Pete Rates the Propositions
November 2002

Proposition 46: Housing Bonds ($2.1 billion) — YES

This is a closer call than I would like. Prop 46 mixes critically needed homeless shelters and farmworker housing with not-so-critical first-time homebuyer programs that amount to price supports for the real estate industry. I'm unwilling to make the homeless suffer so I can indulge my principles, however, so I must recommend a yes vote.

Prop 46 is a $2.1 billion bond for low-income housing aid. Roughly half of the bond money will be directed into the Multifamily Housing Program (www.hcd.ca.gov/ca/mhp), where it will provide low-interest loans for the construction of affordable rental units. Such units, once completed, are reserved for low-income renters for 55 years. Preference is given to projects near existing public transit in developed areas. To qualify, a family of four must have an annual household income no greater than $24,320; the monthly rent on their two-bedroom unit will be at most $547. The MHP program is key to providing decent living conditions for those near the bottom of the economic ladder.

An additional $200 million of Prop 46 money will provide housing assistance for farmworkers, who are among the most housing-starved populations in the United States. It is estimated that over half of farmworkers live in "overcrowded," and nearly one third in "extremely overcrowded" conditions. Migrant farmworkers in particular live in squalor too often. Prop 46 offers a way to help treat the people who put food on our tables humanely.

Another $200 million from Prop 46 will be used for the construction of homeless shelters throughout the state. With the economy in the doldrums and jobs scarce, families down on their luck will need these more than ever. Prop 46 will fund 30,000 new homeless shelter beds.

On the basis of what I've described already, I recommend a "yes" vote on Prop 46. But I've accounted for only three-quarters of the $2.1 billion in the bond. What does the rest of Prop 46 fund? Not rental, but homeownership.

Our government subsidizes homeownership in a number of ways, most notably with the mortgage interest deduction on income taxes. These subsidies have the effect of artificially buoying home prices. After all, if homeowners had to bear the full burden of their mortgage interest payments, they could afford only smaller mortgages and lower-priced homes.

Prop 46 adds to government support of home prices by dedicating $400 million to homeownership programs such as the California Homebuyer's Downpayment Assistance Program and CalHome (see www.chfa.ca.gov). These provide down payment assistance and low-interest loans to low- to moderate-income first-time homebuyers .

Maybe you feel it's heartwarming to see the state help less fortunate people achieve the American dream of homeownership. But these programs add subsidized buyers for the least expensive homes, driving up their prices; this in turn pushes prices up for the next level, and so on, until the subsidy has rippled to every condo and house in California. As a homeowner I'm tempted to say, "Yay!" but as a taxpayer I don't want the state in the business of supporting residential real estate prices. We probably have better uses for that $405 million.

Nevertheless, I support Prop 46 because the bulk of its funds will go to the hugely beneficial programs outlined above. As I like to say, you must vote "yes" or "no" on each proposition; there is no essay section. On balance, 46 is a winner.

Proposition 47: School Facility Bonds ($13 billion) — YES

Here are some numbers for you. 2.4 million California students are in temporary or substandard classrooms. There are 86,000 portable classrooms in use—one-third of all classrooms statewide. Public school enrollment increases by 100,000 students per year. It will take $20 billion to fix all of this.

Prop 47 will provide $11.4 billion for school building construction and modernization. It will cover the state's share, with the rest coming from local and federal sources. The last school bond was passed four years ago, and is nearly exhausted. We need this measure to keep up with today's needs.

Prop 47 also directs $1.6 billion to community college, state college and University of California buildings. These higher-education systems enroll over 2 million students and rising. They deserve new and modernized buildings as well.

Proposition 48: Finalizing Elimination of Municipal Courts — YES

To be, or not to be, that is the question:
Whether 'tis nobler in the mind to suffer
The presence in our Constitution of Municipal Courts,
Or to take arms against these sicklied enterprises
And by Prop 48 end them. To die—to sleep,
No more; and by a sleep to say we end
The constitutional provisions for courts already abolish'd
In all fifty-eight counties: 'tis a consummation
Devoutly to be wish'd...

Proposition 49: Giving Top Funding Priority to After-School Programs — NO

Make no mistake: I think after-school programs are a fine thing. They keep at-risk kids off the street, enrich their education, and allow working parents more time to support what are often poor households. After-school programs and their brethren, before-school, vacation and summer programs, deserve every penny of the $475 million the state spends on them each year. Maybe even more.

But that's no reason to give them higher funding priority than anything else, as Prop 49 proposes.

Prop 49 would exempt after-school programs from the annual budget process. The legislature and governor would be forced to allocate $550 million to them every year, regardless of economic conditions. Prop 49’s two "escape valve" provisions that purportedly would ease the $550 million requirement in tough times won’t help. One of these, a suspension of the Prop 98 school funding guarantee, is politically infeasible, while the other, a budget-size trigger, will never be activated due to simple population growth and inflation, according to both the Legislative Analyst's Office (lao.ca.gov) and the California Budget Project (www.cbp.org). Realistically, that $550 million is incompressible.

Prop 49 gives its $550 million stronger protection than anything else in the entire budget. If you vote for Prop 49, you're saying you believe after-school programs are more important than anything else the state funds. More important than hospitals and clinics, roads and bridges, security and public safety, aid to the poor and homeless. Even more important than other education programs. So important, in fact, that you won't let the legislature or governor touch after-school programs as they can all that other stuff.

Look, people, there's a distinction between "beneficial" and "untouchably sacred." I'm asking you to make that distinction right now. The programs Prop 49 funds simply aren't that much more deserving than the other things the state funds. Giving them top priority is neither fair nor honest.

Prop 49 is permanent; it has no sunset provision. You may believe that after-school programs are the best use of $550 million this year. But can you predict that will be the case five, ten, or twenty years from now? You'd better be sure, because the only way to amend Prop 49 will be with another ballot proposition.

Important: A "no" vote on Prop 49 will not discontinue after-school programs; it will merely keep them at their current high (not ultra-super-double-extra-high) priority. There is no danger to our at-risk youth in voting against 49.

Funding mandates like Props 49 and 51 amount to budgeting by robot. I suppose that has a certain appeal to an actor who built his career playing cyborgs and androids, but it's no reason for you and me to support it. "I'll be back," says the Prop 49 sponsor. I hope it's not with more measures like this one.

Proposition 50: Water & Wetlands Bonds ($3.4 billion) — YES

Prop 50 is a $3.4 billion bond measure to fund wetland protection, water conservation, ecosystem restoration, and drinking water system upgrades and security. These are all crucial projects. Bonds are the right way to finance them, because the money will be spent on long-lived acquisitions and improvements. If you're in doubt, think forward to the next drought, and remember that California adds 500,000 thirsty new people every year.

Prop 50 will dedicate $955 million to drinking water quality projects, helping guarantee the safety and security of our water. I don't need to say how timely that is. An additional $710 million will fund water management projects such as water banking and ground-water recharge. The CalFed Bay-Delta program gets $825 million, and watershed and wetland protection get $950 million.

You may recall other recent water bonds, such as Prop 40 (March 2002) and Prop 13 (March 2000). These were beneficial, but not enough. Prop 40, an omnibus environmental bond, had just $375 million for water resource protection and didn't effectively address drinking water safety. Prop 13 dealt primarily with flood control and Bay-Delta issues. In terms of California's long-term needs, the earlier measures provided little more than a drop in the bucket, so to speak.

California's population is expected to top 50 million by 2030. At the same time, our share of Colorado River water will decline as Nevada and Arizona claim more. Investing in water infrastructure is just plain smart, especially in this era of low interest rates. Prop 50 is the way to do it.

Proposition 51: Earmarking Vehicle Sales Tax for Transportation — NO

Question 1. What do a casino, a housing developer, a university, a land conservancy, a railroad museum, and Ross Perot have in common? Answer: They all want the state to pay for special projects that primarily benefit themselves. These projects are mostly (but not all) transportation-related, and run into the tens of millions of dollars. They'd like taxpayers to foot the bill.

Question 2. Why do these folks grow nervous when it's budget time in Sacramento? Answer: Because the legislature and governor might not fund their projects. In lean years, or when priorities or politics dictate, there may not be money available for them.

Question 3. What would you wish for if you were one of these people? Answer: Immunity from the budget process. In fact, you'd be willing to pay for a ballot proposition that requires the legislature and governor to fund your projects.

Question 4. Guess what Prop 51 is? Answer: Exactly that! Prop 51 will reserve 30% of motor vehicle sales taxes (nearly $1 billion in 2003-04, increasing in future years) for specified transportation and "related" projects, and there's not a thing the legislature and governor can do about it.

In essence, Prop 51 asks us to dedicate $1 billion a year indefinitely to projects that primarily benefit its campaign contributors. We don't get to consider the other programs competing for that $1 billion, such as health care, aid to poor children, and education. Hell, we don't even get to consider other transportation projects. In times of budget crisis, the legislature needs all the flexibility it can get. I am unwilling to straitjacket the legislature with selfish initiatives like Prop 51.

You may read that Prop 51 has "escape valve" provisions to prevent it from taking effect in time of financial crisis. Not so. Because of inflation, population increases and other factors, the valve will never open. If you don't believe me, ask the California Budget Project (www.cbp.org/2002/bb020601.htm). Prop 51 will be in effect in good times and bad.

To those who are skeptical that Prop 51 was written to benefit its campaign contributors, I offer the following. If you examine the contribution reports (cal-access.ss.ca.gov), and match them with the projects specified on pp. 79-98 of your ballot pamphlet, here's a sample of what you'll find:

Contributors to Proposition 51 Source: Cal-Access Contributor Amount Bounty from Prop 51 Agua Caliente Band of Cahuilla Indians $1 million $120 million LA-to-Indio rail line delivering gamblers to front steps of their casino Playa Capital (funneled through PCL's "Conservation Action Fund") $830,000 $55 million for Los Angeles County to acquire Playa's undevelopable land in the Ballona Creek watershed area Pardee Construction $500,000 $137 million freeway interchange allowing construction of 3,000 additional homes University of Southern California $300,000 $75 million underpass beneath Exposition Blvd. Riverside Land Conservancy $250,000 $10 million every year for land acquisition and administration covering Western Riverside County Habitat, San Timoteo Park & Santa Ana River trail Hillwood Development of Dallas, TX (Ross Perot) $150,000 $30 million rail grade crossings near its planned cargo hub at former Norton Air Force Base California State Railroad Museum Foundation $75,000 $7 million grant, plus $1 million every year, to build and operate a new Railroad Technology Museum United Transportation Union $20,000 Union jobs at all of the above Oakland Mayor Jerry Brown Friend of Prop 51 sponsor $65 million for Oakland transit and park improvements, Oakland School for the Arts, and downtown parking Freba Fay, LLC $100,000 Nobody knows. Freba Fay ("Free Buffet" - get it?) is incorporated in Pennsylvania, where laws allow its owners to be anonymous. This loophole undermines California disclosure laws. It's an alarming trend

"Hold the phone," you say. "I thought this was a transportation initiative. Why does Prop 51 have all that money for Ballona Creek, San Timoteo Park, a railroad museum, and a school for the arts? It makes no sense." Bingo. There is marvelous gobbledygook in the bill justifying such expenditures "because the impacts of state and federal highways ... have negatively impacted the environmental quality" of the respective areas. We're supposed to believe that these unrelated projects will somehow mitigate damage from more highways. I don't buy it, and if Prop 51 passes I expect it will be found to be in violation of the "single-subject" law and struck down.

I'm extremely disappointed in the many environmental groups like the Riverside Land Conservancy, the California Conservation Campaign ($90,000), and the Golden Gate National Parks Association ($80,000) that have endorsed and made contributions to Prop 51. Don't these guys have any ethics at all? The largest part of Prop 51 will result in more highways, cars, pollution, and environmental destruction. But I guess the environmental advocates consider Prop 51 a cost-effective way to force funding out of the state government. Ethics, shmethics. We want our money.

(Note to Prop 51 sponsors: I might consider supporting your next initiative if it contains, say, an annual grant of $750,000 to the "Pete Stahl Research Institute." Think it over.)

"Proposition 51, sponsored by the Planning and Conservation League and paid for by some of the biggest landowners in the state, ought to be known as the Developer Tax Grab Act of 2002 ... But financial irresponsibility is the least of this measure's sins. It is fundamentally corrupt." —Sacramento Bee editorial

"Proposition 51, the 'Traffic Congestion Relief and Safe School Bus Act,' is a shameless raid on the state treasury by favor-seeking developers and environmentalists." —Orange County Register editorial

"Want a railroad line right to your gambling casino, built with taxpayer money? Then pony up $250,000 to the Planning and Conservation League to get the organization's Proposition 51 on the Nov. 5 ballot. Want the state to buy your land ... that cannot be developed? Donate $800,000 to the league. Want a $2 million golf cart path along El Toro Road to Leisure World? A highway interchange that will allow you to build thousands of new homes? Get out the checkbook." —Los Angeles Times editorial

"The question is: Why aren't you in jail?" —State Senator Kevin Murray to PCL's Transportation Director at a legislative hearing last month, reacting to Prop 51's blatant cash-for-legislation scheme

Prop 51 is a nothing but a very large barrel of pork, pork, pork. There is no earthly reason we should approve this package over the heads of our legislators and governor, in a vacuum that precludes us from considering of the needs of schools, law enforcement, health, and everything else the state does. The sales tax is a general tax, and should be allocated by the Legislature every year on an as-needed basis, considering every funding priority. Prop 51 would take $1 billion out of that process every year, and spend it on the pet projects of its campaign contributors.

Proposition 52: Election Day Voter Registration — YES

If you haven't registered to vote at your current address, you must do so fifteen days before the election. That makes voting a two-step process for many. It is too much trouble for too many citizens. A study by political science professors at CalTech and MIT suggests that over one million people didn't vote in the 2000 presidential election because of failure to register by the deadline.

Prop 52 will allow voters to register at the polls on election day. It will increase voter turnout by an estimated six to nine percent. By itself this will not solve our scandalous voter turnout problem (a whopping 65% of us managed to skip this year's March primary), but it's certainly a step in the right direction.

Under Prop 52, election-day registrants will have to present proof of residence: either a driver's license or two other documents, one of which can be any piece of mail addressed to the person at that address. While this may seem flimsy, it's actually a step forward: you may currently register to vote before the fifteen-day deadline without presenting any proof of residence.

Prop 52 provides funding to local elections officials for the extra training and staff required to register voters at polls. I expect there will initially be delays at some polling places, especially in precincts with mostly rental units, but this should smooth out over time.

I am tempted to oppose Prop 52 because it may encourage casual voters to drop in on election day, vote based on irrelevant factors such as attack ads and the ethnicity of people's names, and then pay no attention for another 364 days. I will be in agony if, for instance, Prop 49 passes because an uneducated electorate is duped into thinking it must vote "yes" to give after-school programs any funding at all. But you know what? The registered electorate is just as susceptible to distraction and subterfuge as the unregistered. In fact, one of the largest blocs to benefit from Prop 52 will be college students, who tend to change addresses frequently; they're probably more intelligent and plugged into the issues than the average voter, not less.

Over the years, every liberalization of voting procedures has been a big win. Remember when you had to have a "valid reason" to obtain an absentee ballot? Now any voter can vote absentee, and it's great. Remember the opposition to "Motor Voter"? How ridiculous that seems now. Yes, election day registration might possibly open the door to vote fraud, but past experience implies that risk is overstated.

There is nothing intrinsic to the act of voting that should require a fifteen-day advance notice of intent to do so. The point of elections, after all, isn't to satisfy some bureaucratic deadline; it's for everyone to have a voice in our democracy. So why not simply allow citizens to show up at the polls and vote? Why not, indeed.

My semi-biennial lecture on bonds

When California wants to finance large projects, it asks the voters for permission to take out loans. Props 46, 47 and 50 are just such requests. If voters approve, the legislature may take out loans for the projects by selling general obligation bonds, which are paid back with interest over twenty-five years or so. The bond payments come out of the state's main budget, the General Fund. So when we vote on the bonds, we are really voting on whether the project in question ought to be added to the state's budget.

"Wait a minute!" I hear you cry. "What about those interest payments? Won't we end up paying more for interest than for the bonds themselves?" This used to be the case, but with today's low interest rates each dollar of bond money will cost only 25 cents in interest, accounting for inflation. (See page 36 of your ballot pamphlet for details.)

"Okay," you admit, "but loans are still more expensive than pay-as-you-go." This is true. But loans are the only way to buy a house, or a car, or anything else that you need immediately but can't pay for yet. It's worth paying the premium of interest to get the funding now.

"Well and good," you continue, "but there are $18 billion in bonds on this ballot. Isn't that too much to borrow?" For you, yes, but the State of California can handle it. Bond payments today are just 4.3% of the General Fund, down from over 5% in the mid-1990s. The bonds from Props 46, 47 and 50 would increase payments to 4.9%, still an acceptable figure.

Props 46, 47 and 50 will fund long-lived, tangible acquisitions, such as homeless shelters, classrooms and wetlands. It's sensible to make extended payments for things that will be used far into the future. Remember, too, that California's population continues to grow by hundreds of thousands of people every year. Borrowing makes particular sense if you know your income will go up in the future. As the state grows and the economy recovers, the General Fund will certainly grow too.

There is one last reason to vote for a bond measure. In addition to being formal requests for permission to take out loans, bond measures are also looked upon as referenda on the merits of the proposed projects. If a bond measure fails, legislators are likely to believe that the public feels the project is not worthy of receiving state funding. By voting no, you may have meant, "Yes on the project but no on the bonds," but your message to Sacramento will read, "No on the project." So if you vote down a bond measure just because you don't like bonds, you may well have killed forever the project the bonds were to have funded.

 
 
 
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