$5.3-Billion Bond Issues Go to Voters : With Measures OKd Earlier, State Asks Approval to Borrow $6.1 Billion

The Legislature, after weeks of delay, Thursday approved and sent to Gov. George Deukmejian $5.3 billion in school, highway, prison and clean water bond measures that will be put before voters in the June and November elections.

A succession of quick votes in the Assembly and Senate, most of them coming without debate, gave the measures the necessary two-thirds majorities in both houses and ended weeks of political jockeying and horse-trading.

Deukmejian, who worked out the bond package with party leaders during a series of private meetings in January and February, immediately announced that he will sign the measures.

Called ‘a Major Step’

“California took a major step in preparing for the 21st Century today with passage of a major bond package, addressing vital public works needs such as transportation, school and prison construction,” the governor said in a statement released by his office.

Deukmejian urged voters to approve the bond issues.

The bond measures represent easily the heaviest level of borrowing California voters have ever been asked to approve in any one year. When the $5.3 billion in Legislature-approved bonds is added to a $776-million parks bond measure already qualified for the ballot, it brings the total that voters will be asked to approve to $6.1 billion.

The previous record was the $3.2 billion in bond measures put on the ballot in 1986.

Among the individual bond measures approved by lawmakers Thursday was a $1-billion measure to finance highway construction, two $800-million measures to finance public school construction, three proposals that will provide $450 million to build housing for low-income Californians and emergency shelters for the homeless and to offer loans to make older buildings earthquake safe, and an $817-million measure for expansion and renovation of state prisons.

Also approved were:

-- A $600-million measure for construction projects at community colleges, state colleges and University of California campuses.

-- Three bond proposals to put $200 million into projects to improve the quality of California’s water.

-- A measure that would provide $75 million in matching funds to local governments for public libraries.

Along with those bonds, the Legislature also gave final approval to a $510-million bond measure that would extend the state’s popular Cal-Vet mortgage program for veterans.

Mortgage Payments

Only the veterans’ bonds were non-controversial. Those bonds, unlike the others, are repaid with mortgage payments.

Principal and interest payments on the other bonds will come from general tax revenues.

Legislators, like Deukmejian, see the bonds as a means of financing important public works projects and still getting around the spending limit imposed on state government by voters in 1979. The spending limit does not apply to expenditures made to pay off voter-approved bonds.

They also acted on the basis of several reports, most notably one by Legislative Analyst Elizabeth G. Hill, saying that the state has been conservative in its bond policy in the past and could handle the extra borrowing without much of a problem.

The governor’s $1-billion transportation bond proposal drew the heaviest debate. Deukmejian plans to repay the bonds with general tax revenues. Historically, the state has used gasoline taxes and highway user fees to finance transportation projects.

Sen. John Garamendi (D-Walnut Grove) denounced the governor’s financing plan as a “revolutionary shift.”

He and a handful of other Democrats in the Senate said they would prefer raising the gasoline tax rather than financing transportation projects with bonds because of the huge interest costs.

A Senate staff analysis said the highway bonds alone will carry $1 billion in interest costs over a 20-year period. Deukmejian hopes to reduce the interest costs by paying off the bonds early with future budget surpluses.

Deukmejian found an ally in Senate President Pro Tem David A. Roberti (D-Los Angeles), normally one of his harshest critics. Roberti said cities such as Los Angeles were facing monumental traffic congestion problems. “Something has to be done,” he said.

Roberti said voters ultimately will decide the financing issue. “If they think the proper way to go is a gasoline tax, then fine, they can vote no on these bonds and the message will come loud and clear to us,” he said.

Barely a Two-Thirds Majority

The highway bonds passed on a 27-7 vote, the bare two-thirds majority. Lawmakers settled troublesome issues before voting Thursday.

Sen. Marian Bergeson (R-Newport Beach) quietly amended her $800-million schools bond bill to delete a provision that called for using $40 million of the borrowed money to pay for a share of the ongoing operating costs of school districts. Bond measures traditionally have been used to pay for one-time-only expenditures, such as building a bridge or a school, and the proposal to use some of the bond money to pay for operating costs was widely denounced as a dangerous precedent.

A group of Assembly Republicans also retreated from their threat to hold up Bergeson’s school bond act until they won approval for an amendment that would have exempted many California land developers from a fee assessed on new construction to help finance school construction.

As part of the compromise that overcame GOP concerns, the Senate, on a 31-1 vote, gave final approval to a measure that would put a three-year limit on developer fees and make several other changes sought by real estate interests, such as exempting from fees remodeling projects that cost less than $20,000.

Not ‘a Perfect World’

Assemblyman William P. Baker (R-Danville), who led the Republicans in the dispute over developer fees, said Thursday that he was giving in “reluctantly.” “Let’s vote. It isn’t a perfect world,” Baker said.

On still another related issue, the Senate voted 28 to 5 to accept relatively minor amendments to a landmark affirmative-action bill that would steer 15% of future state contracts to firms headed by minorities and 5% to companies headed by women. The Assembly will vote later on that measure. Women and minority legislators insisted on the bill to ensure that minorities will get a share of the economic activity generated by the bonds.