MOORLACH CAMPAIGN UPDATE — Debt Matters — November 5, 2016

There is one Proposition that has really gotten under the Governor’s skin. He really hates Proposition 53 and is campaigning against it with all of his disposable resources.

The proponent, Dino Cortopassi, is also funding this ballot measure with his personal resources, hoping to leave a lasting legacy here in the state that allowed him to create his personal wealth.

For my editorial perspective on Proposition 53, see MOORLACH UPDATE — Propositions 51 and 53 — September 3, 2016 september 3, 2016 john moorlach.

Dino Cortopassi is taking on the government and the Sacramento establishment. Even local municipalities are opposed to his simple proposal. And, some editorial boards are weighing in with their opposition. Our local OC Register recommends a "yes" vote.

Earlier in the spring, this ballot measure was the topic of a Senate Governance and Finance Committee Hearing. I’m a member of this committee. Every witness, but one, the lawyer retained to draft the measure, was opposed to it.

I mentioned that many revenue bonds fail, and cited a few recent examples. I also stated that this ballot measure would be successful. Like Proposition 218 in 1996, which asked voters to approve tax increases, Proposition 53 will allow voters to approve $2 billion or more in state revenue bonds. Voters actually appreciate having more control. I would expect Proposition 53 to do well.

The Bakersfield California provides a rebuttal to its recommendation to oppose Prop. 53 with the piece below.

In March, I mentioned that the State Controller did not include the entire unfunded actuarial accrued liability for retiree medical in California’s most recent Comprehensive Annual Financial Report (see MOORLACH UPDATE — California CAFR — March 19, 2016 march 19, 2016 john moorlach).

A few days later the OC Register mentioned this intentional multi-billion dollar exclusion in an editorial (see MOORLACH UPDATE — SB 1463 — March 25, 2016 march 25, 2016 john moorlach). The editorial writer below used this statistic in his piece and gave me credit.

Remember to vote on Tuesday. For assistance in filling in your sample ballot and for an invitation to my election night party, go to MOORLACH CAMPAIGN UPDATE — Endorsement Roundup — November 3, 2016 november 3, 2016 john moorlach and MOORLACH CAMPAIGN UPDATE — Next Week — November 4, 2016 november 4, 2016 john moorlach.

P.S. You still have a couple of days to make a contribution to my campaign. Go to http://moorlachforsenate.com/ and click on "DONATE." Contributors of $100 or more will be specifically included on my campaign finance report. If you wish to be listed as a member of the winning team, donate today.

Image of The Bakersfield Californian logo

Vote yes on Prop. 53 and demand accountability for debt

Bruce Freeman

In a recent editorial, The Bakersfield Californian took an oppose position on Proposition 53, the measure known as “Stop Blank Checks” which will appear on the Nov. 8 statewide ballot.

The proposed measure, which only pertains to the state’s multibillion-dollar revenue bond megaprojects, would only do two things: it would require that the total cost of a project be disclosed to voters before it begins and it would require statewide voter approval.

The idea behind the measure is simple: If taxpayers have to pay, they should have a say. I strongly support Proposition 53 because consent of the governed also means the consent of the taxed.

Many are surprised to learn that some of the state’s largest, most expensive projects currently have little to no voter oversight. That means no vote by the people or the legislature, and no thorough fiscal scrutiny is required before these huge projects begin.

Proposition 53 would only apply to revenue bonds costing over $2 billion that are used to pay for state projects. Revenue bonds theoretically are paid for by “revenues” from a project. But when projects don’t generate enough revenue, taxpayers pick up the tab. One such example is the City of Stockton’s $47 million bond in 2004 for an arena. Stockton’s arena revenue shortfall contributed to its 2012 bankruptcy. Prop. 53 protects state taxpayers by adding a layer of transparency to these massive state megaprojects.

According to Wealth Daily, “Revenue bonds may offer higher risk than general obligation bonds because repayment depends on specific revenue streams rather than tax revenues, including user fees or lease payments that are vulnerable to economic trends.”

Proposition 53 would force governments to be more responsible with our money instead of letting unaccountable and unelected state bureaucrats, controlled by special interests, just run up a tab. And if the large amounts of revenue bonds still are needed? Then approval is just a voter initiative away. It is no different than what we do with general obligation bonds.

A good example of a fiscal disaster is the high-speed rail project. Although voters approved $9.95 billion in general obligation bonds with Proposition 1A in 2008, and the federal government kicked in $3.5 billion, estimates for the project keep changing, but officially now run to $64 billion. Proposition 53 would give us a say in the multibillion-dollar cost increase that could be funded with revenue bonds to make up the difference.

Sacramento politicians and unelected bureaucrats have gotten too comfortable with spending other people’s money with very little, if any, oversight. Spending at these unsustainable levels is going to have long-term consequences for us and future generations.

According to a report by Controller Betty Yee, the state now suffers “a net pension liability of $63.7 billion.” And when “claims, judgments and long-term leases” are thrown in, the debt jumps to $175.1 billion. State Sen. John Moorlach, R-Costa Mesa, calculated “$74 billion in unfunded retiree medical” benefits will be added in the next report due later this year. Total: $224.1 billion in debt. Some say this is a conservative estimate.

According to campaign finance data from the California Secretary of State’s website, opponents funding the attack on Proposition 53 are those who stand to benefit from huge state megaprojects. It’s no surprise they oppose something that may get in the way of their profits. Contributions so far — with more to come — include: $250,000 from the State Building and Construction Trades Council of California, $350,000 from the California Construction Industry Labor Management Cooperation Trust and $300,000 from the Laborers Pacific Southwest Regional Organizing Coalition-Issues PAC.

Proposition 53 is just common sense, especially for taxpayers. Why should the total cost of state megaprojects be hidden from taxpayers? Please vote “yes” on Proposition 53 for transparency and to hold politicians accountable when it comes to long-term state debt.

Bruce Freeman is the president of Pinnacle Advisory Services Inc.

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