About the only thing Propositions 1 and 2 have in common is they’re being used as props of a different kind by Gov. Jerry Brown. They’re handy stage props for the governor’s reelection campaign.
You’ve got to tip your hat to a political magician who can meld a water bond with a rainy-day fund and create a shield that protects him from having to talk about his plans — if any — for a record fourth term.
The English language with its endless opportunities for mixed metaphors helps immensely: Banking water. Storing money.
“Save water. Save money,” Brown urges in a TV ad promoting Props. 1 and 2. “The pendulum always swings in California between wet years and drought, between booms and bust.”
Never mind that Prop. 1 is about spending — $7.5 billion in borrowed money, times two for interest—and Prop. 2 is about socking dollars away.
Of the Prop. 1 money, $2.7 billion would be spent on providing new water storage, presumably dams. Most of the rest would be used for such worthy local projects as wastewater management, storm water capture, recycling and groundwater cleanup.
Truth is, Brown for a long time resisted placing a water bond on the same ballot on which he was standing for reelection. He feared it might contradict his message of frugality and conflict with the pitch for a Prop. 2 piggy bank.
Ultimately, however, he concluded it wouldn’t look good for a governor to block water development during a severe drought.
As of last week, Brown had raised nearly $11 million for the TV spots featuring him plugging Props. 1 and 2. The ads say nothing about why he should be reelected, which he surely will be in a no-sweat jog Nov. 4.
From here, let’s focus on the complex, benumbing Prop. 2.
“It’s a wonky, wonky mess — so boring that once you start talking to people about it their eyes just glaze,” says Katherine Welch, director of a volunteer parents’ group called Educate Our State, one of the few organizations that opposes the measure. “But you really have to be in the weeds with this stuff to see how ugly it is.”
I’ll try to stay out of the weeds.
Basically, Prop. 2 is designed to confront human nature and force Sacramento politicians to do what they’ve seldom had the self-discipline to do. And that is to save — especially to avoid spending one-time revenue boosts on new permanent programs.
In rare gubernatorial testimony before the Assembly Budget Committee in April, Brown put it this way:
“If we were angels, we wouldn’t need any of these things. We would just, every day and every year, make very wise judgments. But we haven’t proven that to be the case. So we’re going to try a little bit of protective restraint. And that’s what the rainy-day fund is.”
Here’s how it would work: 1.5% of all general fund revenue — $1.6 billion currently — would be salted away. (The governor and Legislature did that voluntarily this year.)
Additionally, volatile capital gains revenue that exceeded 8% of the general fund would be set aside. That currently amounts to around $1.7 billion. In bust years it would be zero.
The squirreled funds would be split between two purposes, half being deposited into the rainy-day reserve, half used to pay down debt, including unfunded pension liabilities.
The rainy-day kitty could grow to 10% of the general fund, or about $11 billion currently. Revenue exceeding that would have to be spent on public works.
The reserve could be tapped only if the governor declared a “budget emergency” and the Legislature agreed.
There’s not much organized opposition to the above.
But there are gripes about another Prop. 2 feature: When capital gains are robust, some of the bonus could be dumped into a state school reserve. That’s OK. But then school districts would be limited in how much they could hoard on their own. And that isn’t OK.
The California Teachers Assn. insisted on capping local school reserves as a condition of its neutrality on Prop. 2. It wants more money flowing into teachers’ pay. So to appease the union, the governor signed a separate bill that will take effect if Prop. 2 passes.
It was a bad bargain and contradicted Brown’s past advocacy of local control.
Democrat Delaine Eastin, a former state schools chief who headed education committees in the Legislature, says local districts should not be thwarted in their desire to be fiscally responsible. “We should want them to be prudent and build up reserves,” she asserts.
Welch, from the San Francisco Bay Area, contends that Prop. 2 generally is bad for schoolkids because it would shortchange classroom funding. But she’s not trying to raise money for an opposition campaign.
“We’re just trying to raise awareness,” she says. “It’s not that we think we’re going to beat this. We can’t go up against this big political machine.”
As I’ve written previously, a rainy-day fund merely treats the symptoms of revenue volatility that play havoc with Sacramento budgeting in tough economic times.
What’s really needed is to cure the disease with tax reform—broadening the tax base and relying less on the richest 1% who pay half the state income tax, and lowering the sales tax rate while extending it to services. But that takes political courage.
Meanwhile, it makes sense to sock some money away.
Props. 1 and 2 both deserve passage.
But promoting them doesn’t give Brown a valid excuse for not telling voters what they can expect from a fourth term.