Proposition 12

Title:			Bond: Parks, Water and Coastal Protection Act.
Sponsors:			Assemblymembers Antonio Villaraigosa and Fred Keeley
Legislative History:			AB 18 (1999) Assembly Floor: 61-15 Senate Floor: 31-3

Major Provisions:

• Provides for the sale of $2.1 billion in state general obligation bonds to fund parks improvements. Following is a breakdown of specific allocations:
  • Grants to local agencies for urban parks, trails, and recreation facilities - $847 million.
    • $388 million of that amount would be allocated on a per capita basis to cities, counties, and park districts.
    • $200 million would purchase open space.
    • $100 million would be allocated for park improvements for low-income and at-risk youth.
  • Department of Parks and Recreation - $545 million, mostly for state parks projects.
  • Wildlife Conservation Board - $266 million for conservation projects, including preservation of wetlands and riparian areas, ancient woodlands, the Salton Sea, and threatened and endangered species habitats. $83 million would be allocated for matching grants for local acquisitions.
  • State Coastal Conservancy - $220 million for acquisition of property and development of public use facilities.
  • Other conservancies - $135 million for Lake Tahoe, Santa Monica Mountains, San Francisco Bay, and Coachella Valley Mountains conservancies.
  • The remaining amount (about $108 million) would be spent on several river projects, grants for California Conservation Corps projects, agricultural land and urban forestry projects, and a few Department of Fish and Game projects.
    
    
• Requires the Department of Parks and Recreation to catalog deferred maintenance needs of each unit of the state park system and to seek funding for those needs in each annual budget. Bond money generally cannot be spent on acquiring new improved property until 75 percent of those deferred maintenance needs are met through other sources. The department director may make exceptions for unique opportunities to acquire real property that would be a significant improvement of the state park system.

Background:
In the 1980s, a series of park bonds were approved by voters, providing a total of about $2 billion. Cal-Tax supported bonds in 1984 and 1986, which were approved by voters. The most recent bond to pass was Proposition 70, a $776 million initiative in 1988. Cal-Tax opposed that measure. As an initiative, it was not the result of legislative determination of priorities, but rather allocated more money to projects where supporters committed to help it pass. Most of the funding was for new acquisitions, with only 10 percent allocated for improving access to existing public lands.

No park bonds have passed in the 1990s. The Legislature placed one measure on the ballot in 1990, and an initiative measure was on the 1994 ballot. Both failed. Cal-Tax opposed both measures. The 1990 measure, Proposition 149 ($437 million), was opposed because it was not seen as the highest and best use of state infrastructure funds. The 1994 measure was Proposition 180, an initiative to incur $2 billion in debt for parks and conservation. Cal-Tax opposed the measure because it was drafted without legislative review, was not viewed as the best use of scarce resources, and it would have spent one-time bond money on some ongoing program operations.

On the March 2000 ballot will be five bond proposals, totaling $4.7 billion. This measure is the largest of the five. The other measures are for water projects, libraries, crime labs, and veterans' homes. In 1998, the only bond on the ballot was approved -- a $9.2 billion school bond -- and those bonds will be sold in increments over four years.

Policy Considerations:

• Does this proposal meet Cal-Tax's criteria for evaluating bond proposals, as outlined below?
  • The project to be financed is a capital facility or infrastructure project and the bond funding will pay for land acquisition and capital costs, not for maintenance, operations, non-construction salaries or wages, or ongoing costs.
  • Non-bond financing is not a reasonable option.
  • The project costs are appropriately shared by future taxpayers because the project will have a useful life at least as long as the term of the bonds and future taxpayers will benefit from the facility that is built with the bond proceeds.
  • It is not appropriate for bond funds to pay for equipment, computers, or similar items that will not be useful for at least as long as the debt is outstanding.
  • For state bonds, projects funded must be of state-level concern and importance. State bonds should not pay for local projects that do not have significant extra-territorial impact.
  • Interest rates for indebtedness are not abnormally high and the overall state debt level will not be excessive.
    
    
• No bond funds have been provided for park repair and improvements since 1988. Since then, California's population has increased nearly 20 percent, and park usage has increased. While the state's economy is performing well and the general fund is growing at a healthy pace, is it time for the public to commit to improvements that have been postponed for over a decade?
  
  
• Parks contribute to a good quality of life and are an important part of the state's infrastructure, although they do not facilitate economic activity as much as transportation improvements or other kinds of infrastructure. How important is this need in comparison with other infrastructure needs?
  
  
• Much of this bond money would be subvened to local governments. What other sources of funding are available to localities, and how feasible is it to fund local parks without state help? Local governments can utilize local G.O. bonds and parcel taxes, but their passage rate has not been high in the past.
  
  
• According to news reports, many state parks have facilities that are falling apart because money has not been appropriated by the Legislature for repairs or maintenance. If this bond is approved, what assurance is there that new facilities and lands will be maintained appropriately in the future?
  
  
• If the Legislature does not have the will to maintain existing parks and facilities, should new parks and facilities be acquired and built which will add to the maintenance demands?

Fiscal Impact:
According to the Legislative Analyst's Office (LAO), debt payments for this bond would be about $144 million a year for 25 years if the bonds were sold at 5.5 percent, which is the current rate for this type of bond.

It has been generally accepted in recent years that a prudent level of debt service for the state would be 5 percent or less of the state general fund. Although California reached the 5 percent level in recent years, the general fund has grown dramatically because of increased revenues brought in by the strong economy. LAO estimates that currently approved debt payments will be 4.1 percent of the general fund in 2000-01 and decline thereafter. If all the bonds on this ballot were approved, the debt ratio would remain roughly constant, rather than declining.

Support Arguments:

• Improved and expanded parks and recreational areas would help society by keeping kids out of trouble and improving our quality of life.
• This measure would help our economy because parks are important for tourism jobs, and healthy rivers and streams would benefit agriculture.
• Prop. 12 would protect the environment by protecting lands around waterways, and promoting tree planting and preservation. It would help Californians leave a legacy for future generations.
• Tough fiscal safeguards would ensure money is spent properly. This measure does not produce a tax increase.

Support arguments signed by:
Robert Stephens, chair, National Audubon Society - California; Antonio Villaraigosa, Speaker, California State Assembly; Allan Zaremberg, president, California Chamber of Commerce; Gail Dryden, president, League of Women Voters of California; Jacqueline Antee, state president, American Association of Retired Persons; Larry McCarthy, president, California Taxpayers' Association.

Opposition Arguments:

• Government would use much of the money to buy land for insects, rats, and weeds.
• Interest costs make bonding too expensive over time.
• If these projects were important, they should have been funded through the state surplus.

Opposition arguments signed by:
Ray Haynes, California State Senator; Brett Granlund, California State Assemblyman; Carl McGill, chairman, Black Chamber of Commerce of Los Angeles County; Lewis K. Uhler, president, The National Tax Limitation Committee.

Cal-Tax Position:
Support. This bond is fiscally responsible and satisfies Cal-Tax criteria for evaluating bond measures. Park facilities improve the quality of life, contribute to the economy, and help improve the environment.