Pete Rates the Propositions
Sensible opinions on the California ballot propositions      since 1980      by Pete Stahl

Read the ratings:
Prop.   1 - YES
Prop. 26 - NO
Prop. 27 - NO
Prop. 28 - NO
Prop. 29 - NO
Prop. 30 - YES
Prop. 31 - YES
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Pete Rates the Propositions
November 2014

Pete recommends:
1   YES   Water Bonds
2   YES   Budget Stabilization
45   YES   Requiring Approval of Health Insurance Rate Changes
46   YES   Pain-and-Suffering Increase + Drug Testing of Doctors
47   YES   Reducing Some Felonies to Misdemeanors
48   YES   Indian Gaming Compacts: North Fork & Wiyot
        My Semi-Biennial Lecture on Bonds

Proposition 1: Water Bonds – YES

Summary: A $7.1 billion bond for new dams, groundwater storage, water conservation, recycling and desalinization, watershed restoration, and more. No Sacramento Delta bypass tunnels or canals. It’s a lot of money, but there is very little that’s more important to California’s economy and quality of life.

Details: (Please see My Semi-Biennial Lecture on Bonds, below, for my opinion on bonds in general.)

This is a no-brainer. Nearly all Californians live in an artificial environment of abundant water. This is not natural. For us, natural would look like Afghanistan, which receives the same rainfall as we do. Our lifestyle is possible only because of massive importation of fresh water from somewhere else. We can survive without functioning roads, without electricity, even without the Internet (God forbid). But if our enormous system of water collection, storage, purification and distribution ever failed us, there would be serious trouble.

Prop 1 provides $7.1 billion to maintain and improve the state's water system. The largest share, $2.7 billion, is allocated for construction and improvement of dams and underground storage systems.

In dry years like this one, as much as 60% of California's water comes from wells, many of which are being sucked dry. In parts of the Central Valley the ground is subsiding, meaning that the aquifer is collapsing and permanently losing capacity. This must be stopped. Underground is the best place to store water. It's where water naturally occurs, and there's none lost to evaporation. You don't have to dam a river or flood a canyon to store water there, and there's virtually no risk from natural or man-made disaster. Part of the $2.7 billion from Prop 1 will replenish underground water.

(On a related subject, I'm thrilled with Gov. Brown's recent signing of three bills regulating groundwater use in California for the first time. It's disappointing that the timetable is so long—"sustainability" won't be required until 2040—but it's still progress.)

I'm less excited about new and enlarged dams. These destroy habitats and make life difficult for migratory fish, and are vulnerable to potential problems like earthquakes and bioterrorism. The Sierra Club and League of Women Voters share these concerns, resulting in "neutral" stances from both organizations on an issue that should have easily won strong endorsements.

I cannot tell you what portions of Prop 1 funding will be used for dams vs. groundwater, because the measure leaves that decision to the California Water Commission. Similarly, other agencies will decide how to allocate money from the other Prop 1 buckets. This is disappointing: I'd like to know more specifically what I'm getting for my $7.1 billion. It looks like an attempt to avoid charges of pork-barrel funding or regional favoritism. But that's politics, I guess.

On top of the money for storage projects, Prop 1 allocates $810 million for regional water projects and $725 million for newer technologies such as recycling and desalination. As with the dams and groundwater replenishment above, these will add to our total water supply.

Next on the list of Prop 1 projects is $1.4 billion for water quality, including $900 million for prevention and cleanup of groundwater pollution. Agricultural runoff, in particular, can make wellwater unusable, so it's important to address it. Also included is $520 million for drinking water quality and wastewater management in small and disadvantaged communities.

Prop 1 allocates $1.5 billion for ecosystem and watershed protection and restoration projects. This will help wildlife flourish and clean up polluted rivers and streams in designated areas across the state. For example, the Sacramento San Joaquin Delta Conservancy gets $50 million; the San Diego River Conservancy $17 million; and the Tahoe Conservancy $15 million. On the minus side, I am miffed about a provision that allows the state Wildlife Conservation Board to spend up to $200 million to buy water in order to "enhance stream flows." Purchasing water to pump into a river is not an appropriate use of long-term bond funding.

Finally, Prop 1 has $395 million for flood protection, primarily strengthening fragile levees in the Sacramento Delta. The Delta is the source of drinking water for over half of Californians; failed levees here could endanger that source. Prop 1 also prohibits any bond money from funding a Peripheral Canal or tunnel bypassing the Delta to send water southward. State or federal agencies could still build one, but not with funding from Prop 1.

For the most part, Prop 1 requires local agencies receiving bond money to match it with their own funds. The matching money will come from customers (i.e., water users) in their areas. This will encourage local agencies to apply for funding for only truly needed projects, since their ratepayers will be supporting the projects directly.

In a way, Props 1 and 2 are both rainy-day funds. For financial rainy days, Prop 2 (see below) provides a stronger savings account to minimize budget crises. And for actual rainy days (there will be some, I promise), Prop 1 provides funding to capture that water, store it, minimize its environmental impact, and distribute it to thirsty farms and people across the state.

Proposition 2: Budget Stabilization – YES

Summary: The state’s income fluctuates wildly as capital gains of taxpayers go up and down. Prop 2 will solidify the state's "rainy-day fund" so we save more in good years to make up for shortfalls in lean years.

Details: Imagine you're a rock star – a freelance professional musician. Your income varies tremendously from year to year. Some years are great: you crank out hit after hit, fill stadiums around the world, and rake in millions. Other years are dry: no one buys your music, concert dates disappear, and you barely make enough money to support your entourage. Ah, how fickle are music fans.

How would you manage your finances if you knew your income would fluctuate so much? If you're smart, in good years you'd stash away lots of money and pay down the huge mortgage on your mansion. Later, you could tap your savings to make it through the inevitable bad years to come.

California's income is like a rock star's. The state receives enormous, temporary boosts in income—$15 billion or more—whenever the stock markets soar, largely due to revenue from personal capital gains taxes. (This happened in the boom years of 2000 and 2007.) Later, when the inevitable correction or recession sets in, that income disappears. (This happened in 2002 and 2009.) Ah, how fickle are the markets.

In the face of this variability, I'm sad to say, California has been behaving like a real-life rock diva. In every year with a spike in income, the state has spent it all, salting away virtually nothing for the lean years everyone knew were around the corner, and ignoring the growing mountain of pension debt. That has led to epic crises the following years, with cuts to services and increases in taxes, fees and tuition. Pain, pain, pain. It might make a killer heavy-metal song, but it's lame public policy.

Prop 2 is a step toward sobriety. Prop 2 will require the state to amass an $11 billion "rainy-day fund" (the Budget Stabilization Account, or BSA), to be tapped only when the legislature and governor jointly declare a budget emergency due to revenue shortfall, natural disaster, or war/civil disorder.

The BSA has actually been around for a decade, created by Prop 58 in 2004. It has been pretty useless, though, because its provisions have no teeth. Under Prop 58, the governor can simply decide not to contribute to BSA, and the legislature may unilaterally vote to drain it completely for any reason. During the recent recession, they have done exactly that, and so the BSA was empty from 2008-09 until 2013-14. Prop 2 will add make the contribution and withdrawal requirements much tougher, giving us a more dependable budget cushion.

The $11 billion required by Prop 2 will build over time. In average or lean years, the state's contribution will be about $800 million. That figure could be reduced only with the joint declaration of a budget emergency by the Governor and Legislature under the conditions described above. In years when capital gains tax revenue is strong, the BSA contribution could be as much as $2 billion. If we keep topping the rock charts and selling out concerts like we are today, the BSA could be fully funded in as little as five years.

Once the BSA fills, any contributions that would have gone into it are diverted to build and maintain infrastructure—school and college campuses, highways, high-speed rail (I'm afraid so), and so on. I'm not thrilled with this provision; it seems arbitrary. Why infrastructure? Why not pay off more debts, or improve service at the DMV, or reduce tuition at public universities? For that matter, why not just return the money to the General Fund? The answer is politics, of course: infrastructure funding buys the construction industry's support for Prop 2.

When that inevitable budget emergency comes, only half of the BSA may be drained during the first year; it will take at least two consecutive years of budget emergency to empty the BSA completely. This is prudent, considering most recessions last longer than 12 months.

On top of the BSA rainy-day fund, Prop 2 also addresses California's looming obligation to fund public pensions and retiree health care over the next few decades. Currently that debt stands at approximately $150 billion. Yeah, yikes. That's way more than the monster mortgage on our rock-star mansion.

Prop 2 will require the state to make extra payments on that debt at the same rate it funds the BSA: $800 million in most years, up to $2 billion in strong ones. This will hardly kill that monster, but over the course of years it will certainly help bring it under control. (Initially, part of this chunk will be used to pay other state debts, such as rectifying recession-year underfunding of K-12 schools and community colleges.)

You may have heard that Prop 2 will require local school districts to gut their existing "rainy day" reserve accounts. This is untrue. The rumor stems from Prop 2's separate state reserve account for schools and community colleges, to be funded only if a long list of conditions are met ("unlikely," says the California Budget Project). Earlier this year the Legislature passed a "trailer bill" that will go into effect only if Prop 2 passes. It stipulates that if the state reserve account ever is funded, then new limits to the size of local reserve accounts will go into effect (between 3% and 10%, depending on district size). If your district has salted away more than that, it's conceivable it would be required to withdraw the excess. However, the stipulation is in the trailer bill, not the ballot measure, so it can be amended or repealed by the Legislature. A bill to do exactly that has already been introduced, and is widely expected to pass soon, eliminating the threat.

Prop 2 will help the state operate smoothly despite the variability of its income. The measure is hardly a panacea; you can still expect to see budget crises when the economy is down. But Prop 2 should make future crises easier to weather, with fewer people hurt. That's all we rock stars really want, isn't it?

Proposition 45: Requiring Approval of Health Insurance Rate Changes – YES

Summary: 16% of Californians get their health insurance through individual or small group employer plans. Prop 45 will require the Insurance Commissioner to approve any changes to the costs of such plans. This is an important step toward controlling spiraling health insurance costs, just as Prop 103 helped bring auto and homeowners insurance costs under control.

Details: Prop 45 will give protection against price gouging to the six million Californians who purchase health insurance through individual or small group employer plans. My first impulse is to favor anything that tips the scales towards consumers and away from rapacious insurance corporations. However, there are legitimate concerns about Prop 45. So while I favor the measure, you should know that it is not perfect.

Under current law, the state cannot reject excessive health insurance rates. The two agencies that oversee health insurance can "review" rates to determine whether they're reasonable, but there's no enforcement. Insurers can still charge whatever they want.

Can we trust insurers to charge reasonable prices? Not if they're driven by the bottom line. To prevent gouging, we must pass Prop 45, which will empower the Insurance Commissioner to reject excessive rates.

For-profit health insurance corporations are fundamentally immoral. They provide a vital service to the public – pooling risk to prevent ill health from financially ruining people. And yet, as corporations, they exist solely to make money – to serve their shareholders, not their policyholders. They have a fiduciary responsibility to maximize profits, and to hell with the patients, the providers, and the community. The system gives them every incentive to delay or withhold reimbursements, to refuse to cover treatments, and above all, to increase premiums. It's nothing personal; it's just what corporations do.

And they do it well. Premium costs have risen 40% since 2008, and out-of-pocket payments jumped 13% in just one year. This has enabled Kaiser Permanente to post $2.7 billion in profits last year, and Wellpoint $2.5 billion. Together with Blue Shield, HealthNet, United Healthcare and others, insurers have raised over $37 million to fight Prop 45.

We already regulate the rates charged by for-profit corporations for other essential services: automobile insurance, gas and electricity, telephone, homeowner's insurance, and so on. Prop 45 will extend regulation to health insurance, where skyrocketing rates prove it's sorely needed.

That's what's good about Prop 45. But I also have reservations.

Covered California is our state's independent insurance exchange under the Affordable Care Act (Obamacare). Every year Covered California negotiates rates with insurers on standardized plans, then offers those plans to all state residents. This allows customers to compare apples to apples and choose a plan based on price and package. The Los Angeles Times editorial board calls Covered California "a new ally" for individual health plan shoppers, because it bargains with insurers and forces them to compete on a level playing field.

Prop 45 could throw a monkey wrench into Covered California's annual negotiations. The Insurance Commissioner would have to approve or reject every deal Covered California makes. Now, it's reasonable to guess that the Commish would rarely, if ever, reject a deal. However, Covered California has tight deadlines, and the Commissioner doesn't. If the Commissioner takes too long to evaluate the plans, then our insurance exchange could be thrown into chaos.

And Prop 45 contains wild card that could cause exactly this kind of delay. Any member of the public will have the right to challenge health insurance rates at the Department of Insurance or in court, as they currently can for auto and homeowner's insurance. These challenges will take time. And, if successful, the challengers are entitled to have their legal fees paid by insurers, at a rate equal to that which the industry pays its own attorneys.

It sounds like an invitation to fish for fees. And indeed, Consumer Watchdog, the main sponsor of Prop 45, has collected over $14 million in such fees over the years. Yet without the ability to challenge, the public would be left at the mercy of one elected official who is susceptible to all the pressures of statewide politics (and who may in fact be an ally of the industry). So even though this provision may cause headaches for Covered California, I don't want to give it up.

On balance, my reservations about Prop 45 are minor compared to the great benefit of regulating health insurance rates. As we have seen with other types of insurance, private insurers can survive and even thrive in a rate-regulated environment. Prop 45 will give consumers a fighting chance against corporations that, by design, care only about their own bottom lines.

Proposition 46: Pain-and-Suffering Increase + Drug Testing of Doctors – YES

Summary: California's cap on "pain-and-suffering" awards in medical malpractice cases is the same today as it was in 1975: $250,000. Inflation has eroded this so much that attorneys will no longer help poorer victims seek compensation. Prop 46 updates the cap to account for inflation. Prop 46 also throws in random drug testing for doctors in hospitals, enhancing patient safety. Finally, it requires use of a state prescription database to thwart addicts and dealers. I initially thought Prop 46 was a wrongheaded vanity bill, but research proved otherwise.

Details: I had a hard time deciding how to rate Prop 46. It seems to contain good ideas: updating the cap on "pain-and-suffering" compensation, testing medical caregivers for drug and alcohol use, preventing "doctor shopping" by addicts and dealers. But it also seems to have been motivated by a suspicious combination of grief (the original sponsors) and self-interest (attorneys), making it resemble irresponsible vanity initiatives like Prop 35 (2012) and Prop 9 (2008). How to decide?

When I'm stuck, I often ask these questions:

  1. Is the proposed law necessary?
  2. Can't (or won't) the Legislature handle it?
  3. As written, does it do more good than harm?
  4. If it has harmful provisions, can we live with them?
  5. What are the likely consequences if it passes? If it fails?

So let's review this proposition, then run it through the question grinder and see what comes out. Prop 46 has three main parts: Pain-and-suffering awards, drug testing, and the statewide prescription database.

Pain-and-suffering awards. If you are a victim of medical malpractice, courts may award you both economic and noneconomic ("pain-and-suffering") damages. Economic damages compensate you for measurable financial losses, such as medical bills and past and future lost income. There is no limit to the size of economic damages. Noneconomic damages compensate you for chronic physical pain, loss of the ability to live life normally, mental anguish, anxiety and/or depression, and loss of dignity and independence. Noneconomic losses are real and serious; however, it is challenging to assign a dollar value to them.

Fifteen states do not cap noneconomic damages. Among them are nearby states like Arizona and Washington, and populous states like Pennsylvania and New York. California is one of 35 states that do cap noneconomic damages. A 1975 law set our cap at $250,000. This was high at the time, but has since been passed by other states. For example, in Wisconsin the cap is $750,000; West Virginia $500,000; Nevada $350,000.

California's cap does not adjust for inflation, and has been steadily losing its economic potency. Prop 46 would apply cost-of-living increases to the cap, retroactive to 1975. It would immediately jump up to $1.1 million, which is what $250,000 in 1975 would be worth today. The cap would continue grow incrementally each year with the cost of living.

In addition to capping awards, the 1975 law also caps attorneys' fees for malpractice suits. Lawyers typically receive between 15% and 30%, depending on the total economic and noneconomic damages awarded. The fact that economic damages are included is very important, because it means that the victim's career (i.e., future lost earnings) dictates how much the attorneys fees can be. For example, if an executive making $200,000 suddenly cannot work due to malpractice, the economic damages would include millions of dollars in lost future earnings. His or her attorneys would be entitled to $150,000 of each million, dwarfing any fees from noneconomic damages. An hourly worker in the same situation would receive far less in economic damages, and a stay-at-home parent could get zip, as would his or her attorneys.

In 1975, the attorney fees from the noneconomic damages alone (up to $75,000) made malpractice cases attractive to law firms. Today, however, that amount is so trivial lawyers won't take on malpractice cases in the absence of high economic damages. The result is that only cases with high economic damages tend to be pursued. Cases with low economic damages are ignored, rendering victims who are not wealthy (or potentially wealthy) increasingly ineligible for noneconomic damages. (Evidence: the recent 50% decline in the number of malpractice payouts in California, from 1,802 in 1997 to just 909 in 2010.)

This trend is plainly discriminatory. Economic factors should not affect pain-and-suffering damage awards. Yet those with low economic losses are not compensated, because it's not worth it for attorneys. Prop 46 will right this wrong by increasing the cap on noneconomic damages, and with it the related attorneys' fees (as high as $330,000), once again making low-economic-damage malpractice cases attractive.

Higher and more frequent damage awards will inevitably mean higher malpractice insurance premiums for health care providers. However, those insurance premiums have been shrinking recently in parallel with the recent trend of reduced payouts. Medical liability premiums today constitute only about one-third of one percent of overall health care costs. Yes, costs will go up under Prop 46, but insignificantly.

Drug testing of doctors. Prop 46 would require hospitals to conduct random drug and alcohol tests on affiliated physicians. Doctors would also be tested whenever a patient of theirs experiences an "adverse event" such as death or disability due to surgical or medication error, contaminated equipment, or a fall. Furthermore, doctors would be required to report other doctors whom they suspect of drug or alcohol impairment while on duty, which would, of course, trigger additional testing. And doctors would be required to report any doctor who did not follow the "appropriate standard of care" during an adverse event, again triggering a drug test.

The Medical Board of California would be required to discipline any physicians found to have been impaired, or who failed to comply with the testing. Disciplinary action may include suspension of the doctor's license, probation with mandatory addiction treatment, referral to the Attorney General for prosecution, notification of the patient and/or family, and notification of all health facilities where the physician practices.

Routine drug testing of all professionals in life-and-death situations is rapidly becoming the norm in our country. By singling out doctors (and not nurses and other health care workers), Prop 46 does an incomplete job, but it's a net improvement. As I like to say, never vote against a proposition because it doesn't go far enough. Your ballot has no option to go farther; you must choose either the partial solution that's offered or no solution at all. The Legislature is welcome to finish what Prop 46 started, or, failing that, perhaps another initiative will appear.

Doctors would be billed for all drug tests they take, and they would be charged an annual fee to cover the costs of the Medical Board's new responsibilities. We can assume that these charges would be indirectly passed on to patients and insurers, pushing up the cost of health care. Significantly? Probably not.

Statewide prescription database. "Doctor shopping" is a common scam used by addicts and dealers to amass prescription drugs such as Vicodin and OxyContin. The shopper visits multiple doctors, collects a prescription from each one, and fills the prescriptions at different pharmacies. It works as long as the doctors and pharmacists are unaware the patient is shopping around.

To combat doctor shopping, California is currently building a database of all prescriptions for commonly abused drugs. Starting in 2016, all prescribing doctors and pharmacists will be required to register as users of the database. However, they will not be required actually to use it. Prop 46 will require doctors and pharmacists to check the database prior to prescribing or dispensing these drugs. If the database shows an existing prescription, they must deny the new one unless they can determine there is a legitimate need for another.

And that's Prop 46. So: yes or no? Let's run the questions!

1. Is the proposed law necessary? As I point out above, the current cap on noneconomic damages is discriminatory and must be raised so not just the wealthy are fairly compensated. Routine drug testing of workers in life-and-death situations is rapidly becoming the norm across all industries in our country. Testing doctors is a good first step toward enhancing patient safety. And requiring use of the statewide prescription database is the only way to prevent doctor shopping. So: yes, yes and yes.

2. Can't (or won't) the Legislature handle it? Patient groups have approached the Legislature repeatedly over the years about the cap on noneconomic damages, without success. Evidently the only way to adjust the cap is to go over the Legislature's heads, to the voters. The Legislature might well enact the other two parts of Prop 46 if given the chance, but it simply hasn't been raised to a high level of urgency. So: no, maybe, maybe.

3. As written, does it do more good than harm? The potential harm I see is in slightly rising health care costs due to increased malpractice awards and drug testing costs; occasional disrespect, inconvenience and invasion of privacy of doctors; and potential privacy and data security concerns with the state prescription database. These are all greatly outweighed by the benefits outlined above.

4. If it has harmful provisions, can we live with them? Yup.

5. What are the likely consequences if it passes? If it fails? Passage of Prop 46 will result in justice for low-income malpractice victims who are currently shut out of the system. It will increase patient safety in hospitals, despite adding bureaucratic and practical inconvenience for doctors. And it will reduce illegal use of addictive drugs. If it fails, we'll have to live with the status quo, which is discriminatory, compromises patient safety, and renders useless a sophisticated crime-fighting tool.

Prop 46 is not a quest for vengeance, as was the overly-aggressive victims' rights measure, Prop 9. And it's not a personal quest for political capital, as was the completely unnecessary human trafficking measure, Prop 35. Instead, Prop 46 is a level-headed, reasonable response to legitimate shortcomings in the current system. It may have grown out of personal tragedy, but Prop 46 deserves your vote.

Proposition 47: Reducing Some Felonies to Misdemeanors – YES

Summary: Prop 47 concerns certain non-serious, nonviolent crimes such as shoplifting, forgery, and drug possession. Under current law, prosecutors and courts can decide to charge these crimes as either felonies or misdemeanors. Prop 47 will require them to be misdemeanors if the amount is below $950 and the defendant has no history of serious crimes. This will allow about 40,000 nonviolent offenders a year to avoid serving with (and being treated like) violent, hardened criminals. That's smart criminal justice.

Details: Crimes are classified as infractions, misdemeanors, felonies and wobblers.

I'm not kidding. Wobblers.

Wobblers are crimes that can be either misdemeanors or felonies, depending on severity and the defendant's criminal history. For example, burglary is a wobbler. It might be prosecuted as a misdemeanor if the defendant has a clean record and walked into an open workshop to steal a wrench; or as a felony if the defendant has prior convictions or broke a car window to steal a purse. The difference in penalties can be significant. A misdemeanor conviction for commercial burglary carries up to one year in jail, while a felony conviction is up to three years.

Prop 47 will require six wobblers to be prosecuted as misdemeanors if the defendant has no prior convictions for violent and/or serious crimes and the value of property involved is $950 or less. The crimes are petty theft, shoplifting, receiving stolen property, writing bad checks, forgery, and non-marijuana drug possession. Prop 47 specifies certain exceptions: repeat theft, or forgery in conjunction with identity theft, for example. In such cases the crimes remain wobblers.

Under today's laws, prosecutors and courts typically treat defendants exactly as Prop 47 proposes. To this extent, Prop 47 merely codifies and standardizes current practice. It will mean more uniform justice across the state, and reduce the possibility that some ambitious, "tough-on-crime" District Attorney will apply frontier justice in one unlucky county. It deserves your vote for that reason alone.

Also, by eliminating prosecutorial discretion, Prop 47 will be protecting defendants from potential discrimination by prosecutors, who can too easily let factors such as race and class slip into wobbler decisions.

Prop 47 will allow offenders currently serving felony sentences for the affected crimes to apply to have their convictions reclassified as misdemeanors, shortening their sentences. Reclassification will not be automatic. Judges will look at each case individually, and must turn down those who "pose an unreasonable risk of danger to public safety," considering prior convictions, victims' injuries, records while incarcerated, or any other relevant factors. This strikes me as sensible and measured.

In addition to making our justice system fairer, Prop 47 will help ease the horrific overcrowding in our state prisons and county jails. Remember that California is under a court order to reduce prison overcrowding from more than 200% of designed capacity down to 137.5%. The state has made great progress toward this goal by moving nonviolent inmates to county jails. Bully for the state, but now 18 counties are under court order to cap jail populations, and must therefore release thousands of inmates early. Prop 47, by making certain cases misdemeanors instead of felonies, will shorten sentences and thereby help relieve overcrowding. And a jail that's not above capacity is a jail that won't have to release inmates early.

Prop 47 is very narrow. It will not affect serious or violent felons. It will not affect crimes of more than $950. It will not affect inmates who pose danger to the public. Instead, it will standardize prosecutions of lesser crimes, promote appropriate sentencing, and let our penal system focus on the hardened criminals for which it was designed.

Proposition 48: Indian Gaming Compacts: North Fork & Wiyot – YES

Summary: Last year the legislature and governor approved gaming compacts allowing these tribes to open a casino on Highway 99 near Madera. There is no good reason to overturn the compacts (i.e., vote "no") unless you own a nearby competing casino, as do the backers of this blatantly selfish referendum.

On the coast of Humboldt County,
By the great Pacific Ocean,
By the mighty redwood forests,
Lies the Wiyot Reservation.
Many moons ago the Wiyot
Wished to build a great casino
On their seaside rancheria,
So their tribe could make some money.
Lots and lots and lots of money.
But the Wiyot Reservation
Lies beside a Wildlife Refuge
With its migratory seabirds,
And its loons and brants and egrets,
And its bacigadarawil
As the Wiyot call the robins.
And the State of California
Was concerned that a casino
Would endanger all the wildlife
Living safely in the refuge.
So the noble Wiyot elders
Made a deal with California,
Not to build their own casino,
Nor disturb the native wildlife.
In return, the tribe could partner
With the North Fork band of Indians,
Who were building a casino
In the County of Madera;
And the Wiyot would be granted,
As a part of the agreement,
A percentage of the income
From that far-away casino.

In the County of Madera,
In the low Sierra foothills,
By the vast San Joaquin Valley,
Lies the Indian reservation
Called the North Fork Rancheria.
The casino they are planning
Is not near their reservation:
It's beside a major freeway,
By the City of Madera,
Thirty-eight miles to the southwest.
This location will be easy
For the city folk to drive to,
So the North Fork are expecting
To collect a mighty jackpot.

Near the North Fork Rancheria,
In the low Sierra foothills,
Are two Indian casinos
Owned by other tribes of Indians.
The Chukchansi Gold Casino
And Casino Table Mountain
Stand to lose a lot of business
If the North Fork Rancheria
Builds its game hall with the Wiyot
Near the City of Madera
On the highly-trafficked freeway.
So the Table Mountain Indians
And a New York City hedge fund
Greatly vested in Chukchansi
Paid to put a referendum
On the North Fork gaming compacts
On the 2014 ballot.
They paid millions of their dollars
For an advertising program
To convince the unsuspecting
To vote "no" upon the measure.

If this ballot proposition
Is defeated by the voters,
Then the North Fork gaming compacts
Will become invalidated.
And there will be no casino
On the freeway near Madera.
And the state's exquisite bargain
With the Wiyot near Eureka
Will be broken by the voters
Who knew not what they were doing.
And the Wiyot may be tempted
To construct their own casino
By the wildlife sanctuary,
By the migratory seabirds,
By the loons and brants and egrets.

Please vote "yes" on 48 to
Reaffirm the gaming compacts.
We should not be overriding
Delicate negotiations
On environmental impacts
Just to guarantee some hedge fund
Good returns on its investment.

My Semi-Biennial Lecture on Bonds

When California wants to finance a large project, it asks the voters for permission to take out a loan. Prop 1 is just such a request. If voters approve, the state may take out a loan for the project by selling general obligation bonds, which are paid back with interest over fifteen years or so. The bond payments come out of the state's main budget, the General Fund. So when we vote on bond measures, we are really voting on whether the projects 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 may once have been the case, but with today's low interest rates each dollar of bond money will cost only 30 cents in interest, accounting for inflation. (See details in your supplemental ballot pamphlet, when that arrives.)

"Okay," you admit, "but loans are still more expensive than pay-as-you-go." This is true. Still, 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 $7.1 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 amount to less than 5% of the General Fund, down from a high of 5.3% five years ago. The sale of previously authorized bonds may push it up; Prop 2 may push it down; but the debt ratio will probably remain in the 4% to 6% range. Prop 1 would raise the figure by roughly 0.33% -- significant, but hardly budget-busting.

Prop 1 will fund long-lived, tangible acquisitions, such as apartment buildings. 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, 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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