House of Cards

Californians may soon be asked to approve $1 billion in highway construction bonds that have no business being on the June ballot. The bonds are part of a precarious house of cards that the Legislature, at Gov. George Deukmejian’s insistence, is building to finance state projects that really should be paid for by increasing gasoline taxes, in the case of highways, or by changing spending limits that hamstring state government.

The Legislature is preparing a total of more than $5 billion in bonds that voters will be asked to approve on the June and November ballots. Added to a $776-million park bond issue that environmentalists have already qualified for the ballot and another for $510 million to finance veterans’ housing, the legislative package could mean that voters would be asked to approve a record sale of $6.2 million worth of bonds in one election year. The size of the package alone makes it a risky proposal, in terms both of winning passage to get money for much-needed projects and of maintaining high-quality bond ratings.

Stringing bonds together in an all-or-nothing package is also bad business--something that the Legislature had to do because of the governor’s stubbornness. He refuses to support bonds that it particularly wants unless it supports his. Each bond issue should be considered on its own merits.

On the question of merit, the highway bond issue has none. Deukmejian’s proposal would switch the burden of financing the cost of highways from highway users to the general fund, where money to repay bonds would come from the same resources now allocated for education, health and law enforcement. As a rule of thumb, for every dollar’s worth of bonds 70 cents is added to state debt. If highway programs are paid from bond funds, the state would pay $1.70 for a dollar’s worth of highway.

The Legislature has at least dropped one bad idea--that of helping to pay for operations of year-round schools out of bond-issue money. At the same time, it still is letting real-estate developers dictate policy on the school bonds. Developers don’t like a fee of $1.53 per square foot that they pay to schools as part of their construction costs. The fee helps local governments match state money to build schools for the children of people who buy the new homes that the developers build, but the developers contend that the fee makes homes too expensive. They want a permanent limit on the fee, and elimination of the fee for some projects. Assembly Republicans are going along with them rather than endanger campaign contributions.

These machinations represent the latest threat to the delicately constructed bond agreement, which at this point deserves to collapse--at least as a package arrangement. It will be late in the game if the governor and the Legislature push the shaky bond arrangement at voters and the voters decide that it is not a responsible way to do business after all. Better that Sacramento do now what it would eventually have to do anyway--level with California voters about the high cost of mortgages on their future.