Ballot measures could put state deeper in debt

By Steve Wiegand -
October 12, 2008

The dozen measures on California's Nov. 4 general election ballot would cost taxpayers – and their children and grandchildren – $78$78.9 billion over the next 30 years, a Bee analysis has found.

That includes $33.2 billion for four bond proposals, $30 billion for drug rehabilitation programs and another $15.5 billion to ensure a minimum amount of state funds for local jails and other law enforcement programs.

On the plus side, if the drug rehab program worked, it could save taxpayers $32.5 billion and reduce the overall ballot's potential cost to $44.4 billion.

But that's still a daunting price tag in an economy that is currently conjuring more visions of bread lines and soup kitchens than high-speed railroads or children's hospitals.

"I think with the way things are, many people are going to vote 'no' on almost everything," said Bob Stern, president of the Center for Governmental Studies in Los Angeles. "It's a bad time to be asking for money for anything."

Nonetheless, a disparate herd of proposition proponents – from oout-of-state billionaires to animal rights advocates – are asking Caalifornians to come across for their causes on Nov. 4.

Figuring out just how much they are asking for can be a tricky business.

The most reliable source is generally considered to be the nonpartisan Legislative Analyst's Office, which breaks down ballot measure verbiage for the official state voter information guide.

But even legislative analysts do some guesstimating when it comes to putting a price tag on propositions.

"Things can turn out differently than you think they will," said Dan Carson, a deputy legislative analyst. "We take our best shot at estimating how it will play out based on the way it's written."

Some of the formulas used are fairly straightforward.

For the four bond measures on the ballot, for example, analysts assume the bonds will be sold at an average interest rate of 5 percent over their 30-year life.

That means the bonds' costs will be just about double their face value. So Proposition 1A's $9.95 billion bonds for construction of a north-south high-speed rail system would eventually cost $19.4 billion.

Ditto for Proposition 3's bonds for capital improvement projects for Children's Hospitals ($980 million in bonds; $2 billion in total costs), and Proposition 10's bonds to finance rebates for buying vehicles that run on fuels other than gasoline ($5 billion in bonds, $10 billion total costs).

The fourth bond measure, which would sell $900 million worth of bonds to finance home and farm mortgages for California veterans, would also have costs that double the bond amount.

But all 26 Cal Vet bond acts since 1922 have paid for themselves through veterans' payments on the mortgages. Taxpayers would only be on the hook if mortgage payments didn't cover the $59 million a year in debt service.

Whether that's enough of a track record to sway voters a 27th time on Cal Vet bonds is uncertain. But passage of Proposition 12 might be the safest bet on the ballot in an election where most states aren't even bothering to ask for any bond money.

In fact, according to the National Conference of State Legislatures, California's quartet of bond measures represent about 27 percent of all the proposed state bond issuances this election – and 91.6 percent of thee total monetary amount being sought.

If history is any guide, the bond measures and other big-ticket items on the ballot may be in trouble because of the overall economic malaise.

Mark DiCamillo, director of the Field Poll, has charted the success rate of California bond proposals since 1976.

In normal times, DiCamillo found, voters have approved a minimum of 68 percent of bond proposals.

During the economic recession of the early 1990s, however, it dropped to 23 percent.

"Voters have generally been receptive to debt financing," DiCamillo said, "but the immediacy of the current economic troubles, plus the presence of other high-cost initiatives on the ballot, may make it much more difficult to support them this time."

DiCamillo's reference was to two other measures on the November ballot that aren't bonds, but carry big price tags.

One is Proposition 5, which would shift the way drug offenders are treated in the criminal justice system by de-emphasizing prison time and focusing on rehabilitation.

The Legislative Analyst's Office has estimated Proposition 5 could cost more than $1 billion a year for rehab programs.

But there is a fiscal flip side to the measure: If the rehab programs worked, they could drop California's prison costs by more than $1 billion annually, plus save more than $2.5 billion by reducing the need to build more prisons.

Another crime-related measure, Proposition 6, would set minimum annual funding levels in the state budget for local law enforcement agencies and jail operations, and stiffen dozens of anti-gang laws.

Legislative analysts estimate the initiative would cost $365 million more each year than the state is currently spending on those programs. That additional amount could increase to $500 million a year within a few years, and even more after that.

It could also cost another $500 million-plus for building more prison space necessitated by the tougher gang laws.

Altogether, the bond measures, the crime-related propositions and the lesser costs of other initiatives could add another $1.48 billion to state government's annual bills.

How much attention voters pay to propositions' potential costs can vary dramatically from election to election, DiCamillo said.

"I think in every election there is a bloc of voters who just vote no on everything," he said. "With the condition of the economy, there could be a lot more of them this time."