Fragile Deal on $5 Billion in Bonds Hangs by a Thread

The Assembly approved seven major bond bills Monday, but balked at endorsing a key element of a $5-billion-plus package of prison, highway, school and other bonds sought by Gov. George Deukmejian and legislative leaders, leaving a fragile compromise hanging by a thread.

At the center of the dispute is an amendment Republicans are demanding be put into an $800-million school bond issue that would allow some land developers to escape fees now being assessed on new commercial and residential construction. Money from the fees is used to help pay for the building of new schools.

The problem developed when the Assembly amended the $800-million school bond issue by Sen. Marian Bergeson (R-Newport Beach), making it unlikely that the Assembly will vote on the measure until later this week, if at all.

Once it became clear that the Assembly would not vote on the Bergeson measure, one of the most important elements in the bond package, Senate President Pro Tem David A. Roberti (D-Los Angeles) adjourned his house without bringing any of the bond measures to a vote, saying the entire agreement might collapse.

“It appears the vaunted agreement over the bonds has not come to fruition,” Roberti said during a brief floor statement. “I would say, frankly, we are nowhere.”

Possibility Left Open

Roberti left open the possibility that the Senate could vote on the bonds Thursday. He acknowledged that delaying the Senate vote could be fatal to the entire bond package, which already has missed several deadlines for appearing on the June ballot.

Before it adjourned, the Assembly approved a $1-billion highway funding bill, $450 million in low-income housing bonds, a $600-million measure to provide funding for construction on state college and university campuses, an $835-million prison construction bill, a $75-million bond measure to provide financing for local libraries and a $65-million measure for water reclamation projects.

As if not to be one upped by the Senate’s Democratic leader, Assembly Speaker Willie Brown (D-San Francisco), further added to the political confusion by tempering his house’s approval of the bond measures with a parliamentary move that will keep the proposals in the lower-house until some kind of agreement is reached with Roberti. Brown did that by immediately moving to reconsider the bills on the next legislative day, or Wednesday.

Agreed to Compromise

Roberti and other Senate Democrats thought that they were rid of the developer fee issue when they agreed to a compromise last week giving developers major concessions, such as a semi-permanent cap of $1.53 per square foot on residential construction.

But powerful land developers, a primary source of campaign contributions for Republican political campaigns, say the cap was not enough. They want a “grandfather” clause that would free many developers of the fees altogether. The California School Boards Assn. has dug in its heels, calling the developer’s ploy “blackmail” and saying they can not afford the loss of fees.

On Monday the issue reached the boiling point when Republicans made it clear that they were not prepared to send the Bergeson bill to the Senate because in doing so they would lose control of their major bargaining chip. By keeping the Bergeson bill, they hope to force Democrats to agree to the amendment.

That left in doubt the future of the entire bond package, which includes 14 interrelated bills. Political leaders agreed earlier that their “deal” was based on an agreement that if one bond passes, then they all pass, but if one fails, then all bets are off.

The Bergeson bill is half of a two-bond deal to provide public schools with $1.6 billion in long-term financing to build new schools. The plan called for one $800-million bond measure to go on the ballot in June, and Bergeson’s $800-million measure to go on the ballot in November.

Roberti said that once the Bergeson bill was sidetracked by Republicans on Monday, he no longer considered himself bound by the agreement. “As far as I am concerned, I feel exempted from any statements I may have made in the past,” Roberti said.

But he said the door was still open to a compromise. “All the other bond measures will pass if we can solve this problem,” Roberti said.

Senate Republican Leader Ken Maddy of Fresno agreed, but warned that each day that passes will make it more difficult to reach agreement. “The tenuous agreements that we have reached in terms of the total bond package are just that--tenuous. Each day that goes by it gets more difficult to collect members who can support the total package,” Maddy said.

Assembly leaders sought to keep the pressure on the Senate, noting that they got the two-thirds majorities necessary to put each bond measure on the ballot, which was their part of the deal.

“We want to give them every opportunity to rethink their position,” said Brown, who passed a personal milestone Monday when he broke the late Jesse M. Unruh’s longevity record for serving as leader of the house.

Brown said the Assembly would not leave the Capitol this week “without completing work on the bonds.”

Assembly Republican Leader Pat Nolan of Glendale said: “We showed them we could put up the votes for (the bonds). We are mystified at the Senate. We passed the bonds and they didn’t.”

Deukmejian, frustrated by the spending cap approved by voters in 1979, has made bonds one of his top legislative priorities this year, particularly a $1-billion highway funding measure that would be paid for out of general tax revenues.

Historically, the state has used the gasoline tax and highway truck weight and other user fees to finance highways. But with the state right at the spending limit, Deukmejian decided to go with general obligation bonds.

Democrats, knowing how badly Deukmejian wanted the highway and prison bonds, used the governor’s desire to get school, prison and highway bonds on the ballot to add several bond issues of their own, such as two that would provide $450 million for housing for the homeless and low-income housing, and another providing state assistance, for the first time, to local city and county libraries.

The result was one of the most complicated legislative packages the Legislature has wrestled with in recent years.