CA: Pitching Public Works Bonds Now a Team Sport (Schwarzenegger and Dem leaders)

It was a priceless photo for a Republican governor running for reelection in a blue state: Him standing at the mike, the two Democratic legislative leaders at his side.

All three grinning into the cameras in the Capitol news conference room — announcing their bipartisan agreement last week on a bill to raise the minimum wage.

But that was not an abnormal picture in this atypical year. Bipartisan deals, aberrant in the past, have become commonplace: a $37.3-billion package of state bonds for public works, a rare on-time budget and — the most recent — legislation forcing drug companies to offer discounts to uninsured low- and-middle-income Californians.

The drug and minimum wage deals are bipartisan in this sense: Gov. Arnold Schwarzenegger and the Democratic legislative leaders have agreed. GOP leaders haven't, but they lack the muscle to stop the bills.

Schwarzenegger and the legislative leaders seem acutely aware that they need to jointly pitch the public works bonds. The governor has been pressuring the Democrats to hit the campaign trail with him, and they've agreed — as long as they're seen as promoting only the bonds, not him.

There's no organized opposition. "Our opposition," Perata says, "is going to be public skepticism."

One potential problem for the bonds, some strategists fear, is Schwarzenegger's constant sermonizing about the evils of tax increases. He could inadvertently persuade some voters to reject any new spending.

The best Schwarzenegger could coax out of his own Republican Party at a state convention last weekend were endorsements of the transportation and flood bonds. The GOP went neutral on the school bond and flatly opposed the housing measure.

At least the Republican governor and Democratic leaders are linked in bipartisan harmony. They'll need to keep making a big show of that to sway voters.

The WSJ has an editorial by Shikha Dalmia, a senior analyst at Reason Foundation, commenting on the Bond Propositions:

Schwarzenegger Gives Up
Arnold Schwarzenegger is following the wrong script. After taking over as governor in 2003, he was expected to vanquish business-as-usual politicians in Sacramento -- and pull California from the brink of fiscal ruin. Instead, he has decided to put his own political future ahead of the economic survival of his beloved Golden State. How else to interpret his recent move to join ranks with his opponents in Sacramento to put a pork-heavy $37 billion bond infrastructure proposal on the November ballot?
The real issue, however, is what this bond measure will do to California. Few doubt the need for California to invest in its crumbling infrastructure. But this is an infrastructure bond in name only. The four big-ticket items in the bond -- which is two times bigger than the biggest bond in the state's history -- are $2.6 billion for housing, $10.4 billion for K-12 schools and universities, $3.1 billion for levee repairs and $19.2 billion for transportation.
The housing bond is simply welfare masquerading as a capital project....
The education bond is equally misguided...
California has also been routinely raiding the transportation dollars it raises from gas taxes for other general fund needs -- a fact obvious to anyone who has ever battled traffic on the San Diego Freeway. Yet only about half of this bond's revenues are slated for actual road building. Instead, $4 billion is going to mass transit even though mass transit's share of commuters, never large, has dropped by 9% since 2000.
Even after the proposed $19 billion transportation bond and the $384 billion in planned transportation spending by the state's biggest three regions (Los Angeles, the Bay Area and San Diego), California's traffic congestion will actually be worse in 2030 than it is today because the state is choosing pork and pet transit projects instead of prioritizing and adding much-needed highway capacity.

• Proposition 1A: Protects the gasoline sales tax from raids for nontransportation purposes.

I appreciate that your recommendation on Prop 1A is NO but a little more detail might help convince conservative voters.

Prop 1A is a trade off.

It allows the continued raiding of dedicated transportation funding sources to balance General Fund expenditures through the 2008/2009 fiscal year. Raiding would then be prohibited until the 2016/2017 fiscal year.

As a trade off, the partial raid authorized by Davis in 2003 and the full raid authorized by Schwarzenegger in 2004 do not have to be repaid until the end of the 2015/2016 fiscal year. Under existing law those raided funds were to be returned to their source by the 2008/2009 fiscal year.

Pro 1A helps gives our liberal governance a two year extension on hard choices. If by 2008, California's economy isn't generating sufficient tax revenue to support its spending habits, the governing class will either have to 1) raise taxes, 2) implement spending reductions or 3) ask the voters to nullify Prop 57 to allow more General Fund borrowing.

None of these alternatives were contemplated by the voters in 2003 when they swept a fiscal conservative into office. Now they know. That candidate did little to correct the electorate's impression in 2003 but has since abandoned all pretensions of being conservative. Today he is just one of the liberal gangsters in Sacramento, spending tax money that isn't there.

I appreciate that your recommendation on Prop 1A is NO but a little more detail might help convince conservative voters.

Thank you for elaborating -- you are exactly correct. I would not oppose it on the fact that it is only a partial protection against raiding (they can still raid every few years), but the extension of paying back prior raided funds is just more borrowing and reinforces the fiscally irresponsible behavior of the past 5 years.

In an odd twist, an initiative to put in a real halt on the Transportation Fund Raids had been circulated earlier this year. It 'accidentally' qualified for the 2008 ballot. I haven't read the actual language, but on the surface I would vote for this Proposition.

California ballot measure that backers tried to kill won't die
Voters will see a tough regulation of gas tax money initiative on '08 ballot. Compromise up for vote in fall.
Michael Gardner, Copley News Service
August 24, 2006

SACRAMENTO -- An initiative to protect gas tax money from raids by the Legislature, which had been purposely crippled and left for dead by its own backers, is heading to voters anyway.
The office of Secretary of State Bruce McPherson confirmed Wednesday that the initiative qualified for the June 2008 ballot with 605,610 valid signatures.
The proposal, which strictly bars any non-transportation use of state gas tax money, was originally made last spring and was drafted by an alliance of labor, business and local government interests. Then in May, the governor and legislative leaders struck a compromise in Proposition 1A that, though weaker, was eventually endorsed by those backing the original proposal.
Now they will be in the awkward position of opposing their own measure. As part of the compromise, they had tried to prevent the initiative from qualifying by not submitting 300,000 signatures, but were surprised when even a much-smaller sample gave them 7,507 more valid signatures than necessary.
In the meantime, voters still can put a stronger lock on transportation funding. Proposition 1A was put on the Nov. 7 ballot by the Legislature and the governor.
Proposition 1A would require the state to repay the transportation account with interest before it can take more. Under the original proposal, which is now on that ballot in 2008, the state would not have that flexibility.
Approval of Proposition 1A could pose an intriguing dilemma for voters two years from now: should they allow the state to tap gas tax dollars in tough times, or is the highway and roads account sacrosanct? This latest ballot twist illustrates the pitfalls of pressure tactics exercised by special interests to force compromise from a sometimes unresponsive Legislature, with billions of tax dollars and important public services at risk.
"It tells us we need act sooner and be more reasoned," said Sen. Tom Torlakson, an Antioch Democrat active in the deal-making.
The decision to abandon the tougher, original initiative also may perplex voters who eagerly signed petitions hoping to end state shifts of gas tax money once and for all.
Jim Earp, a lead negotiator for those supporting limits on state diversions, acknowledged that the decision to compromise could be puzzling.
A more restrictive initiative also could have drawn opposition from the governor and the powerful California Teachers Association, putting a win in doubt. In contrast, Proposition 1A confronts only token opposition, Earp said.
Voters have already told lawmakers that they want the state's nickel share of the gas tax dedicated to highways, potholes and buses. But Proposition 42, passed in 2002, included an escape clauses.
Emboldened by a similar successful campaign by cities and counties to protect property taxes, an alliance of transportation interests spent $2.5 million on a signature-gathering drive to qualify a constitutional amendment on the ballot thwarting legislative raids.

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