Debt Addicts Spend Big Opposing Prop. 53

vote-ballot-electionThe usual suspects are digging deep into their pockets to make sure that California’s borrowing binge remains unchecked. Contractors, unions and bond houses that benefit from state debt are contributing millions to defeat Proposition 53, the Stop Blank Checks initiative. This straightforward proposal simply requires voter approval of state issued construction bonds larger than $2 billion.

These insiders are being joined by the ultimate insider, Gov. Jerry Brown, who has contributed $4.1 million left over from his 2014 reelection campaign. So far, over $15 million in campaign cash is being used for a massive television buy featuring the governor calling for Prop. 53’s defeat because, he says, it will increase the cost of “roads, bridges and hospitals.” This claim is ludicrous on its face. Prop. 53 creates no new costs, but allows taxpayers to approve new debt.

Even if he believes his own words, Brown may have a less obvious motivation for wanting to defeat Prop. 53. He is concerned about his legacy and fears that allowing voters to decide important spending issues might make it more difficult to build that upon which he has seized as his ticket to immortality, California’s high-speed rail project.

When first elected governor in 1974, Edmund G. (Jerry) Brown, Jr. was the nation’s youngest. Now, in what are probably his final two years in elective office, he is the oldest. Considering his senior status, it would not be surprising if his thoughts have turned to how he will be regarded by future generations. Brown is well aware that his father, Edmund G. Brown, Sr., who served as governor from 1959 to 1967, established a reputation as a builder of freeways and universities. Ironically, this was back in the days when the state relied more on a “pay-as-you-go” approach, rather than on massive borrowing to fund projects.

Brown continues to promote high-speed rail even though it’s now clear it can meet none of the promises made to voters back in 2008 in terms of costs, travel time and no public subsidies. Recent polls show that Californians would overwhelmingly reject what is now seen at best as a sop to political insiders and, at worst, the biggest public works boondoggle in America.

California voters of all stripes support infrastructure improvements. There is no question we need better roads, water storage and bridges. But citizens are tired of being lied to. Both the high-speed rail project and the infamous Bay Bridge (rusty bolts and all) blew through their original cost estimates by many factors.

Proposition 53 guarantees voter approval for megaprojects which are far more susceptible to questionable financing than small projects. Such voter approval is already required for general obligation bonds repaid from the state’s general fund. Proposition 53 imposes transparency with new debt by preventing the state from issuing “revenue bonds” and other vague instruments of debt, like “certificates of participation,” over $2 billion without voter approval.

So, in looking at the opponents of Proposition 53, we see the “greedy,” those who depend on the continuation of unrestricted government debt to maintain their high life, and the “needy,” in this case a governor desperately seeking a legacy.

With the political insiders arrayed against them, taxpayers will have to fend for themselves and by passing Prop. 53 they can guarantee that those who pay will have the final say.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Proposition 53 and Voter Power

One California ballot initiative getting far less attention than it deserves is Proposition 53. It would require statewide voter approval for revenue bonds (not now subject to voter approval) in excess of $2 billion.

The anti-Proposition 53 theme is that rather than giving citizens more power, it would reduce their power over local government. Their voter guide statement claims it “erodes your voice and the voice of your community,” allowing “voters in faraway regions the power to deny local projects your community needs.” Unfortunately, those claims, focus-grouped to trigger knee-jerk “no” votes, are deliberate distortions.

Opponents’ claims that Proposition 53 would lead local voters to lose control over local government ignore that it “does not apply to bonds sold by cities, counties, schools, community colleges, and special districts,” which involve the local issues voters care about most. And state general obligation bonds already require voter approval. What Proposition 53 focuses on are joint power agencies (JPAs) which combine different government bodies, because JPA revenue bonds do not require voter approval in California (though they do in some states).

Local voters already have very little power over JPAs, however, making the hobgoblin of lost local voter control imaginary. JPA boards include elected officials from government bodies involved (not all local) and sometimes, those in appointed government positions. Voters have no power over any appointed members. While they can vote for representatives to their local governments, those representatives will always be a minority on the board, so voters have no control over who will be selected as JPA board members. If voters are unhappy with those selected, even throwing them from office (for a generally low voter-visibility role) gives them no power over who will replace them. And while voters have very limited legal power to override JPA decisions (via an initiative within 30 days), its difficulty seldom makes it an actual option. With so little local voter power over JPAs, Proposition 53 cannot eliminate an appreciable amount of it.

High Speed RailThe Legislative Analyst’s conclusion that few projects would likely be subject to Proposition 53 similarly undercuts the lost voter power narrative. The two projects that will clearly be affected — the extraordinarily expensive bullet train and Sacramento delta water tunnel — are also instructive. Neither are really local projects, but ones that would substantially reshape California’s economic landscape, illustrating that JPAs allow policy making for state level issues, while evading the requirement of putting such bonds to a citizen vote.

If citizen control was the real issue motivating Proposition 53’s opponents, local good government and taxpayer groups would offer widespread support. But they do not. State and local taxpayer groups, in particular, favor Proposition 53, reflecting widespread belief that the projects in question can’t be justified and that citizens would be better served by Proposition 53’s securing of more voter power.

Further, virtually all the opponents of Proposition 53, supposedly on behalf of voter groups who favor it, come from groups who benefit from more government projects. Unions and their members who construct the projects (supported by other unionized government employees), those whose sales of goods and services will increase, as well as a host of consultants and lobbyists, all want more construction, regardless of whether those projects advance Californians’ well-being. Similarly, JPA board members, officials who select them, and Sacramento legislators gain power from evading voter approval requirements.

Anti-Proposition 53 attacks add other distortions, as well. Most notable is the complaint it doesn’t precisely define “project,” knowing that highlighting ambiguity will generate more “no” votes. Unfortunately, the greatest problem with such ambiguity is government’s ongoing efforts to weasel out of every constraint those it supposedly represents try to impose on it, amply illustrated by the bullet train saga. That is a problem of abusive government, which needs to be contained, not a reason to keep voters from having any effective power to defend themselves from its abuse.

Proposition 53 is an effort to improve Californians’ self-defense capabilities against government’s ability to impose harm on them. Those who will be better protected, and have seen through the subterfuges, back it by large margins, while opponents, who benefit even from projects that harm Californians, rely on focus-grouped, misleading claims to fool low-information voters. We can only hope that Proposition 53’s opponents have underestimated the gullibility of those they claim to serve.

Gary M. Galles is a professor of economics at Pepperdine University, a research fellow at the Independent Institute, adjunct scholar at the Ludwig von Mises Institute, and member of the FEE faculty network. His books include Apostle of Peace (2013), Faulty Premises, Faulty Policies (2014) and Lines of Liberty (2016).