Mortgaging the Future

California is developing an unprecedentedcredit-card mentality in financing construction of highways, jails, schools and other capital projects. By turning ever more to bond sales for such facil-ities, the state in effect is passing on the bill to future generations. Worse, one legislative committee proposes using bonds to finance current operations of an education program--year-round schools. That is wildly irresponsible.

A spending limit imposed on state government by the 1979 Gann initiative and Gov. George Deuk-mejian’s refusal even to discuss higher taxes seem to leave no alternative to record bond issues pro-posed this year for major public-works projects. But voters also should be aware that a basic phil-osophical shift is occurring in Sacramento that may not serve them well.

California has always accepted a prudent amount of bonded indebtedness as inevitable for a state that keeps growing out of its infrastructure. Twoof the three major credit-rating agencies givethe state an AAA rating for its general-obligation bonds, and the third rates them AA.

There is no formal policy on limits to the debt that the state should take on in any given year,and bond-rating agencies like it that way. In their view, formal limits constrain a state’s ability to respond to emergencies or finance improvements to public works when they are needed. Still, the state usually has kept bond issues in any one elec-tion year to under $2.5 billion. Indeed, Deukmejian vetoed two bills in 1984 because they would have asked voters to approve $2 billion in bonds on a single ballot--a total that he said “could overload the public’s willingness to approve these issues.” Voters, however, did approve eight issues of bondstotaling $3.4 billion that were divided between the June and November ballots in 1986.

This year California voters may be asked to ap-prove $5 billion in bonds proposed by the Legis-lature and the governor. Environmentalists will have another $776-million proposal for purchase and improvement of parkland on the June ballot; another $510-million bond issue for veterans’ home mortgages is also scheduled for the ballot.

Californians are accustomed to bond issues to build public schools, prisons and plants for clean drinking water. For the first time, the state will ask voters in June to approve the use of bonds to finance highway construction--something that California has always done on a pay-as-you-go basis with gasoline tax revenues. Now some high-way costs would come out of general revenues.

An even more dangerous break with precedent is the proposal to operate year-round schools with $40 million from one school-bond issue. Education has first call on the state’s general fund; it, and it alone, should pay for classroom operation.

Bond sales have always been appropriate for major projects that could not be financed in any other way. In today’s political climate, legislators and the governor seem to feel that they cannot raise money any other way. They have not really tried. And they certainly have not invited the voters to debate whether bonding at this level is wise policy.

Voters helped turn the state to bonds when they imposed the spending limits under the Gann initia-tive. But they deserve to be warned by Sacramento that the limits are stifling the state’s future before the governor and the Legislature start to mortgage the future with fine print on bond issues.