Bond Issues That Raise Debt Headed for Defeat

Debt-weary voters appeared Tuesday to be soundly rejecting billions of dollars in spending measures, including an earthquake recovery bond that Gov. Pete Wilson had counted on to help ease the state’s budget woes.

Despite strong support in Los Angeles County, where the Northridge earthquake wreaked devastation, the proposal appeared to be falling victim to voter distaste for increasing the state’s debt.

Early returns showed they were also turning down a tax break for renters and spending proposals for park acquisition, improvements for college campuses and new construction for schools.

Although voters paid little attention to the propositions during the campaign, their dislike for the biggest debt load ever presented on one California ballot was foreshadowed in pre-election polling done by higher education officials.

“In some cases they’re saying: ‘We’re just afraid of adding any more debt service,’ ‘We’d love to do it but we don’t think there’s enough money around,’ and in some instances, ‘You haven’t really tightened your belt enough and you have to first show us you’re really cutting deeply before we’re willing to help,’ ” Cal State Chancellor Barry Munitz said.

Yet frugal voters did approve measures that registered their fear of crime and concern for people with disabilities. The only two propositions winning by comfortable margins would increase prison terms for those convicted of second-degree murder in drive-by shootings and give tax breaks to businesses that improve access to the disabled.

Although the rejection of most measures simply means that the state would not take on added debt, the apparent defeat of the earthquake bonds would throw state budget deliberations into disarray. Already struggling with a $5-billion revenue shortage, Wilson and lawmakers were counting on the measure to pay the state’s share of earthquake repairs in Los Angeles County.

In all, voters were asked to consider nine ballot measures involving issues as sweeping as the expenditure of $2 billion for new parks and as narrow as a technical change in sentencing for drive-by shootings.

Unlike past elections, the June propositions were decidedly low-key. There were no television ads; nearly all ran bare-bones campaigns and some had almost no campaign at all.

The only big budget effort was conducted by the promoters of the park bond issue.

Without as much hype, voters paid almost no attention. A Times Poll conducted nine days before the election showed most voters knew little about the propositions and had to have them explained before they would venture an opinion.

Even so, this round of proposals included four measures that could have a far-reaching combined effect on the state’s treasury. The four authorized bond issues totaled nearly $6 billion--the largest sum of indebtedness ever presented to voters for approval in a single election.

Assuming an interest rate of 6%, repayment of all four would cost taxpayers an estimated $10.6 billion over the 25-year life of the bonds. State taxpayers are now paying off a $13.6-billion general obligation bond debt at a cost of about $1.8 billion a year. Voter approval of the new issues would add about $422 million a year to that cost.

However, on one measure, Proposition 1-A, voters faced a dilemma: If it passed it would add to the state’s long-term indebtedness, but if it failed it could spark a short-term budget crisis.

The measure authorized nearly $2 billion in bonds to pay the state’s share of earthquake recovery costs and $950 million of the cost of strengthening highway bridges considered vulnerable to earthquakes.

Despite the budget implications of all four bond proposals, only the park bond, Proposition 180, attracted organized opposition.

Known as CALPAW, the California Parks and Wildlife initiative, it was also the only proposition to qualify for the June ballot as a citizens initiative rather than through the Legislature.

Critics, including state Sen. Quentin L. Kopp (I-San Francisco), assailed the Yes on 180 campaign for accepting large donations from landholders with parkland for sale who stood to gain if the massive measure passed.

Proponents said CALPAW would benefit future generations of Californians by saving open lands from development at a time when depressed real estate prices ensure that the public would get the most for its money.

Tens of millions of dollars in Proposition 180 was earmarked for Los Angeles County, with more than $85 million set aside for properties to be purchased by the Santa Monica Mountains Conservancy and a sister agency.

The other two bond proposals provided funds to upgrade school facilities and college campuses. Proposition 1-B authorized $1 billion in bonds to help finance construction, renovation and seismic-safety projects for public schools. Proposition 1-C authorized $900 million to pay similar costs for public colleges and universities.

Aside from the bond measures, the other main money-related issue involved an initiative that would reinstate the state’s income tax credit for renters and make it a permanent part of the state Constitution. Proposition 175 would guarantee a renter’s tax reduction of $60 per year for individuals and $120 for married couples.

The remaining ballot measures included Proposition 178, which would provide a property tax exemption for agricultural improvements that involved the installation of water-saving devices. It was failing, while Proposition 176, which would prohibit local governments from levying business license taxes and fees on nonprofit organizations, was too close to call.