June 2018 California Primary Analysis (VI): State Measures

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I just got recently sample ballot for the “Statewide Direct Primary Election” on June 5, and boy, is it going to be a confusing election for people. We have two contests with enough candidates to take two pages (27 candidates for Governor, 32 for Senator, and two contests for our assembly district: one for the “short term” because the previous assemblycritter left early thanks to #metoo, and one for the “full term”, with the same candidates).There are going to be a lot of posts as I work through this. Here’s the sequence as I see it (note: links to articles not yet posted will not work or may be incomplete):

This post will cover the 5 propositions: Prop 68, Prop 69, Prop 70, Prop 71, and Prop 72. Note: All of these were placed on the ballot by the legislature. Initiatives will return with the Fall TV season for the November election. That’s how we do it now in California. Also note: There’s an error in the Printed and Online voter guide: for any references to www.voterguide.sos.ca.gov, omit the leading “www.” (sigh). Lastly, 📜 indicates Legislative Constitutional Amendments.

Prop 68: Authorizes Bonds Funding Parks, Natural Resources Protection, Climate Adaptation, Water Quality and Supply, and Flood Protection.

Authorizes $4 billion in general obligation bonds for: parks, natural resources protection, climate adaptation, water quality and supply, and flood protection. Fiscal Impact: Increased state bond repayment costs averaging $200 million annually over 40 years. Local government savings for natural resources-related projects, likely averaging several tens of millions of dollars annually over the next few decades.

Basically, this means the state can sell more bonds (i.e., go deeper in debt) to get more money for parks, environmental mitigations, preparing for climate change, improving water quality, and improving water supply — meaning water projects. The bonds, and the interest thereupon, is paid from the general fund (meaning our taxes and such). The division is about equal between resource conservation, parks and recreation, and water. There is a local cost-share requirement. The estimate is that the total cost of the bonds would be 7.8 Billion, or about $200 Million over the next forty years.

A lot of local leaders and newspapers have endorsed Prop 68. The basic argument of the Yes side is that the Federal government has abrogated their environmental responsibility, and California must step up to the plate for our state. We will be facing more droughts — hence more water supplies are needed; we’ll have more natural disasters like wildfires and flooding, and need to prepare, thanks to climate change; and we need more recreational opportunties.

The No side does not have a webpage, although the OC Register came out against it. Their basic argument is that all this stuff is needed, but we can’t take on more debt. I hear that argument — I really do.

Conclusion

[✓] I hear the argument of the No side, but I don’t see the Federal government doing anything in this area anytime soon, especially for California. We need to start doing something now. Yes.

Prop 69: 📜 Requires That Certain New Transportation Revenues Be Used for Transportation Purposes.

Requires that certain revenues generated by a 2017 transportation funding law be used only for transportation purposes and generally prohibits Legislature from diverting funds to other purposes. Fiscal Impact: No direct effect on the amount of state and local revenues or costs but could affect how some monies are spent.

You’re on the page of the California Highway Guy, and you need to ask on this one?

OK, first, this is NOT the repeal of the gas tax (that may be on the November ballot, and I urge a no vote on that). Understand that California pays for its roads and transportation projects through a mix of funding sources, but primarily through vehicle license fees and the gas tax. As cars have gotten more efficient and people are driving less (or driving electric cars), funds for maintaining and improving transportation infrastructure have dried up. This is why the gas tax went up — to offset what was lost by more efficient cars (it’s just like your utility raising your rates to pay for their infrastructure after income goes down after everyone installs solar). SB1, which raised the gas tax, guarantees those funds to go transportation. And they are (click here to find out more). But there’s no such guarantee for the VLF and the sales tax on diesel fuel. This fixes that. There are more detailed arguments on the Yes on 69 site; there is a broad coalition in favor.

I don’t even need to look at the No argument on this. We need this too badly.

Conclusion

[✓] Yes

Prop 70: 📜 Requires Legislative Supermajority Vote Approving Use of Cap-And-Trade Reserve Fund

Beginning in 2024, requires that cap-and-trade revenues accumulate in a reserve fund until the Legislature, by a two-thirds majority, authorizes use of the revenues. Fiscal Impact: Beginning in 2024, potential temporary increase in state sales tax revenue, ranging from none to a few hundred million dollars annually, and possible changes in how revenue from sale of greenhouse gas emission permits is spent.

This one is a tricky one. The San Diego U-T endorsement provides some useful background: “Proposition 70 would require the Legislature in 2024 to have a one-time vote to approve with a two-thirds margin a spending plan for revenue from the state’s cap-and-trade program, which auctions permits to polluters for greenhouse gas emissions. It was put on the ballot by the Legislature as part of a deal cut by Democratic Gov. Jerry Brown last year to get Republican votes to renew cap-and-trade. The measure is best seen as a clunky way to achieve a worthy goal: forcing a supermajority of the Legislature to take responsibility for continued funding of the state’s massively troubled $77 billion bullet-train project, which Brown wants to get a substantial cut of all cap-and-trade revenue in coming years. It’s been eight years since the Legislative Analyst’s Office presciently pointed out the improbability that the project could develop a legal financing plan since state law bars the promise of subsidies to attract investors. It’s been seven years since an editorial in The Washington Post called the project an unfolding disaster and lamented that it was going to waste $3.6 billion in federal funds. It’s been six years since the California High-Speed Rail Peer Review Group warned that that the project shouldn’t proceed because of its many flaws. And those were the good old days. Since 2015, things have only gotten worse, with missed deadlines, heavy cost overruns and insufficient funding to complete the project’s first segment in the Central Valley.”

The “Yes” camp bought a domain name for their campaign, but then never set it up with GoDaddy. Their argument in the Voter Guide in favor makes it clear, by implication, they are talking about the bullet train/HSR: “Forcing a two-thirds legislative vote ensures MONEY IS SPENT WISELY FOR HIGH PRIORITY PROGRAMS THAT BENEFIT ALL CALIFORNIANS AND THAT IT IS NOT DIVERTED FOR PET PROJECTS.” Translation: The HSR is Brown’s pet project, and we want the money spent for something else.

The LA Times makes clear that most Democrats, except Brown, are against this. The No Campaign, which actually set up their website, paint this as an attack on climate action in California. They believe, if passed, it would seize funding that is currently used to fight pollution and improve community health. It would subject this funding to a two-thirds vote in 2024, and by doing so, it would hold these climate investments hostage to the lobbying of corporate interests. The No side is backed by Democratic and environmental causes.

One interesting aspect of the measures is that also suspends a sales tax exemption for manufacturing and R&D, presumably related to cap-and-trade. That makes those activities more expensive.

The Voter Guide shows the estimated cap-and-trade spending that would be impacted. It’s not just the HSR ($730MM). There is also incentives for low-emission vehicles and equipment, affording housing near transit, public transit, forestry and fire prevention, and agricultural emissions reductions. Those are all valid expenditures.

I’m not fully enamored of HSR — I like the idea, but not the execution and cost overruns. Still, I think this proposition is misguided and will impact useful activities.

Conclusion

[✗] No

Prop 71: 📜 Sets Effective Date for Ballot Measures

Provides that ballot measures approved by a majority of voters shall take effect five days after the Secretary of State certifies the results of the election. Fiscal Impact: Likely little or no effect on state and local finances.

This one is pretty much a no-brainer, and reflects the realities of today. In the past, initiatives and propositions, unless they indicated otherwise, took effect the day after the election. Most elections were done by ballots counted on election day, and so the results were known the next day. In the modern era with more vote by mail, it takes longer to actually get all the ballots in, checked, and counted. So the measure would change things to have the initiatives and propositions, unless they say otherwise, take effect when the election is certified. This prevents something from taking effect and then having to be undone if the final results change things.

There are no campaign websites for either side. It looks like most, if not all (i.e., looking at a Google search) of the papers are in favor of this. It makes sense to me.

Conclusion

[✓] Yes

Prop 72: 📜 Permits Legislature to Exclude Newly Constructed Rain-Capture Systems From Property-Tax Reassessment Requirement

Permits Legislature to allow construction of rain-capture systems, completed on or after January 1, 2019, without requiring property-tax reassessment. Fiscal Impact: Probably minor reduction in annual property tax revenues to local governments.

The issue here is that improvements to property of a sufficient value normally will trigger a property-tax reassessment. This isn’t a big deal on newer properties unless the market is rising really fast, but can be a big deal on older properties. Why is this an issue? California is in a drought. People want to add rainwater capture systems for irrigation purposes, which saves potable water for drinking. But if doing so triggers a reassessment, they won’t. So by providing this exemption, the state is encouraging people to add those systems.

The Yes on 72 site notes that a similar exemption was provided for solar panel installation, and look at what that industry has done. They have an extremely broad set of endorsements, including both the California Democratic Party and the California Republican Party. That’s rare.

There was no “against” argument submitted, and the against side (if it exists) has no website.

Conclusion

[✓] Yes

 

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