Governor’s Highway Bonds Will Face Some Roadblocks

When Gov. George Deukmejian made his big pitch for highway bonds earlier this month, he apparently forgot to mention a couple of problems.

One has to do with the causes of traffic congestion; the other with politics at the state Capitol.

“The goals of our program are to build more roads and highways more quickly, and to better manage traffic on the roads we already have, so you can get where you’re going with fewer delays,” the governor told a statewide radio audience in proposing to sell $2.3 billion worth of bonds between now and 1990.

But peddling a bond package as a cure for traffic congestion is a little like selling hard liquor as a cure for alcoholism. It may create happy people immediately, but in the long run the program just won’t work.

New highways do at least as much to create congestion as they do to relieve it. By opening new land for development and encouraging urban sprawl, new roads generate enough new auto trips to congest themselves.

The other problem has nothing to do with what gets built by the governor’s bonds. It’s a little more complicated and has to do with the politics of bond financing itself.

By proposing that new highways henceforth be financed by bonds, the governor is in effect requiring that highways begin competing with public schools, parks and other such governmental facilities for a share of public funds. State bond issues must be approved by voters. But first, the Legislature must write a bill before the bonds can go on the ballot. That’s usually always a struggle.

Highways currently are financed primarily by the state’s gasoline tax, which by law must be used almost entirely for road construction. (A small piece may be used for rapid transit projects.)

Not surprisingly, the highway lobby prefers the status quo. Al Shankle, president of the Associated General Contractors, says that if highways must compete every two years for bond funds, long-term maintenance and improvements will be in jeopardy.

Of course, the highway lobby has the political clout to make itself heard. No longer a loose affiliation of cement companies, oil companies, land developers and contractors, the highway lobby is more broadly based these days (cities, counties, transit districts and labor unions are under the tent as well) and is formally organized as Californians for Better Transportation, or CBT.

So what is CBT going to do?

An immediate possibility would be to seek defeat of Deukmejian’s bond plan in the Legislature, where Assembly Speaker Willie Brown has already attacked it because of its cost. (For each dollar that it raises for construction, a 20-year-bond costs 70 cents in interest and underwriting fees.)

What CBT would most prefer, however, is a straight-up increase in the gas tax, probably in the range of six cents a gallon. (Currently, the state and federal governments each levy a nine-cent-a-gallon tax.)

But there are two big obstacles to that, the first being the man who would have to sign any gas tax increase into law. Because he has twice run for governor as a tight-fisted administrator who abhors tax increases, and because he seems to be thinking seriously of a third term, Deukmejian obviously would prefer not to be tagged with a tax increase now.

In fact, it’s likely that third term considerations helped him decide that new highway money henceforth should come from bonds.

But even if the governor (and the Legislature) could be convinced to approve a gas tax increase, there’s the second obstacle: The Gann limit.

Promoted by tax crusader Paul Gann, and approved by voters in 1979, it placed a lid on state spending that is just now beginning to be felt. Thus, even if new money for highways were flowing in, it could not be spent.

The highway lobby tried last year to win legislative approval of a proposed constitutional amendment that would have exempted highway spending from the Gann limit.

But the measure died, largely because of opposition from the public schools, whose officials also dislike the limit and want plenty of company when they make their expected attempt to change it.

As a result, the highway lobby may launch an initiative campaign to get its Gann exemption on the ballot. And it’s possible that the lobby might have support from Gann himself.

Newly interested in highway funding, Gann has said that gasoline taxes should be considered “user fees.” If they were, the Gann limit itself would exempt them from its provisions.

As Deukmejian was no doubt thinking a few weeks ago when his bond proposal was taking form, bond repayments also are exempt from Gann’s spending cap. In other words, if the state collects more money than it may legally spend, it may use the excess to repay bonds.

And lo, just a few days after Deukmejian made his bond proposal, the Commission on State Finance announced that state revenues will exceed the limit by nearly $1 billion this fiscal year and that additional, bigger excesses are likely in the future.

So at least $1 billion in additional revenue may be available annually to repay bonds. The highway lobby is not impressed. It has no problem building freeways that soon may be jammed to overcapacity. But when it comes to financing, it wants the road to itself.