true cost of these bonds, a cost to be paid by younger Californians and their children for at least a generation. These bonds figure to add an average of about $2.5 billion to the state’s budget each year for three decades, an obligation that can’t be avoided even in times of extreme emergency.
But the politicians say bonds are the only way to get the work done. “It will get done much faster and more reliably with bonds than with a pay-as-you-go plan,” says Angelides, whose function as state treasurer over the last eight years has been to sell state bonds. Interestingly, many bonds passed during that time are still on the shelf, unsold although authorized, in part because plans to distribute the money to local agencies and details of how it will be spent have not yet been worked out.
Similarly, plans for spending much of the $38 billion now on the ballot are indefinite. So claims that bonding assures quicker work on necessary projects simply don’t match the reality of past bond issues.
 If legislators and the governor – whoever wins this fall – have the will to do it, they could easily agree on a pay-as-you-go plan that would get the work done at least as fast and at half the cost.
 Here’s how: First, the politicians would have to pledge they would find that same $2.5 billion they say will be readily available each year for bond repayments and set it aside for construction. Do that, and they’d spend the $38 billion base amount of these bonds without paying a cent of interest.
 Once the money is pledged, with binding resolutions passed and signed, the next step would be to prioritize the work. The most urgent needs – often assumed to be levee repair and replacement – could be accomplished in the first year.
 Using bond money to do that work would mean waiting at least until next summer to get started, the time for voters to approve the bonds and for them to be configured and sold and contracts let. But simply appropriating the first $2.5 billion installment could allow for much a more immediate start.
Where could this year’s money come from? One place might be the rainy-day fund set up in the budget that passed in June. Another might be the higher-than-expected revenues still pouring into state coffers each month.
One other thing about pay-as-you-go: In any year there’s a true budget crisis, work could be delayed. The state budget then would not be pushed further into deficit, as would happen if bonds were sold and repayment became an absolute must each year.
For sure, if voters nix some or all the bond measures placed before them by the politicians this fall, those same politicians will label their own constituents short-sighted and cheap. But the reality may be different from such epithets.
If voters continue a trend begun when they handily turned down the proposed library bonds and pre-school tax increases embodied in last June’s Propositions 81 and 82, they may actually be showing they are simply more savvy and efficient than the state’s entrenched elected officials.
Tom Elias is author of the book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It,” now available in an updated third edition. His e-mail address is [email protected]
