MOORLACH UPDATE — Propositions 68 and 69 — May 18, 2018

As I was given the invitation by the Senate leadership to write statewide ballot arguments against both Propositions 68 and 69, I’m also receiving invitations for television interviews and editorial submissions on these two ballot measures (also see MOORLACH CAMPAIGN UPDATE — Proposition 68 — March 23, 2018 and MOORLACH CAMPAIGN UPDATE — June Primary Antics — April 28, 2018).

My other ballot recommendations for the June Primary can be found at MOORLACH CAMPAIGN UPDATE — June Primary Antics — April 28, 2018.

The Sacramento Bee allowed me to weigh in on the oppose side in the first piece below.

KCRA Channel 3, an NBC affiliate, did separate stories on both measures in the second and third pieces below. To see the clips, just click on the links provided.

And the OC Register and Los Angeles Daily News weighs in on Prop. 69 in the fourth piece below.

Let me remind you that California’s balance sheet is the worst in the nation. And, its attention to infrastructure has been abysmal. I see Sacramento as a person living beyond their means, but putting up a great facade, and displaying improper addiction traits. It’s like an individual barely eking by on a commission-based income, having $25,000 in credit card balances and only making the minimum payments, only to put no money down on a new $90,000 car to keep up the supposedly wealthy image. One small hiccup, and this charade is over.

It’s time for Sacramento’s majority party to meet with a credit counselor. It’s time for plastic surgery (cut the credit cards) and an honest pay-as-you-go budgeting process for the state’s roads and infrastructure. It’s not time to borrow more and tell everyone that “this time the Capital will spend the money on roads. Really, this time. We mean it. We’re even doing a ballot measure to prove it. We won’t screw it up like every other time.” How sad will it get around here? And why do the voters insist on enabling this behavior?

When the creditors come calling, please remember this conversation.

SOAPBOX

Prop. 68 means more debt and higher taxes

BY JOHN MOORLACH

Special to The Sacramento Bee

http://www.sacbee.com/opinion/article211305214.html

http://www.sacbee.com/opinion/op-ed/soapbox/article211206504.html

It’s time, Californians, to hold on to our collective wallets.

“It does NOT raise taxes,” proponents of Proposition 68 insist in the official state voters’ guide. Then where do they think the money will come from to repay the $4 billion in bonds that are supposed to go for parks and “climate adaptation,” whatever that is?

Bonds are debt. Debt needs to be repaid, with interest. The debt payments will increase the state budget or something in the budget will have to be cut to provide the required funds. But most likely, taxes will have to be raised.

In an economic downturn, bonds must still be paid. And recessions happen.

We are not talking about small change. The Prop. 68 repayment is $7.8 billion – $4 billion in principal, plus $3.8 billion in interest. That means $200 million a year for 40 years from the state’s general fund.

Assuming they don’t leave the state to get relief from ever-high taxes, that means not just our children, but our grandchildren will be paying it off.

Californians have been here before. In 2009, during the Great Recession, when revenues dropped sharply,

Gov. Arnold Schwarzenegger pushed a $13 billion tax increase through the Legislature, on top of $15 billion in budget cuts, including $8.1 billion to education.

Despite the current good times, California’s finances are actually in bad shape. The unrestricted net deficit is a whopping $169 billion, the worst of any state. Our state already owes $74.2 billion on previous bonds, including for the high-speed rail boondoggle, costing the state’s general fund $3.9 billion in debt payments in 2018-19.

Silicon Valley profits are currently filling state coffers. Forecasted personal and corporate income taxes are up $8 billion from Gov. Jerry Brown’s January budget proposal. Which begs the question: If the Prop. 68 projects are so great, why not just fund them with that surplus?

The next time Silicon Valley’s profits tank, expect $40 billion annual deficits, and tax increases. Which is why this accountant and financial planner believes a pay-as-you-go system is best. And you should, too.

John Moorlach, R-Costa Mesa, represents the 37th state Senate District. He can be contacted atsenator.moorlach.

Prop. 68 promises billions for California parks, clean water

Critics contend debt would be crippling

Mike Luery
Reporter

http://www.kcra.com/article/prop-68-promises-billions-for-california-parks-clean-water/20711288

For bicycle riders like Eric Johnson, the American River Parkway is an urban jewel in Sacramento County — and a place to be cherished.

“It’s nice to be away from the cars,” Johnson said. “It’s nice to be in the nature scene. You know, it’s peaceful.”

That’s why Johnson said he supports Proposition 68, a $4 billion bond measure that would allocate an extra $10 million to the American River Parkway.

“I’m all for it,” Johnson said. “I want more bikeways. Bikes are something that’s definitely growing and needs to be added to. You need to get cars off the roads. More people should bike. It’s good for us.”

Supporters argue that Prop. 68 is good for parks and good for improving water quality statewide.

“California water management is on the right track,” said Tim Quinn, executive director of the Association of California Water Agencies. “We think it’s important for the voters to support that even if it means a relatively small amount of debt.”

Critics like state Sen. John Moorlach, R-Costa Mesa, believe the debt payments on the bond will be anything but small.

“You have to pay for that $4 billion,” he said. “It’s going to cost you another $4 billion in interest. So, over 40 years that’s $200 million a year. Where does that come from?”

Prop. 68 promises millions of dollars in improvements, but opponents contend California should not be borrowing more money.

“We don’t need to go into debt,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “We have a budget surplus.”

Coupal believes the state should be using some of its nearly $9 billion surplus to pay for those projects.

“This is like somebody who has a very large savings account and is paying a maximum on their credit card interest of 18 percent,” Coupal said.

“If you’ve got the cash, isn’t it better not to go into debt because you’re paying in this case, taxpayer dollars to Wall Street,” Coupal asked.

Supporters of Prop. 68 insist the measure will help pay for conservation and other projects that could benefit millions of people across the state now.

“Starting with more flood protection, levee maintenance and levee investments, more money for recycling programs, which are increasingly important to everyone in California,” Quinn said.

The increased debt burden is not a concern for Johnson.

“I would borrow the money for bikes, definitely,” he said. “Less cars, more bikes.”

“I’m not trying to be the guy that spoils the party,” Moorlach said. “I’m just saying, ‘Hey, I’m an accountant. I’m a certified public accountant and a certified financial planner by training, and I’m saying we shouldn’t be adding more debt.’”

 

Gas tax fight heats up with new ballot measure

Prop. 69 promises lockbox for transportation funds

Mike Luery
Reporter

http://www.kcra.com/article/gas-tax-fight-heats-up-with-new-ballot-measure/20724280

Kimberlynn Roach of Sacramento learned the hard way that driving on California roads can be dangerous and costly.

“Really not paying attention to the potholes, even the small ones, split my tires,” she said.

The damage was so extensive that Roach had to buy not one, but two new tires, at a cost of $140.

Road repair supporters said Proposition 69 on the June ballot will protect transportation funds by putting a lockbox on the money generated from Senate Bill 1 — the gas tax law that went into effect in November.

“Prop. 69 is so important because it prevents the Legislature from raiding transportation funds for projects that are not transportation related,” said Orville Thomas of the California Alliance for Jobs.

California drivers began paying 12 cents a gallon more at the pump because of the gas tax. Prop. 69 supporters argue the measure is a constitutional amendment and would guarantee that $2 billion raised from the gas tax can only be spent on fixing California roads, improving transit and easing congestion, including HOV lanes.

“Cities and counties get a direct share of that revenue to invest in safety and road improvement projects in every community across the state,” said Kiana Valentine of the California State Association of Counties. “So, we have a vested interest in making sure the Legislature cannot divert those funds for non-transportation purposes.”

But, tax watchdog Jon Coupal isn’t buying that argument.

“It claims to be a lockbox,” he said. “But again, how many times have we heard the phrase lockbox?”

Coupal doesn’t trust the California Legislature even if Prop. 69 passes. He thinks lawmakers could still find a way around it and use the money for things not related to transportation.

“If people think this money is going for actual roads instead of bureaucracy and pensions, and at the end of the day, virtually all new tax increases in the state of California or at the state or local level are going into pension obligations,” Coupal said.

Sen. John Moorlach, R-Costa Mesa, is also skeptical of Prop. 69.

“I think it’s an indictment of Sacramento,” he said.

Moorlach said that Prop. 69 would interfere with California’s Gann Limit, which puts restrictions on how much money the state can spend.

“So, you’ve got to be careful for your kids and grandkids, what’s being done with a little sleight of hand,” he added.

The California Legislature has borrowed from transportation funds in the past and used the money for other things.

“We have seen three decades of nothing but diversions of valuable transportation dollars,” Coupal said. “I think voters would be foolish to trust them this time.”

But, supporters of the measure argue that won’t happen under Prop. 69.

“The legislators themselves chose to author this to make sure that future legislatures don’t come in to divert these funds,” Thomas said.

Back at the gas pump, Roach said she does want safer roads but isn’t sure who to trust when it comes to billions of dollars in transportation funding.

“Let’s just hope for the best,” Roach said.

Meanwhile on Sacramento’s busy Arden Way on Wednesday, KCRA 3 found a road construction crew making repairs. The money for the project comes from the gas tax hike and the improvements are a welcome relief to drivers like Gladine Williams.

“California roads have definitely deteriorated over the last 10 years,” Williams said. “There’s a lot of areas where I used to enjoy taking that drive. Now, I’m like, ‘Oh, I can’t go down that street.’”

Voters will decide Prop. 69’s fate next month, but in the meantime, Williams has this perspective.

“You have to be more cautious. You don’t want to hit a pothole,” Williams said.

Even if Prop. 69 passes in June, there is another proposition to repeal California’s gas tax that is expected to make the November ballot. If voters approve that measure, then billions of dollars designated for transportation projects would essentially disappear.

“If voters want to repeal this (gas tax) and create unsafe transportation options then there won’t be anything left to protect anymore,” Thomas said. “All that funding for local projects would be gone.”

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OPINION

Vote yes, with some caveats, on California Prop. 69

By THE EDITORIAL BOARD

https://www.dailynews.com/2018/05/17/vote-yes-with-some-caveats-on-california-prop-69/

Whatever one believes about the wisdom of recently enacted gas tax and vehicle-registration fee increases, most will likely agree that those revenues should be used to improve California’s transportation infrastructure.

Proposition 69 offers Californians an opportunity to ensure that the additional taxes and fees from Senate Bill 1 actually go toward transportation.

Currently, the state constitution ensures the bulk of SB1 revenues will go to transportation infrastructure. Revenues from gasoline excise taxes and diesel excise taxes, which together constitute more than half of SB1’s projected revenues, are already restricted to transit.

But diesel sales taxes and the new transportation improvement fee are not currently protected from being readily siphoned off. So long as these fees and taxes are being collected, taxpayers deserve to know that there are at least some constitutional constraints on how that money is used.

Opponents like Sen. John Moorlach, R-Costa Mesa, say it’s embarrassing, even insulting, to have to tell the Legislature to only spend SB1 revenues on transportation purposes. Moorlach is right about that.

There’s little reason to trust politicians in Sacramento to spend the public’s money responsibly. Proposition 69 at the very least offers some degree of restraint on what the Legislature does with SB1 money.

While we’d prefer the Legislature was full of fiscally responsible individuals who would never mislead the public, would always make the most prudent decisions and would stick to their word, we don’t have that Legislature. And in cases like this, the marginal benefits of having some restrictions on how SB1 money is used, to ensure the money is being used toward transportation purposes, is often the best we can hope for.

Ultimately, while we have reservations about the measure’s raising of the Gann Limit by hundreds of millions of dollars according to the Legislative Analyst’s Office, given the amount of revenues SB1 is dealing with, it’s important to have some degree of certainty that that money will go toward its intended purposes.

On balance, we suggest voting yes on Proposition 69.

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