The $46-Billion Questions Await State’s Voters

Up and down the November ballot, Californians face choices about vast sums of money: how much to spend, how much to borrow, how much to generate by raising taxes.

Together, the proposals would open a $46-billion gusher of spending on highways, schools, levees, hospitals, housing, parkland and more. They would add $84 billion in debt and interest to state budgets over the next 30 years. Taxes, mainly on oil and tobacco, would rise by more than $3 billion a year.

The torrent of money on the ballot gives voters a chance to set California’s fiscal course for decades: They could reaffirm the state’s reputation for clamping restraints on public spending, launch a new era of activist government or opt for something in between.

With television ad skirmishes already underway, a key question is whether the sheer magnitude of the total spending risks eroding support for many, if not all, of the ballot measures. All 13 hold fiscal implications for California.

“It looks like people are getting inundated with separate spending requests,” said Democratic pollster David Binder, whose surveys and focus groups have found growing voter resistance over the last decade to bond proposals. “My sense is that they all are going to suffer to some degree.”

Squabbles over taxes and spending also have been the main conflict in the race between Republican Gov. Arnold Schwarzenegger and his Democratic challenger, state Treasurer Phil Angelides, making fiscal priorities the dominant theme of the California election season.

Schwarzenegger has made no new taxes his signature campaign pledge. Angelides has made his a $5-billion increase in taxes on corporations and high-income Californians; he says they should “pay their fair share again” to improve schools.

Facing relentless attacks from the governor over taxes, Angelides called last month for $1.4 billion in tax cuts, mostly for middle-income Californians and small businesses.

So far, polls showing Schwarzenegger running well ahead of Angelides appear to reflect, at least in part, a voter reluctance to embrace the sort of expansive fiscal agenda that the Democrat advocates.

In the election as a whole, “a threshold question that many voters will be asking themselves will be whether or not they pay enough taxes as it is,” said Frank Schubert, a strategist for campaigns to defeat two ballot proposals that would raise taxes.

Darry Sragow, a veteran Democratic strategist who is not working on any November ballot measures, described the political climate for spending proposals as difficult, thanks to the high cost of gasoline and other necessities, along with the public’s deep sense of insecurity in the 9/11 aftermath.

“When people are feeling uncertain and threatened and scared, they’re much more likely to be risk-averse, and that means they’re not particularly receptive to proposals that are going to take more money out of their pockets,” said Sragow, who has run successful school-bond campaigns in Southern California.

Among other things, bond advocates must show that the borrowed money would meet critical needs, he said.

For proponents of the nearly $43 billion in public works bonds on the ballot, a danger sign appeared last month in a survey of likely voters by the Public Policy Institute of California: 59% said the total was too much money for the state to borrow.

Yet the only bond proposal that was clearly losing (40% yes; 45% no) was Proposition 84, a $5.4-billion plan by conservation and water-supply groups for projects to protect water quality, enhance flood controls, acquire parkland, preserve forests and clean up beaches, among other things.

As for the other four bond measures -- which constitute the bulk of spending on the ballot -- at least 50% backed each one of them, although voters so far know little about the proposals. (A measure requires a simple majority, 50% plus one vote, to pass.)

Combined, the four measures make up the $37.2 billion in public works projects proposed by Schwarzenegger and the Legislature: Proposition 1B, $19.9 billion for road construction; 1C, $2.8 billion for housing; 1D, $10.4 billion to build and repair schools; and 1E, $4.1 billion for flood protection.

Schwarzenegger and Democratic lawmakers vowed to campaign for the bonds, but so far, the governor’s focus has been more on his own reelection effort as legislators scrambled to wrap up their session last week in Sacramento.

A bipartisan group of consultants -- described by many strategists as unwieldy -- has assembled to push for voter approval of the bonds, but there has been scant public evidence of a campaign.

The construction industry has put millions of dollars behind the transportation and school proposals, and the California Teachers Assn. is expected to spend heavily on the school plan.

Aides to Schwarzenegger and Democratic leaders said the campaign would focus on concrete results that the bonds could produce in traffic relief, improved schools and disaster protection.

They argue that the surge in California’s population will otherwise overwhelm the state’s infrastructure -- a line of attack that they believe will counter concerns about the immense cost.

“We’ve got a good case to make,” said Paul Hefner, a spokesman for Let’s Rebuild California, the committee promoting the four bond measures.

Opponents have not mounted a substantial campaign, but ballot measure strategists say it will still take a major push to pass such a giant bond package.

“Anybody who thinks that’s going to be a slam dunk, I think they’re going to be surprised,” said Rick Claussen, a strategist who led the campaign that defeated Proposition 82, filmmaker Rob Reiner’s June ballot measure to raise income taxes on the wealthy by $2.4 billion a year to pay for universal preschool.

The June election did not portend well for the November bond proposals. In addition to the preschool proposal, which lost 61% to 39%, voters rejected, by 53% to 47%, Proposition 81, a $600-million library construction bond that had no organized opposition.

So far, with no ads airing on the bonds, the oil and tobacco industries threatened by other ballot measures have dominated television advertising.

“The targeted industries are not going to take it lying down,” said Jon Coupal, president of the Howard Jarvis Taxpayers Assn., which opposes seven of the ballot measures and is neutral on others.

Chevron Corp., Aera Energy LLP, Occidental Oil and Gas Corp. and other energy companies have spent millions on ads against Proposition 87, which would tax California oil drillers up to $485 million a year to establish a $4-billion alternative energy research program.

Voters can expect to be confused: Industry ads say the measure would curb California oil production and lead to increased importing of more expensive foreign oil. The extra cost “will lawfully be passed on to the rest of us in higher gas prices,” one ad says.

Proponents, however, point out that the measure would bar oil companies from passing the cost of the tax to consumers through higher pump prices.

Hollywood film mogul Stephen L. Bing, Silicon Valley venture capitalist Vinod Khosla and other supporters are spending millions on spots promoting the measure, which they say would cut air pollution and produce cheaper energy.

“The voters will hear both sides loud and clear,” said Steve Smith, a Yes on 87 strategist.

Meanwhile, Philip Morris USA Inc., R.J. Reynolds Tobacco Co. and allies are spending millions to kill Proposition 86. It would increase tobacco taxes by $2.1 billion a year to raise money for hospital emergency services, nursing education, health insurance for children, cancer research and other medical programs. The state’s 87-cent-a-pack tax on cigarettes would rise to $3.47.

The tobacco industry portrays the initiative as a money grab by hospitals and an invitation to collusion in fixing prices for medical care. Hospitals and medical groups have plowed millions into the Yes on 86 campaign but so far have spent minimally on their first ad, which urges voters to “stand up to big tobacco” to improve public health.

Claussen, a No on 86 strategist, said the campaigns to defeat tax proposals in November would benefit from a rise in voter skepticism of ballot measures. Labor unions heightened that public reluctance last year, he said, by urging voters to examine a “hidden agenda” behind Schwarzenegger’s special election initiatives, all of which went on to lose.

“You’re going to see a lot more scrutiny from voters,” Claussen said. “People start to put two and two together and say, ‘Gee, this money’s got to come from somewhere.’ ”

michael.finnegan@latimes.com

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Money measures

The 13 proposals on November’s ballot have huge fiscal implications for California and its residents:

Proposition 1A: Would protect the state gas tax from being used for anything but transportation improvements, except in the case of severe economic hardship. Requires loans of sales tax revenues to be repaid within three years.

Proposition 1B: A $19.9-billion bond issue for transportation and safety projects. It would cost about $38.9 billion over 30 years, counting interest.

Proposition 1C: A $2.8-billion bond issue to provide housing and emergency shelters. The bond would cost an average of $204 million per year over its 30-year life.

Proposition 1D: A $10.4-billion bond to relieve public school crowding and repair old schools. The bond would cost the state $20.3 billion in principal and interest.

Proposition 1E: A $4.1-billion bond to rebuild and repair flood control structures. It would cost $8 billion over 30 years.

Proposition 83: Increases penalties for violent and habitual sex offenders. Net costs would be up to $200 million annually within 10 years, and potentially several hundred million dollars more in construction costs.

Proposition 84: A $5.4-billion bond to pay for water, flood control, park and conservation projects. It would cost $10.5 billion over 30 years to finance the bond.

Proposition 85: Prohibits abortion for unemancipated minors until 48 hours after a physician notifies a parent or guardian, except in an emergency or with a parental waiver. Would potentially cost several million dollars annually for health and social services programs.

Proposition 86: Imposes an additional tax of $2.60 per pack of cigarettes on top of the current 87 cents. Would increase state revenues for health programs and children’s health coverage.

Proposition 87: Establishes a $4-billion program to reduce petroleum consumption through incentives for alternative energy. Would increase state oil tax revenues but also cause reductions in other revenues in the tens of millions of dollars annually.

Proposition 88: Imposes a $50 tax on each property parcel to increase funding for schools serving kindergarten through 12th grade.

Proposition 89: Provides public financing of campaigns through a 0.2% increase in taxes on corporations and financial institutions.

Proposition 90: Bars state and local governments from condemning or damaging private property to promote other private projects. It would require “potentially significant” increases in government payments to property owners.

Source: California secretary of state

Los Angeles Times