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

Read the ratings:
Prop. 51 - YES
Prop. 52 - NO
Prop. 53 - NO
Prop. 54 - YES
Prop. 55 - YES
Prop. 56 - YES
Prop. 57 - YES
Prop. 58 - YES
Prop. 59 - YES
Prop. 60 - NO
Prop. 61 - NO
Prop. 62 - YES
Prop. 63 - YES
Prop. 64 - YES
Prop. 65 - NO
Prop. 66 - NO
Prop. 67 - YES
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Pete Rates the Propositions
November 1998

Pete recommends:
1A   YES   $9.2 Billion School Bonds
1   NO   Reassessment Exemption for Contaminated Property
2   YES   Elimination of Transit Tax Diversion
3   YES   Partisan Presidential Primaries
4   YES   Ban on Steel-Jawed Leghold Traps
5   NO   Casinos on Indian Reservations
6   NO   Ban on Horsemeat
7   YES   Air Pollution Reduction Tax Credits
8   NO   Pete Wilson's School Reform Omnibus
9   YES   Requiring Private Utilities to Eat Costs of Nuclear Power Plants
10   YES   Tobacco Tax to Fund Early Childhood Development Programs
11   YES   Sales Tax Revenue Sharing

Proposition 1A: $9.2 Billion School Bonds - YES

Okay, students, who here wants to reduce elementary school class sizes? Good, you can put your hands down. Now an algebra question. What happens when you divide a growing number of students by a smaller class size? Yes, Mr. Einstein. That's right, you need more classrooms. On to political science. Since Prop 13 limited school districts' property tax revenues, who pays for school construction? Mr. Jarvis? Yes, it's the state government. And finally, economics. How does the state finance school construction? No, Mr. Stockman, not through the trickle-down effect. Mr. Greenspan? Right, through the sale of long term, general obligation bonds. Very good, class.

Prop 1A is an enormous bond measure that will add and refurbish primary, secondary, college and university buildings throughout the state. If you believe education should be the government's number one priority, this is your chance to put your money where your mouth is. The state Department of Education says we'll need over $40 billion in K-12 facility improvements over the next decade. So think of the $9.2 billion Prop 1A provides as merely a down payment.

Please see my semi-biennial lecture on bonds for my opinions on bonds in general.

Proposition 1: Reassessment Exemption for Contaminated Property - NO

Proposition 13 says that a property's "assessed value" can increase only 2% a year as long as the property isn't sold or significantly improved. So while your property may be worth twice what it was when you bought it, its assessed value will have barely changed. Since property taxes are based on assessed value instead of real value, the size of your property tax bill depends more on how long you've owned your property than how much it's really worth. It's sort of like paying income tax based on how long you've had your current job instead of how much money you make. It's ridiculous.

In the twenty years since Prop 13 passed, we voters have approved about a zillion little exemptions to let special people avoid reassessment when they move or remodel: disaster victims, people who inherit property from their parents or grandparents, people over 55 who move into cheaper homes, people who fire-proof or earthquake-proof their property, people who live in historic buildings. Prop 1 extends exemptions to people who replace or remodel environmentally contaminated property to make it habitable.

On the surface Prop 1 seems reasonable and innocuous. But every time we grant a reassessment exemption like Prop 1 proposes, we make the lunacy I pointed out above more palatable, and thus postpone the day when California implements a more equitable property tax system. Prop 1 hopes to eliminate the complaints of yet another class of citizens upset with the system of "property tax based on length of ownership," and thus perpetuates a law that's fundamentally flawed.

I try not to recommend protest votes, but I make an exception for issues related to Prop 13. As California housing prices skyrocket, soon it won't be unusual for people who have just bought their property to pay ten times more property tax than their neighbors who have owned since 1978. It's as unfair and arbitrary to base taxation on length of ownership as it would be to base it on length of hair or length of name. Prop 1 will pass easily. Your "no" vote might just send a tiny message that we are unwilling to accept the inequity of Prop 13 any longer.

Proposition 2: Elimination of Transit Tax Diversion - YES

You pay a lot into state and local transit funds. Over twenty-five cents in sales and gas taxes on every gallon of gasoline. All of your vehicle registration and driver's license fees. And, in many counties, up to 1.25% sales tax on everything you buy. It's a hefty sum, adding up to billions of dollars statewide.

The California constitution directs that these funds may be used only for transportation-related purposes, such as highway construction and maintenance, trolleys and subways, the Highway Patrol , the Department of Motor Vehicles, the Air Resources Board, and so on. But there is a loophole. The transit funds may be "temporarily loaned [sic] to the State General Fund upon condition that amounts loaned [also sic] be repaid to the funds from which they were borrowed." (Article XIX, Section 6: transit gloria)

You'd think this temporary borrowing should be harmless. But the authors of the provision never defined "temporarily." And there's your loophole. Technically, it could mean just about anything—why, in geologic time, "temporarily" could mean a few centuries! Right. And technically, if it's only oral to, um, loophole contact, it isn't really sex. Uh-huh.

Anyway, your friends in Sacramento noticed this transit fund loan loophole during the state fiscal crisis a few years ago, and decided to exploit it. Since 1990 Pete Wilson and the Democratic legislatures have "borrowed" over a billion transit dollars for non-transit related purposes, and paid back not one cent. There is no indication they ever will.

Prop 2 will close this loophole, ensuring that all transit funds are used for transit. Temporary loans could still be made, but Prop 2 takes care to define "temporary": one year in most cases, or three years when the governor declares a state of fiscal emergency. This is sensible and honorable.

Proposition 3: Partisan Presidential Primaries - YES

In 1996 the voters passed Prop 198, instituting open primaries. I thought it was a dumb idea then, and I think it's a dumb idea now. It was believed Prop 198 would give more moderate candidates a chance at party nominations, since they can garner crossover and independent votes. But despite the open primary this year, my ballot still has the same liberals and conservatives it has for the last decade. I see no change.

And open primaries represent a soon-to-be-exploited invitation to electoral sabotage. If you're a smart Republican or Democrat, and your party's candidate stands unopposed, you ought to cast a nuisance vote for a weak candidate in the other party. There wasn't much of this sort of hanky-panky last June, but that's only because we're new at this game. Imagine what the governor's race would look like today if Dan Lungren had instructed Republicans to use their primary votes, useless to him, to nominate hopeless Democrat Pia Jensen instead of Gray Davis. And think how much happier Barbara Boxer would be now if she had directed a million Democrats in the primary to make neophyte Mark Raus the Republican U. S. Senate nominee instead of Matt Fong. I'm guessing the politicians won't miss this angle in 2000, and I don't think it will serve us well.

Prop 3 will remove presidential primaries from the dumb open system. Only Democrats will be allowed to vote for Democrats, and Republicans for Republicans. (Unfortunately you Independents will be left out, but that's the price you pay for your fence-sitting.) To my thinking, Prop 3 doesn't go nearly far enough. But it would be compounding a dumb idea to vote against it. A little relief is better than none at all.

Proposition 4: Ban on Steel-Jawed Leghold Traps - YES

Steel-jawed leghold traps are California's version of land mines. They lie silently in wait for any creature to trip them, then they savagely mutilate their victims, causing a slow, agonizing death, often by infection or starvation. Eighty countries and several states have banned these menaces. Prop 4 will do the same in California. Prop 4 will also outlaw the use of two particularly dangerous poisons in the field, where they can run off into other areas, killing unintended animals and fish.

If you have any doubts about 4 after reading the arguments in your ballot pamphlet, turn to page 86 and read the proposed law. It's short, simple, clear, and as right as rain.

Proposition 5: Casinos on Indian Reservations - NO

About 40 of the 100 Indian tribes in California operate gambling casinos. The federal Indian Gaming Regulatory Act of 1988 requires such tribes to negotiate governing compacts with the states they're in. None of the California tribes has finalized such a gambling compact yet. The Pala Band of Mission Indians in San Diego County, however, has a tentative agreement with Governor Wilson, which only awaits ratification by the state legislature. If that compact is approved, it will become the model for gambling agreements with all the other tribes. Prop 5 proposes a different model compact with less regulation. If Prop 5 passes, the state will be forced to accept this more liberal gambling compact for all tribes that request it.

What are the main differences between the Pala pact and Prop 5's proposal?

  1. The Pala pact requires local community input into the siting and construction of casinos. The idea is to avoid big, glitzy casinos abutting neighborhoods, as one sees at the Nevada border at South Lake Tahoe. Prop 5 has no requirement for community input.
  2. The Pala pact requires casinos to pay workers' compensation and state unemployment insurance, which they otherwise would not have to do. (As sovereign nations, tribes aren't subject to state labor laws.) Moreover, the Pala pact requires the tribes to allow casino employees to unionize. The majority of casino employees are not Indians. Prop 5 has no labor-relations requirements.
  3. Finally, and perhaps most importantly, the Pala Pact outlaws video slot machines. By far the biggest money maker for the tribes, these electronic terminals offer blackjack, poker (against the house), tumbling fruit, and other games of chance with the odds stacked against the player. This kind of machine is illegal elsewhere in California. Tribes currently operate over 12,000 video slot machines, averaging nearly 350 per casino. The Pala pact would ban them. In their place, casinos could substitute video lottery machines (similar to Keno), limited to 199 machines per tribe. Prop 5 would maintain the status quo, allowing every tribe an unlimited number of video slot machines.
There's a lot to dislike about both the Pala pact and Prop 5. The Pala pact arbitrarily and unnecessarily limits the quantity and type of games that can be offered. Supporting this kind of restriction would seem to be a concession to the big Nevada gaming interests, of whom I'm no special friend.

But at least the Nevada casinos have to treat their workers fairly. If Prop 5 passes, California casino workers will be at a huge disadvantage. They won't have basic protections every other worker in the state takes for granted. It is much more important to treat these workers fairly than it is to allow the tribes to offer unrestricted gambling. So while I give the tribes my sympathy, and with a snarl towards Las Vegas, I must recommend a "no" vote on Prop 5.

Proposition 6: Ban on Horsemeat - NO

Prop 6 seeks to end the inhumane practice of shipping horses thousands of miles in hot, dusty trailers to be slaughtered for food. The long trip to the nearest licensed horse processing facility (in Nebraska or Texas) is too often a harsh, brutal mistreatment of the animals, and should not be tolerated. I applaud the authors of Prop 6 for trying to put a halt to it.

But Prop 6 will also ban the sale of horsemeat for human consumption in California. "This is wrong?" you ask. This is wrong. Let me explain.

We Californians are a diverse lot. Our cultural roots extend to all corners of the Earth. We eat cows, swine, sheep, goats, deer, rabbits, alligators, kangaroos, buffalo, ostrich, and a whole lot of raw fish. Why not horses too? Because "traditionally" we don't eat those. Oh. And whose tradition is that? It may be yours, but it certainly isn't everyone's. Nevertheless, Prop 6 would impose that tradition on everybody.

This is cultural imperialism, folks, and it has no place in a state with no ethnic majority. I may not be a fan of horsemeat, but I know people who are, and I'll bet you do too. Forcing everyone in the state to follow some Western idea of "the noble horse of which thou shalt not partake" would be the same, in principle, as imposing on everyone the Kosher laws, or Meatless Fridays, or even a mandatory limit on daily triglyceride intake. It's authoritarian. It's culturally stifling. Put bluntly, it's Fascist. All right, all right, maybe that's going too far. But you get the idea.

It is no more cruel to slaughter a horse for food than any other animal. Yes, many horses are sweet, gentle companions. But so was the pet bunny I had when I was a kid, and you don't see us rabbit lovers banding together to outlaw hasenpfeffer.

And let us not forget poor Bambi! Give me a break.

I am outraged by cruelty to animals. We must find some way to protect horses from mistreatment during their transport to Nebraska. If Prop 6 only stopped the abuse, I would support it, as I do Prop 4. But Prop 6 goes too far beyond, attacking the cultural diversity that makes California so great. I cannot vote for that.

Proposition 7: Air Pollution Reduction Tax Credits - YES

Should the state government allocate $218 million a year to decrease air pollution from diesel engines and crop fires? That's what Prop 7 would do. If you're tired of breathing the nation's worst air, Prop 7 is your chance to do something constructive about it.

Prop 7 will make over $100 million in tax credits available to public and private operators of outdated diesel-powered buses, tractors, bulldozers, and other heavy equipment who replace or retrofit them to reduce emissions. Smaller amounts will be available for finding alternatives to the burning of rice straw and other farm waste; improving air conditioning, fireplace and landscaping products and equipment; and research and development of diesel emissions reduction. Those wishing to receive the tax credit would have to apply to the state Air Resources Board, which would grant it only to those projects it deems most effective at reducing pollution.

I don't buy the argument that Prop 7 is just a gift to heavy industry, and thus represents "corporate welfare." There is currently no requirement for owners of diesel equipment to replace or retrofit to reduce emissions. If Prop 7 were to fail, industry would have no incentive to clean up its act. Unlike cars, diesel equipment lasts for decades. Without 7, you and I will be breathing the gunk these engines spew for many more years.

Proposition 8: Pete Wilson's School Reform Omnibus - NO

Read some editorials on Prop 8. They're a hoot!

"Johnny has one orange, three apple pies, 14 3/8 baseball bats, a glass of water and freckles. What's the capital of Botswana? That's the problem with Proposition 8. It doesn't add up." San Jose Mercury News
"...this initiative is a strange beast of many parts. Its backers, essentially Gov. Pete Wilson in various disguises, call themselves Californians for Smaller Classes, Drug-Free Schools and Educational Accountability, which should give some indication of how many tentacles this schoolhouse mooncalf has." Peter Schrag in the Sacramento Bee
What on earth could inspire such zaniness in your normally stolid local newspapers? Let's look at Prop 8. Try not to bust a gut.

The 8,000 public schools in our state are overseen by a messy tangle of bureaus. There's the federal Department of Education, the state Department of Education, the state Superintendent, the state Board of Education, the Office of Child Development and Education, the Commission on Teacher Credentialing, the state legislature, your local Board of Education and superintendent, and the principals and administrators at each school. Not exactly the model of efficiency. Prop 8 seeks to add two new entities to this web. (Giggle.)

First, a statewide Chief Inspector of Public Schools, who would be appointed to a 10-year term by the governor without confirmation by the legislature. The Chief Inspector would grab half the budget from the state Dept. of Ed., and produce an annual report ranking all schools on the "quality of education offered by the schools." That is one vague charter. What does it mean? It means the Inspector has free rein to craft a report that maximally bashes the state Superintendent, Department of Education, teachers' union, legislature, or whatever other political opponent he has that week. It's no accident that the Inspector is protected from the legislature and from succeeding governors. If 8 passes, Pete Wilson will appoint a crony to this post on November 4, and even if Gray Davis is elected to two successive terms, he'll be saddled with an untouchable political antagonist for his whole time in office. Hardee har har.

Second, Prop 8 will make your local PTA a major player in setting school policy. Under Prop 8, every school will establish a governing council of parents and teachers, with authority to determine school curriculum and spending. That's right, your school's council will be able to override or ignore your local school board, the state Board of Ed, and anyone else it wants to. Legally, yeah, there are some rules they'll have to observe. But who's going to police all 8,000 governing councils for compliance with federal, state and other requirements? If the mob at my school decides to insist on the teaching of creation theory exclusively, or that girls don't need to take science, or that football funding is more important than classroom repairs, who's going to stop them? Prop 8 makes no provision for the election of governing council members; they can be appointed, or just whoever shows up. Stop it, you're killing me.

As if this weren't enough, Prop 8 imposes unnecessary new requirements for teachers to earn their credentials, and depending on how it's interpreted, might require all 100,000 teachers to take a subject examination before being allowed to continue teaching their subjects. In a time of widespread teacher shortages, this is not the correct medicine. Tee hee.

Since the days when Pete Wilson was mayor of San Diego, all of his initiatives have contained irrelevant and superfluous provisions that pander to your baser instincts in a shameless attempt to get your vote. Prop 8 is no exception. Prop 8 will require schools to expel students who bring drugs to school. This may be a good idea, but it has nothing to do with the madness above. And Prop 8 claims it will reduce class sizes. But that has already been accomplished by the legislature. Ha ha ha ha.

If you want to emasculate your local school board, hamstring the state Board of Education, burden the government with an untouchable, Ken Starr-like gadfly, and entrust your children's education to the capricious whims of the local mob, then Prop 8 is the measure for you. But I think you'll agree instead that Prop 8 is just laughable. Vote "no".

Proposition 9: Requiring Private Utilities to Eat Costs of Nuclear Power Plants - YES

Oooh, this one's complicated. Oooh, my brain hurts. Ouch.

Prop 9 rewrites much of the 1996 back-room deal that has deregulated electricity generation in California. Prop 9 seeks to give residential and small business consumers real savings, not the phantom savings they see under the current deal. There are chunks of 9 I cannot support, but I believe the courts will throw other chunks out, bringing the bill into a kind of ironic balance. Crazy as it sounds, the result will be fair to the utilities and beneficial to consumers.

A history lesson. Back in the 1960s, many utilities used natural gas-fueled generators for electricity. These used so much gas, though, that gas shortages occurred. Nudged by the Texan in the White House, the federal government stepped in, propping up prices and limiting the amount of gas that could be sold to utilities so residential and small business demands could be met. So many utilities turned to oil-fueled generators.

Well, of course, in the 1970s there was an oil shortage. So Washington passed the Powerplant and Industrial Fuel Use Act of 1978, requiring the utilities to phase out both oil and natural gas generators. Okay, in 1978 what were the alternatives to oil and gas? Hydroelectric was clean, but those pesky environmentalists would scream every time a river was dammed. Wind, solar, geothermal—all very nice, but not quite up to lighting Los Angeles. The answer had to be nuclear power. It offered enough generating capacity, independence from OPEC, and the lowest environmental hurdles. So Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric built Diablo Canyon and expanded San Onofre. They didn't do this because they thought it was economical; they did it because they were backed into a regulatory corner.

Also in 1978 the Feds enacted the Public Utility Regulatory Policies Act (PURPA), which sought to encourage more efficient energy generation. It required utilities to purchase cheaply-produced electricity from outside sources at whatever rate they would have paid to produce that electricity themselves. Got that? If it would have cost PG&E 10 cents per kilowatt-hour to build and run a new plant, that's the rate they'd have to pay Fred's Hydroelectric Dam, even though it might cost Fred just 5 cents to produce that juice. The idea was to give Fred incentives and rewards for building such efficient generators. Oh, and under PURPA, PG&E could be forced to sign a deal with Fred locking in these inflated rates for up to 30 years.

The result of the forced nuclear development and artificially high supplier contracts, of course, was that by the 1980s Californians were paying outrageously high electricity bills. When the bottom dropped out of the energy market, consumers saw no rate decreases, because the nuclear and Fred costs were inflexible. Even if electricity production prices had dropped to zero, California utilities would still have these huge fixed costs, and rates would stay virtually the same.

By the 1990s, the mood had changed in Washington. Deregulation was the craze, and electric power generation was in the spotlight. After the enabling federal legislation went into effect, California legislators huddled with the utilities and other interests (notably the environmental groups who oppose 9) to hammer out a deal. SCE, PG&E and SDG&E, fearing for their very solvency, demanded that any deregulation protect them from the oppressive nuclear and Fred costs, collectively termed "stranded" costs, they were bearing due to the 1978 laws. Without such protection, they argued, Fred himself could sweep in, offer his cheap electricity directly to consumers at a fraction of the big utilities' prices, and put the utilities out of business. Nobody wants to see that. So the deal that emerged in 1996 looks like this:

  1. The big utilities can add a Competitive Transition Charge (CTC) to all ratepayers' bills. The CTC will pay off nuclear-related costs until 2003, and will compensate the big utilities for their Fred overpayments until the Fred contracts end.
  2. To compensate consumers for the CTC, the utilities are required to freeze electricity rates at 10% below their June, 1996 levels, from now until March, 2002.
  3. To compensate the utilities for the rate reduction/freeze, they were authorized to issue $6 billion in bonds. These were sold to the investing public in 1997.
  4. To pay off the bonds, the utilities can add a Trust Transfer Amount (TTA) to all ratepayers' bills. Unfortunately, for most consumers the TTA wipes out all savings from the 10% rate reduction/freeze. Furthermore, while the freeze expires in 2002, the TTA lasts until 2008.
  5. To compensate consumers for the TTA, well, um, soon there will be open competition and everything will be just fine. In other words, bend over, this won't hurt a bit.
This is a pyramid scheme, with ratepayers left holding the bag. This deal is far too much in the utilities' favor. It would be okay just to charge the CTC, which is justified by the sudden lifting of the 1978 restrictions. But the rate reduction/freeze is a sham, and the TTA is an insult.

Prop 9 attacks the deregulation deal on a number of fronts.

  1. Under Prop 9, the CTC can pay only for Fred overcharges, not nuclear costs. This means the big three private utilities will have to eat about $5.3 billion in nuclear costs.
  2. Under 9, the electricity rate reduction is doubled to 20% below June '96, and is permanent, not temporary.
  3. Under 9, the TTA is eliminated. The big utilities will have to find some other means of paying off the $6 billion of bonds, plus interest.
If all of Prop 9 were implemented, it would place an intolerable burden on the utilities. You can't impose an unexpected $11 billion in costs on these firms and expect them to survive. And survive they must, because those utilities' nuclear plants provide 20% of California's electricity. That's too much for "the grid" to handle right away. Think brown-outs on 100-degree days. As unpopular as it may be, the utilities need and deserve the relief the CTC's nuclear component provides; it solves a problem that was not of their making. Prop 9 wipes out the this fair and equitable compensation.

But Prop 9 also wipes out the unfair and dishonorable TTA. So who's gonna pay off those $6 billion in bonds? Not the bondholders—the 1996 deregulation law says that the government will do nothing to alter the bond arrangements without making adequate provision for bondholders. And not the state—the deregulation law also says the government shall not be liable for the bonds. And not the utilities themselves—the revocation of the asset (TTA) that backs the bonds is widely thought to be an uncompensated taking by the government, in violation of the Fifth Amendment.

My guess (for whatever that's worth) is that the courts will reinstate the TTA if Prop 9 passes. And you know what? The $6 billion the TTA provides just about matches the $5.3 billion Prop 9 takes out of the CTC. If you squint real hard, it's just as if Prop 9 did the right thing, simply eliminating the foul TTA while leaving the noble CTC intact.

Yeah, sure, it's all based on a bet, a prediction, a guess. If your legal prognostication disagrees with mine, vote "no" on 9 to prevent brown-outs. But we can only vote yea or nay, and I think 9 represents a chance worth taking. So let's take the plunge, damn the torpedoes, nothing ventured, it is far better to have loved and lost, let the chips fall where they may, and have a nice day. And while you're up, please get me some aspirin.

Proposition 10: Tobacco Tax to Fund Early Childhood Development Programs - YES

Prop 10 will jack up the tax on cigarettes by 50 cents a pack (and the tax on other tobacco products by the equivalent of one dollar a pack). By itself, the tax increase will reduce the number of smokers in California. This was shown ten years ago when, following Prop 99's 25-cent increase, tobacco use declined by one quarter. If you believe the state has a duty (ethical or fiscal) to discourage smoking, stop here and vote for Prop 10.

How can I be in favor of such social engineering, you might ask, when my position on Prop 6 is so strongly civil libertarian? Simple. Horsemeat consumption does not put people in the hospital at public expense. No one ever got sick from second-hand horsemeat. Horsemeat has not been shown to cause forest fires or lost productivity due to illness. Horsemeat is not physically addictive. Cigarettes, of course, are all these things, so the state has a compelling interest in limiting their use.

Does it matter what the state will do with the $750 million Prop 10 will raise every year? I don't think so— for all I care they can use it to build fantastic sports palaces for wealthy, private athletic leagues. But for the record, the bulk of Prop 10 proceeds will be used for programs aimed at promoting the development of children aged five and under. These programs will include parental education, child care provider training, and health care services. Prop 10 funds will also go toward general health education, anti-tobacco advertising, and breast cancer research.

Proposition 11: Sales Tax Revenue Sharing - YES

The twin cities of Snidely and Whiplash have been growing a lot recently, what with the economic boom and all, and Wal-Mart has made it known they'd like to plop a new shopping mall somewhere in the area. This will be a great sales tax windfall to whichever city gets bulldozed and paved. The Snidely elders, eager to win the mall, offer a small sales tax refund to Wal-Mart as incentive to locate there. Of course Whiplash catches wind of Snidely's scheme, and offers Wal-Mart a better deal, and pretty soon there's a bidding war. In the end, Whiplash "wins" by offering a 110% sales tax refund, free sewer and garbage services, a 17-lane freeway to the new mall, and a city-subsidized mansion for the store manager.

Well, of course, Whiplash didn't really win, and Snidely didn't win, either. Wal-Mart won. This goes on all the time, all over California. Wouldn't it be smarter to allow Snidely and Whiplash to agree to share the sales tax windfall regardless of which city lands the store? That way at least some government would get that sales tax.

Prop 11 will allow cities and counties to enter into sales tax sharing agreements voluntarily. Two-thirds votes would be required on all city councils and boards of supervisors involved. Under current law, such arrangements are possible only by a vote of the people. That's too slow for Wal-Mart, though, and it would just make our ballots longer. I, of all people, would hate to see that.

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 1A is just such a request. If the 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 28 cents in interest, accounting for inflation. (See page 12 of your second ballot pamphlet for details.)

"Okay," you admit, "but loans are still more expensive than pay-as-you-go." Its true, they are. 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 $9.2 billion in bonds on this ballot. Isn't that too much to borrow?" For you, yes, but the State of California can handle it. Current bond payments total less than 5% of the General Fund; Prop 1A bonds would keep it that way. We had a budget surplus this year, remember, so this is hardly a budget buster.

Prop 1A will fund long-lived, tangible acquisitions, like school and college buildings. It's sensible to make extended payments for items which will be used far into the future. Remember, too, that California's population continues to grow by hundreds of thousands of people a year. Borrowing makes particular sense if you know your income will go up in the future. As the state grows and the economy soars, 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 any state funding. 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.

Copyright © 1980-2016 Peter L. Stahl
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