There’ll be a skunk at the establishment picnic on election day in California. It’s Proposition 53.
That ballot initiative is an irritating pest for many who rely on giant government public works projects for their livelihood.
Hardly any establishment group likes it — whether political, business or labor. Most major newspapers have editorialized against it.
Gov. Jerry Brown really hates it. And he’ll spend a chunk of his growing $19-million political kitty to fight the thing, if he thinks it might pass.
Why? Because Prop. 53 potentially threatens Brown’s two legacy projects: The runaway $64-billion Los Angeles-to-San Francisco bullet train and the $15.5-billion monstrous twin water tunnels in the Sacramento-San Joaquin River Delta.
The voters? They might want to give the ballot measure a serious look. That’s because it would give them more power.
Prop. 53 is actually pretty simple compared with other initiatives. It would require statewide voter approval of any government project to be financed with more than $2 billion in state revenue bonds, a rarity.
But the bullet train and twin tunnels — the largest state public works projects ever in California — certainly could fall into that very rare category.
Here we need a refresher course on bonds:
The most common bond is a general obligation bond, called that because all Californians are obligated to repay it out of the state general fund. Currently the state is paying back $75 billion in general obligation bonds, costing the treasury $6.8 billion annually. Plus, there’s an additional $31 billion in bonds that voters have approved, but are unsold.
But Prop. 53 isn’t about general obligation bonds. They already must be approved by voters.
It’s about revenue bonds. They don’t require the voters’ OK, at least in California. In some states they do.
Revenue bonds are repaid by a project’s users. Water bills are jacked up to pay for a new reservoir, for example. Or tolls will increase to pay for a bridge.
There’s also another sneaky kind of revenue bond used by the state. It’s called a lease revenue bond. It’s a tool to build state structures, such as prisons, when no legitimate revenue is in sight.
The state will build a lockup for the prisons agency. Then the prisons agency will lease it from the state. The agency’s lease money will come from its normal funding source, the state general fund. But bookkeepers will count the lease payments as revenue and use that to retire the bonds.
That’s enough to make one dizzy. But don’t fret it. I use it only for added perspective on state debt.
The state currently is paying back about $10 billion in lease revenue bonds, costing almost $1 billion a year.
It’s state debt that motivated Prop. 53, insists its creator, delta native Dean “Dino” Cortopassi, 78, a wealthy farmer and food processor.
Cortopassi’s attackers insist his real motive is to blow up the tunnels. The project would siphon fresh water from the Sacramento River and pour it into southbound aqueducts before it can flow through the huge estuary, harming farms and fish.
Cortopassi denies that’s his goal. If it were, he says, he’d have bankrolled an initiative aimed directly at the 40-foot-wide, 35-mile-long tunnels.
“It’s simply not true,” he told me. “Yes, I think the delta tunnels are horrible. I’m an environmentalist as well as a farmer. I love the delta. The tunnels are really going to trash the delta environment.”
“But my principal concern is debt,” Cortopassi continued. “Revenue bond debt is cockroach debt because it grows in the dark.
“I call the whole Sacramento gang ‘porkers.’”
State debt is officially pegged at around $340 billion, including unfunded retiree pension and healthcare liabilities. But some argue it’s much higher than that, perhaps approaching $1 trillion.
Cortopassi, who has dumped $4.5 million of his own money into the ballot campaign, says Prop. 53 is one way voters can start controlling state debt.
“It’s truly a lousy idea,” said Loren Kaye, a veteran policy guru for the state Chamber of Commerce. “The only reason to like it is if you don’t like a couple of projects you want to kill: the tunnels and the train. It certainly would kill the tunnels. And probably the train is going to die anyway.
“Otherwise, it’s really a stupid idea.”
Why? Because, he says, there are no taxpayer risks in revenue bonds. They’re paid off by a project’s users. “The folks at risk are the bondholders who lent the money.” So voter approval shouldn’t be needed.
But that argument ignores the obvious: Voters and water ratepayers and bridge commuters are one and the same. They’re members of the public. Why shouldn’t they be allowed to vote on whether their water bills are significantly boosted or their bridge tolls are tripled?
But Prop. 53 opponents ask why Los Angeles voters should be permitted to cast judgment on a project to be used mostly by San Francisco Bay Area residents, such as a new bridge. The bridge wouldn’t benefit them, so why would L.A. people support it?
Cortopassi’s answer: Why wouldn’t they? It’s not going to cost them any money. Bay Area drivers would be paying.
It just seems to me that on the mega projects, some people other than a few political appointees should decide. People like voters.
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