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California state legislature decides to ask voters for permission to borrow $20 billion for climate and schools

By ADAM BEAM – Associated Press

SACRAMENTO, Calif. (AP) — Facing a flood of billions of dollars in budget deficits, the California Legislature turned to voters Wednesday for help.

Lawmakers voted in November to pass two $10 billion bonds. If approved, the money would fund 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, with budget surpluses well over $100 billion during the pandemic. But over the past two years, the state has had to drastically cut spending to offset deficits totaling more than $78 billion as revenues declined amid rising inflation and a slowdown in the technology industry, which is so important to the state.

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The money from the bonds could offset some of these cuts and also fund a number of priority projects across the state in the coming years.

But the money is not free. Repaying the climate bond alone will cost taxpayers more than $19 billion, with annual payments of $650 million per year, putting even more pressure on government finances.

While Governor Gavin Newsom met with President Joe Biden and his fellow Democratic governors in Washington, Senate President pro tempore Mike McGuire signed the bills as acting governor, ending a turbulent evening session of the legislature that was repeatedly disrupted by protesters against the Israel-Hamas war.

It is always risky to ask voters for permission to borrow large sums of money, especially if you do so several times in one election.

In addition to the two statewide votes, voters will likely also have to vote on hundreds of local loan proposals – including a massive $20 billion housing bond for the nine counties surrounding the San Francisco Bay Area.

Recent history suggests that voters are fed up with these bonds.

In 2020, despite approving statewide school bonds, voters rejected a proposal to borrow $15 billion in education—the largest borrowing in state history. And earlier this year, voters narrowly approved Proposition 1, which allows the state to borrow more than $6 billion to house the homeless—an outcome widely seen as a warning to lawmakers considering further debt.

“I would have thought that the razor-thin majority on Proposition 1 would be a wake-up call for these ill-defined bonds,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “Whether it’s homelessness, education, or climate, Californians feel like they’re not getting anything for their money.”

Supporters say voters are smart enough to recognize the huge need that must be met – most school buildings are built with a combination of state and local money. But the need for state money is so great that there is a waiting list for more than $3 billion worth of projects, says Democratic Rep. Al Muratsuchi, who sits on the committee that approves the funding.

“Why are you going to voters? You’re going to voters to make investments that will move us forward and that cannot be funded through individual budgets,” said Democratic Senator John Laird.

Much of the climate bond will go toward improving water supplies and wildfire preparedness. Across the state, nearly 400 water systems do not meet state safety standards. Fifteen of the 20 most destructive wildfires in state history occurred in the last decade. Heat waves are getting longer and more severe, putting public safety at risk, and severe winter storms have caused devastating floods in recent years.

“It’s more tangible and real for people here because they’ve seen it so many times,” says Melissa Romero, deputy legislative director for California Environmental Voters, an advocacy group that supports the bond.

Negotiations on the education bond have been going on for nearly two years, and not everyone is happy with the end result. The funds from the bond will only be earmarked for public schools and community colleges, not for the University of California and California State University.

In addition, some advocacy groups claim that the bond would benefit wealthier school districts and benefit poorer districts – which they say is a persistent problem with the state’s school construction financing program.

“This would leave the status quo in place, with some nominal equity adjustments that would not really solve the underlying problem,” says Nicole Gon Ochi, deputy attorney at Public Advocates, a nonprofit law firm and advocacy group.

Muratsuchi said the bond will make it easier for districts to qualify for the state’s financial hardship assistance program and will help districts with fewer resources navigate the complex process of applying for state grants.

Concerns about the climate bond revolve around whether $10 billion is enough to make a difference and whether the money will be distributed fairly across the state. Democratic Rep. Jasmeet Bains was one of the few lawmakers to oppose the bond on that basis.

Democratic Rep. Eduardo Garcia noted that “difficult decisions have to be made” given the competing priorities and limited resources.

“We also had to consider the dynamics of what the voters and members of this House would support,” he said.

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