SACRAMENTO, California – Mired in a series of multibillion-dollar budget deficits, the California Legislature turned to voters for help on Wednesday.
Lawmakers voted to place two $10 billion bonds on the November ballot. If approved, the money would pay for the construction of new schools and help communities prepare for the impacts of climate change.
California was swimming in money just a few years ago as budget surpluses totaled well over $100 billion during the pandemic. But the state I had to cut expenses to cover deficits that totaled more than $78 billion over the past two years as revenues declined due to rising inflation and an economic slowdown in the state’s key technology industry.
The bond money would cover some of those cuts, as well as pay for a number of priority projects across the state in the coming years.
But money is not free. The climate bond alone will cost taxpayers more than $19 billion to pay, with annual payments of $650 million per year, putting more pressure on state finances.
With Gov. Gavin Newsom meeting with President Joe Biden and other Democratic governors in Washington, Senate President Pro Tempore Mike McGuire signed the bills into law as acting governor, capping a raucous late-night session of the Legislature that was interrupted several times by the Israel-Hamas war protesters.
Asking voters for permission to borrow large sums of money is always risky, especially when we do it multiple times in the same election.
In addition to the two statewide ballots, voters will likely be asked to approve hundreds of local loan proposals — including one massive $20 billion housing bond for the nine counties surrounding the San Francisco Bay Area.
Recent history suggests that voters are tired of these bonds.
In 2020, despite a track record of passing school bonds across the state, voters rejected a $15 billion education loan proposal – which would have been the largest in state history. And earlier this year, only voters Proposal 1 narrowly approved authorizing the state to borrow more than $6 billion to help house the homeless — an outcome widely seen as a warning to lawmakers who were considering taking on more debt.
“I would have thought that Proposition 1’s minimum margin would be a wake-up call for these ill-defined titles,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “Whether it’s education, homelessness or climate, Californians realize they are not getting value for their money.”
Advocates say voters are savvy enough to recognize the great need that will be met — most school facilities are built with a combination of state and local money. But the demand for state dollars is so great that there is a waiting list of projects worth more than $3 billion, according to Democratic Representative Al Muratsuchi, who is part of the committee that approves the funding.
“Why are you going to the voter? You go to voters to make investments that move us forward that one-time budget allocations cannot pay for,” said Democratic State Senator John Laird.
Much of the climate bond would go toward improving water supplies and helping prepare for wildfires. Statewide, nearly 400 water systems do not meet state safety standards. Meanwhile, 15 of the 20 most destructive wildfires in state history have occurred in the past decade. Heat waves are becoming longer and more severe, putting public safety at risk, and intense winter storms have caused damaging flooding in recent years.
“It’s something more tangible for people here and more real because they’ve seen so much,” said Melissa Romero, deputy legislative director at California Environmental Voters, an advocacy group that supports the bond.
Negotiations on the educational link have been going on for almost two years and the final result has not pleased everyone. The bond money would only apply to public schools and community colleges, excluding the University of California and California State University systems.
Additionally, some advocacy groups say the bond would benefit wealthier school districts at the expense of poorer districts — something they say has been a persistent problem with the state’s program to finance school facilities construction.
“This would continue with the status quo, with some nominal equity adjustments that wouldn’t really address the underlying issue,” said Nicole Gon Ochi, deputy managing attorney at Public Advocates, a nonprofit law firm and advocacy group.
Muratsuchi said the bond would make it easier for districts to qualify for the state’s financial hardship program and help districts with fewer resources navigate the complex process of applying for state grants.
Concerns about climate bonds center on whether $10 billion is enough to make a difference and whether the money will be distributed fairly across the state. Democratic Assemblymember Jasmeet Bains was one of the few lawmakers to oppose the bond for this reason.
Democratic Rep. Eduardo Garcia noted that “difficult decisions needed to be made” given competing priorities for limited funding.
“We also had to consider the dynamics of what voters and members of this House would support,” he said.
