CA: Voters should reject the bonds, and vote NO on Props. 1B, 1C, 1D, 1E and 84

FlashReport ^ | 10/11/06 | Jon Fleischman

[NormsRevenge]

We will devote quite a bit of space in the FlashReport in the coming weeks to articulating why the five "big bonds" measures on the November ballot -- Propositions 1B, 1C, 1D, 1E and 84 -- should all be rejected by California voters.

You've heard me make the case over and over if you are a regular reader, but if you are new to this site, I can sum up the main over-arching reasons to reject all of this borrowing in just a few paragraphs:

For decades, the liberals who control the state legislature, along with a string of Governors who aided them with budget signatures, have neglected infrastructure investment in California. Instead, these liberals have taken the state budget (which is now well over $100 billion annually) and have put much of that money into their lefty social engineering programs and into fattening the state bureaucracy.

Lack of proper funding for infrastructure has also been exacerbated because of initiative and ballot measures that have been passed by voters over the years that create 'locked in' formulas for spending - usually because the voters are taking into their own hands setting spending priorities (because they were unhappy with the job the politicians in Sacramento were doing?).

While I think that ballot-box budgeting is a bad idea, until a global solution to the problem is reached, I could have supported a ballot measure this year that would have required a fixed percentage of the state's budget each year (say 10%?) must be spent on infrastructure. In other words, a solution to use current revenues to the state to make the necessary investment in California's infrastructure needs.

The key issue is this: California taxpayers already generate more than enough revenue into state coffers to run a lean, effective state government AND finance all of the state's infrastructure needs without increasing the amount of money that comes from the pockets of Californians (or in this case, the amount of money borrowed - and debt created).

If California truly had a lean state government, and state income was substantially lower, THEN AND ONLY THEN might it make sense to support bonded indebtedness for long-term infrastructure (after all, people take out long-term loans all of the time for their homes).

Of course, what you won't see on the television commercials is that all of the bond packages on the ballot contain vast amounts (billions) of spending on programs that go way out of the scope of what any rational person would call "infrastructure" -- there is a cornucopia of social engineering spending tucked into them -- as well as a lot of 'discretionary' spending to be decided later by the legislature. Yes, the SAME legislature that put us into this mess by misprioritizing spending for decades.

Today's on the main page FR Guest Editor Brandon Powers selected a column from our friend Bill Saracino to highlight as the Golden Pen Award Winner. It is worth a read to gain some insight into why Proposition 1D, the so-called "Education Bond" is particularly poor public policy, and should be rejected.

Bill's well written piece also talks about the dangerously high level of indebtedness Californian's have already authorized.

Bill's piece does not add a footnote on why 1D is particularly heinous -- it says that for local school districts to get money for school construction, etc., those districts have to be able to provide a match of local funds. Which means the $10.4 billion of borrowing in the bond measure will then create a surge of local tax increase measures and local bond measures as districts try to do what they can to get those funds. So some have called 1D the "Blue County Bonds" because conservative areas of the state will reject local tax increase measures and so school districts in these areas may not be able to put up the 'matching funds' to get some of the 1D money.

Anyways, I hope that you will very much consider these points above, and those made by Bill Saracino today on 1D and on too-much-borrowing in general, and vote NO on 1B, 1C, 1D, 1E and 84.

What better message to send to the politicians in Sacramento, especially after re-electing a Republican Governor with a new team of GOP Statewide Officeholders -- then to tell them: Spend the $100 billion ++ you take in already on infrastructure, but Californians aren't opening their wallets or credit cards any more!

Proponents of the borrowing will tell you about how the 'need is great' (especially on the Levee and Transportation Bonds). Remember that it is this 'need' that will put pressure on the legislature to spend current dollars on these priorities. Take away the pressure from Sacramento politicians, and we doom ourselves to several more decades of misprioritized spending on left-wing programs.

[NormsRevenge]

liberals have taken the state budget (which is now well over $100 billion annually) and have put much of that money into their lefty social engineering programs and into fattening the state bureaucracy.

---

.. and of late, done it riding a Trojan Horse with a Rainbow Flag as a tail. Those girlie men. :-}

Thanks to Jon and another FR on the web for the commentary.!

[ElkGroveDan]

As Board of Equalization Member Bill Leonard has pointed out, Proposition 1B alone "holds the dubious distinction of being the largest bond ever placed before the voters anywhere in the world."

[SDGOP]

But, its for the children!

[Amerigomag]

Voting against bond measures is generally preaching to the choir on FR.

What interests me is Prop 1A. If you spot an artcle addressing 1A, please post it. I'd like to follow the discussion.

Prop 1A is marketed under two broad categories. Innocuous and good for everyone. But, people don't spend thosusands of dollars to gather signatures for direct, simple majority legislation that is innocuous and good for all.

[calcowgirl]

I'm finding little to like on the ballot.
As of now, Prop 90 and Prop 85 are the only two that will be getting a YES vote.

Bonds, taxes, bonds, taxes.... spend, spend spend.
The socialist's funding schemes need to be cut off, NOW!

Ditto to your comment thanking Jon Fleishman for his opposition.

[calcowgirl]

Prop 1A was put on the ballot by the legislature. It passed as SCA 7 (Torlakson-D).

The legislators voting against it were: Cogdill, DeVore, La Malfa, Maze, Mountjoy, Strickland, Villines and Walters. Maybe one of them will speak up. Of course, so much of this legislation was put in front of them at the last minute and with little detail, I doubt there was a thorough vetting.

These two comments are interesting (from the May 4, 2006 Assy Analysis). I made some minor corrections to the first:

As written: Spreading the repayment of existing funds "owed" due to prior suspensions of the Article XIX B General Fund transfer will save the General Fund approximately $690 million for the 2006-07 budget year as compared with the Governor's proposed budget and $1.6 billion over the next three budget years, as compared with current statutory law.

Corrected: Spreading the repayment of existing funds "owed" due to prior suspensions of the Article XIX B General Fund transfer will save cost the General Fund Taxpayer approximately $690 million for the 2006-07 budget year as compared with the Governor's proposed budget and $1.6 billion over the next three budget years [for spending on otherwise unaffordable programs], as compared with current statutory law.

And this comment:

Authorizes the Legislature to provide by statute for the issuance of bonds by state or local agencies that would be secured by the minimum annual transfer of "repayment" of suspended funds.

So this is authorizing another $2.3 billion in bonds? ($0.690 + $1.600 from above)

Text of ACA 7 relative to bond issuance (last paragraph):

(2) The Legislature may provide by statute for the issuance of bonds by the state or local agencies, as applicable, that are secured by the minimum transfer payments required by paragraph (1). Proceeds from the sale of those bonds shall be allocated solely for the purposes set forth in this section as if they were revenues subject to allocation pursuant to paragraph (2) of subdivision (b).

I am continuously amazed that government folks think that proceeds from bonds are "revenue."

[Amerigomag]

Spreading the repayment of existing funds "owed" due to prior suspensions

According to the LAO, Proposition 42 is silent as to whether suspended transfer amounts are to be repaid to transportation.

Therefore, they are not owed. In that light, Prop 1A does provide some relief for Caltrans. Under prevailing code, there is no legal, compelling incentive to repay the suspensions.

[Carry_Okie]

Of course, so much of this legislation was put in front of them at the last minute and with little detail, I doubt there was a thorough vetting.

I take it you're familiar with H.L. Richardson's book, What Makes You Think We Read the Bills?

[calcowgirl]

I agree that Prop 1A has some benefits in closing existing loopholes. But it also allows them to continue to raid the fund (twice per decade) and allows the deferral of repayment from prior years by 7 years (10 vs. 3 yrs). The latter allows them to spend $2+ billion that is "freed up" on other programs.

Either which way, I want to see the 2008 measure pass that will not allow them to raid the fund at all.

[Amerigomag]

(2) The Legislature may provide by statute for the issuance of bonds

Here's a just remedy to combat the abuses of the Schwarzenegger Reciprocity Vehicle

1) All state bonds may only be issued to CalPERS.
3) California becomes the agent of record for all state bonding.

Yes, the Austrian would be dead in the waters with his financial backers but the state would receive the bonding commissions and the income from the bonds could be dedicated to offset the staggering, future, medical liabilities of its retirees.

[calcowgirl]

Nope--I'd never heard of the book before.

I just remember the complaints by legislators of what they were being asked to vote on and the reports of strong-arming to get votes for this Bond Bonanza.

[calcowgirl]

All state bonds may only be issued to CalPERS.

If they did that, wouldn't they just collude to sell bonds to CalPERS with outrageously high rates to take care of the unfunded liability and cover up the decades of mismanagement?

[Amerigomag]

Either which way, I want to see the 2008 measure pass

Under any Prop 42 discussion, the year 2008 is a very confusing reference year:

1) Prop 42 itself does not take effect until 2008

2) The original, now orphaned, fix for Prop 42 has qualified for the 2008 ballot.

3) Prop 1A provides a moderated fix, both during the transition to Prop 42 and under Prop 42, beginning in 2008.

This is why I'd like to see Prop 1A hashed out by resident experts on this forum before Nov 7.

[Amerigomag]

If they did that, wouldn't they just collude to sell bonds to CalPERS with outrageously high rates to take care of the unfunded liability and cover up the decades of mismanagement?

Not to beat a bit of humor to death but ..

Nope. Rates are well publicized and controlled by the market. Fiduciary responsibility, including examination of the books to prevent such shenanigans, by federal law. An egregious fix would be nearly impossible to cloak.

[BurbankKarl]

I am voting No on No....

and I never received my voter guide.