During the past legislative session, Gov. Arnold Schwarzenegger and Democratic legislative leaders (primarily Sen. Don Perata and Assembly Speaker Fabian Nuñez) reached an agreement to put four bond measures on the ballot to fund various projects in California.
Three of them (Propositions 1B, 1C, and 1D) are reviewed below. The fourth, Proposition 1E, will be reviewed in a later issue along with Proposition 84, which was put on the ballot by citizen initiative. Prop. 84 has the governor’s support, and both 84 and 1E deal with issues of water supply and flood control.
This proposition would allow the State of California to issue $19.9 million in bonds in order to fund various transportation improvements and repairs.
By far, the bulk of the money—$11.3 billion—would go to highway and road improvements. $4 billion would go to public transportation, $3 billion to improving the movement of goods within the state (including reduction of emissions), and $1.5 billion for transportation safety and security. Most of this money is for ground transportation, with a small portion of the safety and security money ($100 million) going towards ports, harbors, and ferry facilities.
To vote yes on this measure, a California voter would have to answer a series of questions: 1) Are the transportation improvement needs in California great enough to justify almost $20 billion in new spending? 2) Does Measure IB provide the best mix of projects for that spending? 3) Is a bond measure the best way to finance these projects, and, if not, are there reasonable alternatives?
The first question seems easy enough to answer. California’s transportation system was once the envy of the nation, whether it was the red-car light-rail trolleys, wide streets that took advantage of the enormous spaces available in the west, or a well-built highway system. That world of easy transportation in California has clearly been long over, caught in a pincer between exploding population and imploding finances. Given the critical relationship of transportation to our lives—everything we want or need has to get to us by some means, or we have to get to it—spending $20 billion to break the logjams and open the chokepoints and ensure a smooth flow seems more than justified.
But is the mix in Measure 1B (56.4 percent of the money going to roads and highways, 20.1 percent going to public transportation) the best way to address that problem? Does building more roads and highways only encourage more driving and, therefore, should we encourage the use of public transportation by putting more money into it? Or should transportation tax dollars reflect the marketplace, where citizens have shown that they would rather use cars than buses and BART? If you haven’t already made up your own mind, there’s more than enough literature floating around on the internet and in the library to help you make a decision.
Finally, is a bond measure the best way to finance these transportation projects? The cost of a bond is steep, with the state Legislative Analyst estimating that you can add $19 billion in interest payments to the actual $19.9 billion bond principal, making the real cost of Measure 1B $38.9 billion over the 30 year repayment period. Opponents of Measure 1B say that this is a bad way to finance government, doubling the cost and tying up money for years into the future because the legislature doesn’t want to either raise taxes or free up the necessary money out of existing revenue to pay for the improvements out of the regular budget.
If that assertion is true—and it’s hard to argue against it—would the legislature bite the bullet (either on its own or under pressure from voters) and move the necessary money around in the regular budget to buck up the state’s transportation system if Measure 1B doesn’t pass? And if that doesn’t happen and California’s transportation system continues to deteriorate, would such a deterioration do severe and ireedemable harm to California’s economy and its citizens?
You be the judge.
Proposition 1C: Housing And Emergency Shelter Trust Fund
In a perfect world, voters would be able to go down the list of projects in a bond measure, pick out the ones they want, toss out the ones they don’t. Until we reach that perfect world, voters will be faced with bond measures like Proposition 1C, which tries to increase chances of passage by mixing two different types of housing programs that may be popular with two somewhat different voting constituencies.
In addition, there is a sort of “truth in advertising” issue in Proposition 1C. While the measure bills itself as being a “Housing and Emergency Shelter” proposition, more than a third of the money does not specifically go for housing, but for grants to cities for the building of parks and infrastructure, as well as for environmental cleanup to facilitate urban infill. While it can be argued that you can’t have housing without those other projects, it’s difficult to argue why Prop. 1C include “emergency shelter” in its title when only $50 million out of its $2.85 billion goes for the development of homeless shelters.
The details: $625 million (or 21.9 percent) of Prop. 1C’s $2.85 billion goes to existing state homeownership programs, providing loans and downpayment assistance to low-income and moderate-income homebuyers, as well as grants to organizations or local governments which provide assistance to such low-income and moderate-income homebuyers.
An additional $775 million (or 27.2 percent) goes to existing programs to help in the building of housing for “in need” communities, with the bulk ($345 million) going to housing developments for low-income renters, the rest spread between homeless shelters, housing for farmworkers, and housing targeted specifically to homeless youth.
But almost half of the money ($1.35 billion, or 47.5 percent of the total bond) goes to new projects. Among them is $850 million for grants to develop urban infill development (the parks, water and sewer systems, and transportation projects mentioned above), $200 million in grants for parks, and another $300 million in grants and loans to local governments and developers to encourage development near public transportation.
Encouraging development near public transportation is the new mantra for many public officials in California, perhaps making up for years of the disintegration of public transportation in areas where the people already are.
In the East Bay, that means lots of public money for transit villages around the various BART stations, which are sometimes in convenient locations, but sometimes aren’t. There are those who like the idea of BART transit village, arguing that it’s the way to encourage the use of public transit; there are others who dislike the BART transit villages, thinking the Fruitvale Transit Village is a bust, or that the Ashby or North Berkeley BART transit village are simply bad ideas. In either case, because of the low amount of such money in the bond measure (only 10.5 percent of the total), this may not be enough to tip the balance either way.
Proposition 1D: Public Education Construction and Modernization Bond
This is another one of those bond measures that hopes to gain voter approval for new programs and projects by slipping them in alongside items that voters have already approved in the past.
The $10.416 billion in construction and building modernization bond money would be split between higher education and K-12 facilities, with vastly different rules for how the money would be allocated for each.
For the $3.1 billion going to the higher education facilities ($1.5 billion to community colleges, $690 million to the California State University system, and $890 million to the University of California system), no specific programs or building projects are listed in the bond. Instead, the Legislative Analyst’s Office only notes that “the Governor and Legislature would select the specific projects to be funded by the bond monies.
The $7.3 billion in Prop. 1D money going to K-12 facilities, however, are divided between seven specific projects. Four of them—money for modernization, new construction, charter school facilities, and joint-use projects—are already in existence (joint-use projects are typically such things as gymnasiums, libraries, and child care facilities that are located on school campuses but are used for both school and non-school activities). School districts or charter schools receiving these funds through the state School Facilities Program (SFP) normally have to put up between 40 percent and 50 percent in local matching funds.
Without these state funds, facilities modernization and new construction would be virtually out of the reach of most school districts in the state.
Meanwhile, Proposition 1D allocates state money for three new categories of SFP funding: overcrowded schools ($1 billion), career technical facilities ($500 million), and environment-friendly projects ($100 million).
The relatively small amount for “special incentive grants” for environment-friendly projects appears to be part of a compromise just to get the provision in. Considering that this provision promotes construction practices the maximize the efficient use of energy and water that would eventually lowering the overall financial needs of the district, “green construction” supporters of this provisionappear to be hoping that support for such environment-friendly building practices will catch on, and so this eventual part of the state school building bond money as well.
Meanwhile, an estimated 20 percent of schools in the state would be eligible for the overcrowded facilities funds, which aims at replacing the number of portable classrooms with permanent facilities.
And the career technical facility portion of the bond grants monies for construction of or modernization at existing career technical programs within school districts. Roughly 50 percent of the districts in the state have such career technical programs, and so would be eligible to apply for the grant money.
As with other bonds, the cost for this program is steep as opposed to paying for school construction out of the yearly state budget. The Legislative Analyst’s Office estimates that paying off the principal and interest on Proposition 1D over a 30-year period virtually doubles the cost of the bond, adding $9.9 billion to the original $10.4 billion allocation.