CA Money Spread Thin in Transportation Bond

Mon October 02, 2006 - West Edition
Aaron C. Davis - ASSOCIATED PRESS



SACRAMENTO, CA (AP) When Gov. Arnold Schwarzenegger announced an ambitious public works plan in January, he touted it in part as a way to improve more than 1,000 mi. of state roads and build hundreds of miles of carpool lanes on California’s busiest freeways.

Democrats later shrank the pavement-laying portion of that proposal and substituted billions for bus, rail and other urban transit projects, but supporters have stuck to their public message since the latest version was placed on the November ballot. The bond, they said, would largely build roads and ease the lives of California’s legions of freeway commuters.

On Web sites and in fliers soon to be mailed to California voters, a coalition supported by Schwarzenegger and his Democratic opponent, state Treasurer Phil Angelides, hundreds of state and local officials, contractors, labor unions and others reinforce the message: According to the coalition’s Web site, the bond will provide funding first and foremost to “fix the state’s most dangerous highways, clear freeway bottlenecks and help prevent air pollution.”

Proposition 1B, the largest single bond ever placed before California voters, would certainly provide billions to do just that.

But a detailed review by The Associated Press (AP) also showed that more than 40 percent of the approximately $20 billion will not go toward the well-advertised road projects. Rather, billions will go toward projects that have tenuous connections to relieving the state’s worst traffic jams.

New fences around ports in Long Beach and Oakland, school buses for Los Angeles, and security cameras and disaster-plan studies for San Francisco’s subway and ferry terminals are just a few of the projects that would see a slice of the money if voters said yes.

Billions also would go to buying land for railroad crossings, expanding programs to reduce harmful emissions and perhaps even building a new border crossing into Mexico.

“Will it make your commute better? That’s a tough question to answer and a promise we’re not ready to make,” said John Barna, executive director of the nine-member California Transportation Commission, which would be charged with deciding how approximately $12 billion of the bond money would be spent.

That much of the money would go to projects that will not have a direct effect on easing California’s notorious freeway congestion is a consequence of political reality in a state with a Republican governor and Democrat-controlled legislature.

Lawmakers carved up funding for dozens of programs to win bipartisan and regional support in suburban Republican areas and urban Democratic strongholds. The compromises also were a way to ensure the bond made it on the November ballot as part of a $37.3-billion package of public works measures. The other infrastructure bonds would raise money for levee repairs, school construction and affordable housing.

The transportation bond’s official title, the “Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006,” should serve as much as a description for voters as a disclaimer that it contains money for far more than road repairs.

The AP’s examination found that it spreads money across so many potential projects that some experts question if there will be enough set aside for any one region to make a noticeable dent in highway traffic.

In one example of the something-for-everyone approach, the bond guarantees each of California’s 478 incorporated cities at least $400,000 for transportation projects — regardless of whether they have been approved as regional or statewide priorities.

“I would say there is a question of can this very large package — broken up in a lot of components and spread out across all the regions of the state — really make a difference over the life of the bond?” said Mark Baldassare, director of research of the nonprofit Public Policy Institute of California. “I think it’s a big question, and I don’t think the proponents want to oversell this.”

A Troubled

Infrastructure

To Barna and other members of the California Transportation Commission, there is no question the money is needed. The agency estimated recently that unfunded transportation needs in the state would hit $160 billion by the end of the decade.

They consider the $20 billion provided by Proposition 1B as a mere down payment on fixing the state’s road system.

“I think this bond would get us to the place where we would be ready to start making peoples’ commutes better,” Barna said. “We’re talking about enhancing the building blocks. Maybe that means building a component that can shave off 10 or 15 minutes here, or allow you to take a bus there. That’s where we’re getting to with this bond.”

Indirectly, almost all the bond money would go to easing congestion, he said. That’s because in California, one size doesn’t fit all for helping commuters.

Some take buses, others use rail. As a result, improvements to an array of public transit agencies are needed to alleviate congestion, just as new lanes are.

In some cases, supporters said the bond money is needed as a way to begin buying land and preparing for the next generation of rail lines and other mass-transit corridors.

The borrowing plan represents a much-needed investment in the state’s future, said James Earp, executive director of the California Alliance for Jobs, which represents 1,700 construction companies and is helping orchestrate the upcoming television and mail campaign for the bond.

That is especially true as California’s expanding population threatens to make traffic jams even worse, he said.

“It’s like a new roof job,” Earp said. “When you need it, you need it and you go to the bank and borrow. That’s what we’re doing here. We’re taking out a home-improvement loan for California …”

But in borrowing billions, Proposition 1B also would mark a major policy shift in funding transportation projects in California.

For the past two decades, the state has paid for road projects largely through ongoing taxes and fees on gasoline. Under the bond measure, the state would borrow against its general fund to pay for improvements that may be obsolete by the time they’re paid for.

For example, even the measure’s supporters acknowledge that buses and rail cars purchased with bond money could end up in the junkyard before the bond would be paid off in 2037.

Among the key findings in the AP’s review of the bond:

• At least $8.7 billion — approximately 43 percent — will not go directly for road work. Instead, the money will pay for bus, rail, freight, air quality and security projects.

• Of the $11.3 billion that could go for roads, less than half is dedicated to reducing congestion on what the state considers to be “high-priority corridors” on highways and other major routes.

• The only road project guaranteed funding is Highway 99 through the Central Valley. It will get $1 billion, although experts said it will take six times that amount to bring it up to interstate highway standards.

• In most other cases, it’s still unclear how most of the money would be spent. The bond has divided the road money into categories and has left most funding decisions in the hands of the state transportation commission.

• Despite the references to highway safety and port security in the bond’s title, less than 4 percent of the money would go to the state’s main fund for highway safety projects. Supporters said additional lanes and other such projects also would improve safety. And just one half of 1 percent — $100 million — would go to grants for port security.

• Local governments already are angling to use billions of dollars for so-called “trade corridor improvements” and money earmarked for ports to fund projects that have not previously made the cut for state funding. In San Diego, for example, officials are preparing a plan to spend hundreds of millions of dollars in bond money on a third major border crossing to Mexico.

Kim Kawada, executive program manager of the San Diego Association of Governments, said that while the group’s board hasn’t yet approved it, the agency is hoping to compete with the ports in Oakland and Long Beach for bond funding.

“We think the border crossing is going to compete well,” Kawada said of the project the association has been considering for years. “The border is kind of a different issue, but it affects the economy of the entire region and state, it’s not just about sea ports.”

• The bond allocates $1 billion to reduce emissions related to the movement of goods, presumably referring to train and truck emissions on heavily traveled trucking routes and Central Valley railroad corridors. But the Legislature did not empower a state agency to design or manage the program or to cut checks to pay for it.

• The bond also invests $1 billion for transit security. But some question if that’s an appropriate use of borrowed bond money because the state is supposed to be receiving federal homeland security funds for such improvements.

“That seems like a federal domain,” said Jean Ross, executive director of the nonprofit California Budget Project, noting that 10 times more funding was going to such projects than port security, which is in the bond’s title.

Opponents

Share Concern

Over the life of the bond, taxpayers also would pay far more than its $19.9-billion total.

As is common with bonds, the state would pay nearly $1 in interest for every dollar spent. The total payback over 30 years would be $38.9 billion, according to the nonpartisan Legislative Analyst’s Office.

That’s greater than the annual general fund budgets of every state except New York and California.

The amount of borrowing the state will incur for the transportation and other bonds is one reason some Republicans are speaking out against them.

Jon Fleischman, a former executive director of the California Republican Party who now publishes the Republican Web site FlashReport.org, criticized the transportation bond last month during the state party convention.

“… There are tons and tons of programs in that bond that are not bricks and mortar transportation projects and that most people would not think of when you tell them they’re voting on a roads bond,” Fleischman said. “It’s a social-engineering program designed to move people out of cars, not to fix the roads they drive on.”

State Republican Party Chairman Duff Sundheim said he disagreed with Fleischman and noted that party delegates voted overwhelmingly to endorse the bond.

State senator Tom McClintock, a Republican candidate for lieutenant governor, also spoke out against the bond before voting against it when the public works package was placed on the ballot in May.

McClintock said bonds should be used only for capital projects that last at least as long as the state would be paying for them.

“If our children are called upon 30 years from now to repay a bond, they should have the full benefit of the project built with that bond,” McClintock said on the Senate floor. “Bonds are seductive. They promise immediate gratification, but they conceal a heavy price.”

Birth of a Bond

Schwarzenegger first cast road improvements as a major part of any bond package during his State of the State address in January. He released a 10-year plan that relied heavily on bonds to help fund $107 billion in transportation improvements.

Democrats, however, opposed that and other components of his $222-billion “strategic growth plan” as too grandiose, saying it would cap the state’s ability to borrow money for other needs in the future. They also wanted more money for public transit projects.

In May, the two sides agreed on the approximately $20-billion transportation bond and have made promises about its potential since then. Schwarzenegger’s bill-signing ceremony was held in the median near the entrance to an often-clogged freeway tunnel in the San Francisco Bay Area.

“We will build more freeways, and more lanes, especially HOV lanes and more mass transit, more on-ramps and off-ramps, more bridges and so on, all in order to ease the traffic congestion and improve the air quality,” he said at the time.

Paul Hefner, a spokesman of the pro-bond campaign led in part by Senate President Pro Tem Don Perata, said supporters have made no secret that a lot of the bond money would go to fund projects other than roads.

Hefner said the bus and rail lines that make up the backbone of the state’s public transportation systems deserve a piece of the pie because they’ve been equally underfunded over the years. He characterized the bond as a first step in fixing all those needs.

“We can’t promise voters that this [bond] is going to instantly change peoples’ lives,” Hefner said. “We can say that this is going to set aside a significant amount of money to begin fixing the problem.”

Yet by failing to set up a more sustainable way to pay for the state’s ever-expanding transportation needs, the bond might actually move the state backward by creating too much debt for the sake of one-time fixes, said Stuart Cohen, executive director of the Oakland-based Transportation and Land Use Coalition.

Along with the bond, the Legislature should have packaged reforms to index the 18-cent gas tax to inflation, Cohen said. That move alone would have raised approximately $45 billion for transportation projects over the next 30 years, he said.

Regardless of its merits, the bond would be historic if approved by California voters, who have passed just two of five transportation bonds in the last 20 years, according to the California Budget Project.

“Obviously, roads are important to many people, but different voters care about different things,” said Ross, the group’s executive director. “We’ll see if it’s got enough things for enough people, or too many things for too many people.”