By Doug Porter
The following analyses of Propositions 1 & 2 represent my opinions. The SD Free Press editorial board may or may not agree with me. For all our articles on the upcoming election, check out our 2014 Progressive Voter’s Guide.
Back in the middle of August the California Legislature worked up a plan to renumber a couple of propositions appearing on the Nov. 4 ballot.
Two of Gov. Jerry Brown’s legacy political projects — a multibillion-dollar bond for water needs and a constitutional amendment to enhance the state’s rainy day budget fund — dropped the ballot numbers assigned by Secretary of State Debra Bowen of Proposition 43 (water) and Proposition 44 (budget).
(Endorsements are coming… We just don’t meet that often)
Consequently, Propositions One and Two were created. The idea behind this bit of presto-chango is the hope that voters will see these propositions as a package deal; a one-two effort to fix some of what’s broken in California.
While there has always been controversy about addressing California’s problems (Prop 1), just about “everybody knows” the State needs a fix for its Rainy Day Fund (Prop 2).That’s the plan, anyway, and Gov. Brown has done an impressive job of selling both measures to as many parts of the west coast establishment as possible.
Water, Cool Clear Water
Proposition 1– Water Bond – Voter Approval for the Water Quality Supply, and Infrastructure Improvement Act of 2014
Supporters: Yes on Props 1 and 2, A Bi-Partisan Coalition of Business, Labor, Republicans, Democrats and Governor also: yesonprops1and2.com
Opponents: Californians Against More Debt, Misplaced Spending – No on Prop 1 also: noonprop1.org
Ballotpedia Guide: The details, in plain English
You Might Not Know: One of the great controversies about California water management concerns the Delta (and the ecosystems thereof). The legislature was very specific about saying bond monies will “not be expended to pay the costs of the design, construction, operation, mitigation, or maintenance of Delta conveyance facilities.”
My Analysis: This the latest in a series on water infrastructure bonds going back to 1960. The state proposes to borrow $7.12 billion, to be paid back at the rate of $360 million from the general fund annually for 40 years.
After being delayed (mostly for political reasons) for four years, Gov. Jerry Brown has rallied just about the entire political establishment behind this effort. Democrats can brag about jobs and ecosystemic benefits. Republicans can brag about the benefits for corporate farming operations.
The Chamber(s) of Commerce, the Democratic Party, the Republican Party, the San Diego Water Authority, the Nature Conservacy and the Natural Resources Defense Council all love Proposition 1. They’ve built up a war chest just short of three million dollars. (Funds are co-mingled with support for Prop 2)
UPDATE: Mike Lee, a representative of the Water Authority, states that although they support Prop 1, they’ve not added to the war chest “by either contributing or receiving money related to the campaign for the ballot measure.”
On the other side of the question are various (commercial and sports) fishing groups, the Winnemem Wintu Tribe, the Center for Biological Diversity, Food and Water Watch, and the Factory Farm Awareness Coalition, to name a few. They’ve built up a war chest of less than $40,000.
In the history of public works projects I doubt there’s been one that wasn’t packed with what fiscal watchdogs call pork, and Proposition 1 is no exception. It also does little to nothing to address the current drought in California. This is a long term deal and I’d say it is a sure bet agribusiness interests are the big winners.
What we don’t hear from opponents is how they’d line up the political support needed for any alternative funding scheme or what we’re supposed to do about water management if the bond measure fails. Big public works funding is complicated and necessitates building coalitions (which you get by promising a piece of the action) that are extraordinary in nature.
I’ve concluded this is a question of perfect being the enemy of the “meh”.
I will probably vote yes. I completely understand why you might vote no.
The Devil is in the Details
Proposition 2 – State Budget. Budget Stabilization Account. Legislative Constitutional Amendment.
Supporters: Yes on Props 1 and 2, A Bi-Partisan Coalition of Business, Labor, Republicans, Democrats and Governor, also: yesonprops1and2.com
Opponents: No on Prop 2. also: Educate Or State
Ballotpedia Guide: The details, in plain English
You Might Not Know: Ellen Brown of the Public Banking Institute argues against Proposition 2, advocating instead for a state-owned bank (North Dakota does it) in lieu of the proposed fund:
“Having a state-owned bank can substitute for a rainy day fund. Banks don’t need rainy day funds, because they have cheap credit lines with other banks. Today those credit lines are at the extremely low Fed funds rate of 0.25%. A state with its own bank can take advantage of this nearly-interest-free credit line not only for emergencies but to cut its long-term financing costs in half.”
My Analysis: This proposition, along with the Water Bond, are at the top of Gov. Jerry Brown’s agenda, which is why they both got re-numbered to make them easier to market. These low numbers allow them to be presented (accurately or not) as the one-two package to fix what needs fixing in California by the powers that be.
What Prop 2 does is alter the requirements for funneling money out of the General Fund into the state’s rainy day fund. It also creates a mechanism to set aside money for a education rainy day fund.
Who wouldn’t want to save money for a rainy day? Isn’t it the fiscally prudent thing to do?
Various newspapers around the state have lauded Prop 2 based on the premise it would impose “desperately needed fiscal discipline” on lawmakers. And it does do just that by setting up rules about how budgets must function.
The fact is California budgets are notoriously vulnerable during stock market downturns. These contractions –which are really just shakeouts of whatever suckers have fallen for during the latest set of promises of quick riches– impact the state because capital gains taxes are a critical part of the revenue stream.
Rather than fix the tax system, our state government is opting to build up reserves to lessen the impacts of these downturns. Prop 2 also promises savings by paying down past indebtedness at a faster rate. And that’s kinda okay in principle…here comes the BUT…
Part two of this deal–the Public School System Stabilization Account (PSSSA)– promises to build a similar reserve “funded by a transfer of capital gains-related tax revenues in excess of eight percent of general fund revenues.” The devil, however, is in the details.
This education Rainy Day Fund ideas sounds great, except that it leaves a Constitutionally blessed way out for the State to give schools LESS than the minimum guarantee for school funding, while squirreling away the difference to help its cash flow. Then, in a bad year, it will ‘give’ schools their own money, while spending the State’s money elsewhere, Prop 98 (setting a standrad for education funding) be dammed.
Because the formulas in Prop 2 are based on the historically low funding levels that got us to number 50 in national for cost-adjusted per-pupil expenditures, education funding will continue to be California’s red-headed step-child when it comes to budgeting.
Also, the State’s largess when it comes to doling out these savings back to the school districts comes with a hefty price tag: they’re required to spend down their own reserves (to three weeks) when any savings begin to accumulate in the PSSSA. When the state gets richer, they get poorer.
Want me to move the shells around again so you can guess where the pea is?
Everybody who’s anybody in the political establishment loves Proposition 2. Both political parties, both gubernatorial candidates, Chamber(s) of Commerce, the League of Women Voters of California, the San Diego County Taxpayers Association, several large unions and the Howard Jarvis Taxpayer Association have all endorsed it. Hell, it passed through the legislature without a dissenting vote.
I can understand why this Constitutional Amendment is popular in that it provides a certain “certainty.” Keeping funding levels up for education when times are tough is huge pain in the keister and it’s a bi-partisan problem. The new certainty baked into Prop 2 gives politicians an out–now they can say “my hands are tied” when parents, teachers and student complain about budget cutbacks.
I am “certain” my in determination to vote “no” on Proposition 2. Polls, however, say it’s likely to pass, which is not surprising given the institutional backing it has received.
Doug Porter
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Interesting viewpoint. For a fair and balanced overview of both sides of Proposition 1 , the Water Bond, take a look at the League of Women Voters of California Education Fund voter information website:
I’ll look at the League’s explanation of Prop 1. Sadly, the League’s ‘analysis’ of Prop 2 was qualitative and superficial and they got it wrong. Thank you, Doug, for clearly explaining the voter deception in Prop 2’s fine print. Those who understand it fully will not be fooled, they’ll Vote NO on Prop 2.
The real problem with Prop 1 is that it throws a great deal of money at water retention projects that will basically be wasted because there’s not gonna be enough water to make use of ’em. As Mr. Porter writes, in tragic understatement, “It also does little to nothing to address the current drought in California.” I would much rather see those billions spent on desal projects.
Desalination! If only we could vote YES on that.
Thank you, Doug, for capturing California’s eternal school funding shell game. Everyone loves to sound fiscally prudent (‘we’re for the Rainy Day Fund!’) and to ‘invest money in education’ — but for every dollar Sacramento publicly pours in the top, another dollar or two is drained silently out the bottom.
As much as one wants to respect the League of Women Voters, among others, they’re stuck with everyone else trying to understand how Proposition 98 and Proposition 2 would interact. But, shoot, the State hasn’t certified that it has correctly paid Prop 98 funds for SEVEN YEARS. Not since 2007. So, all the might of the State finance department can’t even figure it out … how the heck can other groups?
But, we do know that the State has been taking school-allocated property tax for decades (to backfill cities and counties for their Prop 13 losses, to fund redevelopment, to pay for its deficit financing bonds, to cover its VLF obligations…) and now its decided that, when it fails to repay these in full, it will cover its tracks for a year or so by forcing individual school districts to prematurely spend their reserves.
Thanks for calling it what it is — a shell game preying on kids.
SO grateful that Doug took the trouble to explain these ballot referendums to the general public . I’m voting NO On Propositions 1 & 2. (Also, please fix the bugs in the comments section.)
So glad to have found Doug writing and in San Diego again ( wish I was )
I like to inform myself on all things political, but when things get overly complicated, I will trust in Doug Porter’s info gathering every time.
I have been following his writing for I am blown away to say ….almost forty years !
Thanks for the inner workings of prop 2, I knew it was there but could not quite put my fingers on it.
Thank again
L.