Bullet train could shoot down Brown’s tax initiative

Capitol Journal

SACRAMENTO — The bullet train won’t be on the November ballot, but it will be on many Californians’ minds as they decide the fate of Gov. Jerry Brown’s tax proposal.

That’s what I keep hearing from e-mailers such as Fred: “Many voters will not support Jerry’s tax plan so long as his budget includes monies for high speed rail.”

And Bob: “Every time Jerry Brown mentions the bullet train, the two November tax increase measures lose votes. More and more voters just don’t want to give the state any more money.”

The second tax measure is civil rights attorney Molly Munger’s. It would raise income taxes on all but the poorest people and generate roughly $11 billion annually, mostly for schools.

Brown’s “soak the rich” initiative would raise income taxes substantially on the wealthy and sales taxes minimally on everyone. That would generate $8.5 billion for the current budget year and $6.3 billion annually thereafter. The goal is to avoid deep cuts in education funding and to permanently balance the budget.

Voters narrowly approved a $9.9-billion bond issue in 2008 to build a Los Angeles-to-San Francisco high-speed rail system. But since then they’ve soured on the idea as projected costs have doubled and promised goodies have been scratched.

Most troublesome, it’s still a mystery how all the $68 billion in construction costs would be paid. So far, only roughly $13 billion has been identified.

Nevertheless, Brown and Democratic leaders are pressing the Legislature this week to authorize an initial sell of $2.7 billion in state bonds — at a borrowing cost of roughly $180 million annually for 30 years. That would draw federal funding of $3.3 billion. The combined $6 billion would build the initial stretch of track in the San Joaquin Valley. But no other Washington money is in sight.

A USC Dornsife/Los Angeles Times poll in mid-May found that 55% of voters wanted the bullet train back on the ballot. And 59% said they’d vote against it.

So for many Californians, the tax issue could be their vehicle to vote “no” on high-speed rail.

A Field Poll in late May showed only a slim majority supporting Brown’s tax. Munger’s measure was even less popular.

“If the Legislature voted down high-speed rail this week, it might wind up saving the governor’s tax initiative,” says Dan Schnur, a former Republican strategist who is director of the Jesse M. Unruh Institute of Politics at USC.

“Jerry Brown clearly understands that state government doesn’t have the credibility with the voters to pass his initiative. That’s why he’s doing pension reform. That’s why he’s highlighting welfare reform....

“Brown is trying in every way possible to convince voters they can trust state government with their tax money. But his own high-speed rail project could pull the rug right out from under that effort.”

At the Capitol on Tuesday, the governor and Democratic lawmakers applied the brakes to public pension reform until August. Meanwhile, they stomped on the throttle of bullet train funding.

Appropriating bullet bond money “kills the tax initiative,” says Sen. Alan Lowenthal (D-Long Beach). “It doesn’t [just] hurt it, it kills it. We’re going to raise taxes to pay off debt service on bonds for a project that isn’t going to be used by anyone for 10 years.”

Lowenthal is one of three Senate Democrats who are critical of starting the project in the rural San Joaquin Valley. They’re fighting to pour more money initially into Southern California and Bay Area rail projects that would attract urban commuters.

But the Obama administration has threatened to withdraw the $3.3 billion in federal money if dirt doesn’t begin flying first in the San Joaquin Valley. That’s largely because of a commitment to Rep. Jim Costa, a moderate Blue Dog Democrat from Fresno, according to several Democratic sources who requested anonymity.

They say Costa voted for the president’s healthcare reform after being assured that rail construction would begin in his district.

House Minority Leader Nancy Pelosi (D-San Francisco), the Obama administration and labor unions are pressuring Democratic legislators to vote for the valley rail funding before they recess Friday for a monthlong vacation.

“I’m a ‘no,’” says Senate Transportation Committee Chairman Mark DeSaulnier (D-Concord). “But no votes sometime turn to yes.”

DeSaulnier plans to push alternative legislation that would allow only $1.4 billion to be spent initially in the valley; the rest going into urban regions.

“That’s not a real choice” because the feds would withdraw their funds, insists Senate leader Darrell Steinberg (D-Sacramento).

Although “there is some risk” to the tax proposal if the Legislature approves the bullet bonds, Steinberg says, “the vote by November will be seen in a broader context. We’ll have pension reform, which is much more important to voters, and they’ll look at the Legislature’s overall record of productivity this year.”

And Dan Newman, a spokesman for the Brown tax campaign, asserts that “voters have seen the governor make tough but necessary cuts to schools, colleges, courts, prisons, cars, cellphones, welfare — and they’ll pass the initiative because they want to stop more cuts to schools and balance the budget.”

Dream on, says Jon Coupal, president of the Howard Jarvis Taxpayers Assn. and the most outspoken opponent of Brown’s initiative.

“High-speed rail is Exhibit A in the argument about the perverse spending priorities of the California Legislature,” Coupal declares.

Brown may be shooting himself in the foot by squeezing the trigger on bullet borrowing.