Democratic legislators and officials, business and labor representatives, and water suppliers took turns Wednesday flailing a November ballot measure that would require voter approval of major state revenue bond issues.
If the measure is passed, critics said, using bond financing for critical public works projects, including emergency work after a natural disaster, would become more difficult.
The forum was a legislative hearing on a pending ballot measure under a new state law that also allows initiative sponsors to withdraw their proposals even after they have qualified for the ballot. The Legislature cannot, however, change a measure on its own.
A wealthy San Joaquin County farmer and businessman, Dean Cortopassi, has spent millions to place the bond vote measure on the ballot, complaining that the state has run up too much debt of all kinds. It’s clear, however, that his major target is the twin tunnel project that Gov. Jerry Brown wants to carry Sacramento River water beneath the Sacramento-San Joaquin Delta.
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Sen. Bob Hertzberg, D-Los Angeles, who chaired the hearing, said he personally invited Cortopassi to attend but the sponsor refused. Hertzberg called him “one guy who’s mad.”
While voters must approve “general obligation” bonds backed by tax dollars, state and local governments can issue “revenue bonds” that are repaid from fees and other non-tax dollars without voter approval. The tunnels presumably would be built by bonds to be serviced from water fees on San Joaquin Valley farmers and Southern California water customers.
Subjecting tunnel bonds to a statewide vote would, in effect, be a referendum that project supporters want to avoid. A previous version of the project, called a “peripheral canal,” that Brown sponsored during his first governorship was rejected by voters in 1982.
The Cortopassi measure would apply to any project financed with revenue bond issues of $2 billion or more. It drew criticism from Treasurer John Chiang, who complained that “key provisions are undefined” and said its ambiguities could adversely affect the state’s ability to borrow.
Brown opposes the measure and two of his top officials, Resources Secretary John Laird and Transportation Secretary Brian Kelly, joined in the critical barrage, Laird declaring that it would “constrain crisis management.”
The California Chamber of Commerce and the State Building and Construction Trades Council, which are often at odds, also voiced their opposition, and were joined by the Association of California Water Agencies.
However, Hertzberg was the most vociferous critic, sparring repeatedly with Kurt Oneto, whose prominent law firm, Nielsen, Merksamer, Parrinello, Gross and Leoni, drafted the measure.
Oneto asserted that requiring big revenue bonds to face voters would foster fiscal responsibility, citing the recent Bay Bridge project that wound up costing four times its original estimate, all paid through revenue bonds. He noted that the Legislature’s own budget analyst, Mac Taylor, concluded that it would affect only a “small handful of projects that have statewide significance.”
Taylor’s Legislative Analyst’s Office would have ordinarily testified at a hearing on bond financing, but Hertzberg said he decided to invite “the treasurer (Chiang) as opposed to the LAO.”
“This is about responsible government,” Hertzberg told Oneto, terming him “a young lawyer” whose legal assertions are suspect.