The single most important decision that the legislature will make this year is whether to put a massive infrastructure borrowing plan in front of California voters this year. There is a lot of pressure mounting in the Capitol right now as Secretary of State McPherson has said that the deadline for the legislature to place an item on the June ballot is tomorrow (although many have said there is a week of ‘cushion’ in there).
Everyone in the capitol, the Governor, the Democrat Leadership, the Republican Leadership, all agree on the need for infrastructure investment. However, HOW THIS IS DONE IS VERY, VERY IMPORTANT.
When FR contributor Barry Jantz and I met with two Deputy Chiefs of Staff to the Governor in the hours leading up to the State of the State Address in January, a few key points were stressed to us: the Governor would insist that needed reforms (such as revamping the CEQA process) would be in this package, that there would be a 6% hard borrowing cap in the package, and that the Governor was committed to making sure that this bond measure did not get ‘loaded up’ with spending that wasn’t for basic infrastructure investment.
Well, the ‘word’ (see this tidbit from Dan Weintraub) is that the current proposal dumps the needed reforms, and includings billions of spending on massive socialized programming expenses, such as low-income housing, mass transit and more.
Of course, none of this even addresses the LINE IN THE SAND drawn by Assembly Republicans who acknowledge the need for borrowing to make up for decades of not addressing the state’s infrastructure needs, but have unananimously called for such borrowing to be coupled with a pay-as-you-go commitment that starting this budget year, and going forward, current budget dollars would be set aside to pay for infrastructure needs. The basic message – Californians already pay enough taxes to have a lean, effective state government AND plenty of infrastructure investment — without having to ‘max out’ the state’s credit card.
As the discussions circle around in the Capitol, I will share this final thought — what happens to the political landscape if the next several months, the Governor and Democratic Leaders are out their pushing for a flawed and irresponsible bond package, passed over the objections of most Republican lawmakers? It will make for divisive politics, and SPLIT the GOP. It is bad policy AND bad politics. Much better that the Governor work with Assembly Republicans and force the hands of Democrats, and if necessary, bring a responsible spending plan to the voters via a ballot initiative for November. Let Angelides or Westly run for office against Arnold Schwarzenegger and his responsible infrastructure proposal, supported by his whole party.
I will end my commentary today with these words of wisdom from FR friend Karen Hanretty, who until the end of last year was the chief spokesperson for the California Republican Party:
It’s rumored that the state legislature will be voting today on a $38.6 billion bond proposal for the June 2006 ballot. The proposal, while smaller than Governor Schwarzenegger’s original plan, should raise a number of red flags for any elected official who believes that public servants must be good fiscal managers of the taxpayers’ money. I suspect that by the time the assembly and senate sessions are held on Thursday afternoon, the details of the current bond proposal will take various forms. After all, deals-in-the-making are fluid events.
So without getting too specific, I would simply encourage Republican members of the legislature to heed the words of Senator Tom McClintock — Schwarzenegger’s running mate, in case you didn’t see the posters at convention, and a well-respected fiscal conservative who, according to a November 2005 Field Poll, is known by 53 percent of voters and has a 2 to 1 favorability rating.
Sen. McClintock in December 2005 outlined, in an exclusive article for the Flash Report, three criteria by which to judge bonds:
“Second, state bonds should be used only for projects that benefit the entire state. Projects that exclusively benefit local communities should be paid for exclusively by those communities. A state university, for example, accepts qualified students wherever they live in California – a local school does not. In the past, state bonds were used for university facilities, while local bonds paid for local schools.”
“Third, revenue bonds, not general obligation bonds, should be used for capital-intensive projects that provide direct services to distinct users. A general obligation bond is repaid directly by the state’s taxpayers. A revenue bond is repaid by users of a particular project, such as a bridge financed by tolls paid by bridge users. Today, general obligation bonds are used indiscriminately, including a pending $10 billion high speed rail bond that would force taxpayers who don’t use the train to pay for those who do.”
So when you see a proposal that includes, oh let’s say $135 million for farm worker housing or $100 million for Green Buildings/Sustainable Communities (if you don’t know what this term means, you’re probably not familiar with “eco-villages” either – good for you), ask yourself how this extraordinary financial expenditure helps the entire state with its pressing and overdue infrastructure needs.
And do keep in mind, dear legislator, that California’s bonding authority isn’t limitless. So before you cast a vote for something like $200 million for operational costs at small high schools, ask yourself how that money will benefit citizens ten or twenty years from now. It won’t. Operational costs don’t leave behind something concrete and of lasting value for future generations.
And finally, ask yourself the most important question of the year, “Will my vote help restore California’s fiscal integrity?”
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