Bonds: Proceed With Caution

Some California legislators have misgivings about the record size and precedent-setting nature of the bond issues that they are considering for the June ballot, but so far they haven’t had the will to unravel the main deals that are being made in Sacramento. The biggest deal involves a $1-billion highway bond issue that would shift to the state’s general fund instead of gasoline taxes the burden of paying off highway construction bonds. Someone simply must stand up against mortgaging the future when government’s responsibility is to do jobs as they come along.

A curious combination of allies has at least talked sense to the state Legislature concerning the question of financing some year-round school expenses from the school bond issue. Business people made it clear that they would not campaign for bonds that included operating costs because that would be such a dangerous precedent. Opponents of year-round schools made it equally clear that they would not vote for any school bonds if the bonds earmarked money for a concept that they are working against. While it is not completely clear which of two school bond proposals will go onto the ballot in June, it is fairly safe to say now that it won’t contain operating funds, and that’s good.

What’s bad is the size of the package, which is bloated because of Gov. George Deukmejian’s insistence on including a $1-billion highway construction bond issue. The options for building schools, libraries, water projects and prisons are severely limited by the governor’s refusal to talk about raising taxes or adjusting the Gann limit on state spending, so it’s understandable, if unfortunate, that the Legislature headed in desperation down the bond route.

But highways have always been paid for by gasoline taxes and user fees, and the state would set another of those bad precedents in changing that approach. It also would leave a big bill for someone else to pay down the road because, as a general rule, government must pay an additional 70 cents for each dollar that it borrows through the sale of bonds. That could mean even more competition for already scarce dollars in the state’s general fund.

The Legislature is talking about asking voters to approve $5 billion in bonds. Environmentalists collected enough signatures to put onto the ballot a $776-million bond issue to buy and improve parkland; there will also be a $510-million bond issue to finance veterans’ mortgages. So voters would be considering a record $6.2 billion in bonds. While California voters have not rejected a state-wide bond issue since 1978 and 1980, the Legislature should have cause to worry. Many of today’s voters are the same ones who turned down those bonds and who passed the spending limits that are giving government fits today.