Stockton-area farmer Dean Cortopassi’s warnings about California’s debt are ominous. It will strangle our state, he says.
He’s correct that government debt is a problem. But the state can’t afford his solution, which will put government in a different kind of chokehold.
Cortopassi used $4.5 million of his considerable wealth to hire the Nielsen, Merksamer law firm to write a proposed constitutional amendment, and pay signature gatherers and consultants to place and promote Proposition 53 on the Nov. 8 ballot.
The notion of stopping what Cortopassi calls a “blank check” has its allure. But like so many initiatives, Proposition 53 creates too many uncertainties and corollary problems.
Premium content for only $0.99
For the most comprehensive local coverage, subscribe today.
It would require voters to approve any state project funded by $2 billion or more in revenue bonds, which sounds simple. Unfortunately, California voters too often have discovered after the fact that seemingly straightforward initiatives have unintended and unpleasant ramifications.
As it is, Californians vote on general obligation bonds to pay for public works projects such as new schools. They are repaid by general tax revenue.
Legislators also can use revenue bonds to finance projects, generally less popular ones such as prisons or ones that directly affect a particular region. Revenue bonds cost more to repay than general obligation bonds because they carry higher interest rates. Rather than being repaid by general tax money, they are repaid by revenue generated by whatever project they fund. The cost of the new Bay Bridge, for example, is borne by motorists who pay tolls.
Government debt is an issue, but Proposition 53 is a solution that Californians can’t afford.
The Bay Bridge is a vital link in the transportation system. But if it had been put to a statewide vote, Southern California voters would have had little reason to approve it; few use it on a regular basis.
Gov. Jerry Brown, the California Chamber of Commerce, the building trades unions and many others oppose Proposition 53, for good reason. It could further hamstring elected leaders and impede important construction projects in a state where NIMBY attitudes can block progress.
Cortopassi’s measure would toss a monkey wrench into financing for Brown’s California WaterFix and the $15.5 billion tunnels to move water past the Delta to San Joaquin Valley farms and Southern California and Bay Area residents. It also could further complicate the high-speed rail project, approved by voters in 2008 and under construction in Fresno.
Again, that may sound appealing to some, but Proposition 53 would go further. The Legislative Analyst’s Office, a nonpartisan arbiter of ballot measures, notes that Proposition 53 could affect many large projects “such as new bridges, dams, or highway toll roads.” Exactly which ones is not clear. The initiative does not define the term “project,” leaving the definition up to the courts.
Legislators likely could get around restrictions by entering into partnerships with private companies, which would sell bonds to fund projects, at a mark-up. But any private company would pay higher interest rates than the state, and pass those added costs to state taxpayers, the analyst noted.
Cortopassi, who opposes the tunnels, should have proposed an initiative specifically to block them. If high-speed rail opponents believe voters no longer support it, they should be direct, and place an initiative on the ballot to end it.
But in the guise of combating government debt, Proposition 53 could increase construction costs and add unnecessary layers of complexity and uncertainty to an already unwieldy state government. And voters have a solution if they conclude that legislators abuse revenue bonds: They can vote them out of office.