Dan Walters

Legislators propose bonds, need skeptic Brown’s OK

Jerry Brown: California avoided budget deficit through cuts, new taxes

Gov. Jerry Brown said California was facing a budget deficit in the 2017-18 fiscal year, so the state must be careful about its fiscal condition. Video courtesy of California Channel.
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Gov. Jerry Brown said California was facing a budget deficit in the 2017-18 fiscal year, so the state must be careful about its fiscal condition. Video courtesy of California Channel.

Developers and educators formed a somewhat strange alliance last year to write and ultimately win voter approval of a $9 billion bond issue for schools.

What made Proposition 51 even stranger is that its advocates defied Gov. Jerry Brown.

“I am against the developers’ $9-billion bond,” Brown had said in a statement. “It's a blunderbuss effort that promotes sprawl and squanders money that would be far better spent in low-income communities.”

While Brown was critical of how school bond money was being allocated – he said it favored large districts with sophisticated staffs regardless of their priority – he was evidently more broadly skeptical of the state’s taking on more debt.

Even without the school bonds, or soon-to-be-sold bullet train bonds, the state already has well over $80 billion in outstanding “general obligation” debt that costs the state budget close to $8 billion a year in payments. The 2016 school bond would add about a half-billion dollars a year.

Servicing bond debt, in fact, has become one of the budget’s largest categories, more than it spends on the University of California and California State University combined.

Brown’s skepticism about debt emerged very strongly during a February news conference on the state’s infrastructure needs, including deteriorating highways, flood control and water supply.

A reporter asked Brown about meeting them with bonds, and he responded with a lecture about the dangers of debt, declaring, “in general we ought to be coming more pay-as-you-go.”

Underlying that skepticism is not only Brown’s characteristic frugality but a desire to not leave his successor a budget deficit when his second governorship ends in 2019.

Whatever its antecedents, Brown’s aversion to debt is not common in political circles, where borrowed money is viewed, albeit privately, as free money that can be spent without imposing new taxes on voters. And voters seem to share that attitude, since campaigns for bond issues usually stress the benefits of spending and rarely mention repayment costs.

The divergent attitudes toward bonds is emerging as an issue of this year’s legislative session because lawmakers have introduced a raft of new bond issues they would like to place before voters next year, but would require Brown’s approval to advance to the ballot.

All in all, they total nearly $12 billion, including dueling $3 billion water and parks measures being pushed by the leaderships of both legislative houses, another $3 billion housing bond, a $2 billion higher education bond and a $600 million measure to provide funds to buy cleaner-burning trucks.

Sponsors of water and housing bonds believe that shortages in both of those vital commodities provide political impetus for enactment, and were they to reach the ballot, they likely would pass.

However, they have to get past Brown and his disinclination to put the state further into debt and therefore more pressure on a state budget that he hopes, with his fingers crossed, will still be in the black when he departs.

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