There is a Ballot Initiative which will be on the 2016 ballot, called “No blank checks”. This will give Californians a vote on State bond issues they have never had before. They have always had a vote on “General Obligation” bonds, but not on “Revenue” bonds.
The difference is, General Obligation bonds are repaid out of the General Fund, (our Taxes) while “Revenue” bonds are intended to be repaid with the money that the project will earn. If that’s not enough, the taxpayers have to pay it out of the General Fund. That’s like giving the special interests a “Blank Check”.
If the voters approve this measure, all Revenue bonds issued by the State over $2 Billion must have voter approval. This will put a stop to “low ball estimates”, overly optimistic income projections, and other shenanigans that have been done in the past.
Bonds that remain to be issued for projects like the Delta tunnels $35 billion, the 710 Freeway Extension tunnels $5 Billion, and the High Speed Rail project $68 Billion, must be approved by the voters before they can be issued.
The short description of the measure is below (the important parts are in caps):
“REQUIRES STATEWIDE VOTER APPROVAL BEFORE ANY REVENUE BONDS CAN BE ISSUED OR SOLD BY THE STATE for projects that are financed, owned, operated or managed by the state, or any joint agency created by or including the state, IF THE BOND AMOUNT EXCEEDS $2 BILLION.”
The California Secretary of state has approved the title and language of a ballot initiative and it may now gather signatures.
This petition is to qualify a ballot initiative for the 2016 General Election, to stop the irresponsible underestimating of project costs to obtain voter approval. In short it says;
“Any project to be funded by state bonds that will exceed their voter approved amount by 2 billion dollars, or more, must be re-approved by the voters. ”
Projects to be funded by state issued bonds appear on the ballot nearly every election cycle. The estimates of cost are routinely underestimated to get the voters approval, their promoters know that cost overruns will get paid anyway from the state’s general revenue.
This has resulted in huge gaps between what the voters approve and the eventual estimated cost. As an example, voters approved proposition 1A, a high speed rail project connecting L.A. and San Francisco, estimated to cost $30 billion. State bonds would pay for a third of the cost, the Federal Government a third and private investors a third. It’s now estimated by the World Bank to cost over three times that, there will be no Federal Government support, or private money. The California High Speed Rail Authority’s (CHSRA’s) own estimates are for 68 Billion but since no specific route has been chosen or design challenges defined these “estimates” are just guesses. When asked about the escalating cost estimates, Governor Brown said at the ritual ground breaking in February, “Don’t worry about the money we will get it”. That is clearly unacceptable.
The voters need accurate and complete information on bond funded projects in order to make informed decisions.
The actual language of the proposition is shown below:
Revenue Bonds. Infrastructure Projects. State Legislature and Voter Approval. Initiative Constitutional Amendment.
Signatures Required: 807,615
Requires State Legislature to approve use of revenue bonds for public infrastructure projects funded, owned, or operated by the state or any joint agency that includes the state, if the bond amount exceeds $2 billion and repayment requires new, increased, or extended taxes, fees, or other charges. Requires that legislatively approved projects be presented on statewide ballot for voter approval. Applies to previously approved projects if remaining bond amount exceeds $2 billion. Requires that specified project information for all state bonds be included in voter ballot pamphlet. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Potential reduction in large-scale infrastructure projects funded by the issuance of revenue bonds. (14-0009.) (full text below)
Actual language of “no blank checks initiative”