California State Propositions – June 2014

Proposition 41 -Re-Allocation of Bond Authorization From One Veterans Program To Another, Better One

Recommendation: Strong Yes.

Long-time readers of this blog (or its predecessors) are aghast: Is that really a “strong yes” on a bond measure? Collect yourselves; it is. The reason is that this is an unusually smart bond measure. Also, as our title suggests, while this is correctly identified as a state bond measure, thanks to our surprisingly fiscally conservative state legislature, we view it as more of a re-allocation of already authorized bonds from one program to another.

First, unlike most initiative-created bond measures, this one is not created by an outside special interest group seeking to shift more money away from the ever-shrinking discretionary funds managed by the legislature. Rather, this initiative finds its roots in Assembly Bill 639, sponsored by State Assembly Majority Leader John Pérez and passed both the Assembly and the State Senate unanimously. So, this is bond measure that has been planned for and is supported by our legislature as opposed to one that is being foisted upon them (as is the case for most bond measures).

Second, the legislature actually did plan for this measure. They identified an underutilized Cal-Vets program Created in 1922 and most recently funded by initiative in 2008. That program has about $600 million in authorized but unused bonds intended to help vets. So, the legislature de-funded $600 million in that program and passed AB 639 creating Proposition 41 to authorize the same $600 million in bonds be used for a smarter program. We at PolitoMuse are not fans of micro-managing our legislatures, so we would argue that it should be sufficient that the legislature has unanimously found the new program to be superior for us to support it. Nevertheless, the information in the voter guide and on-line suggests that the new program is more specifically directed toward low and very low-income veterans, whereas the old one is not. We think that is sensible. It appears that the problem with the old program was essentially that the vets, who qualified for it, didn’t need it because they have sufficient resources to qualify for market loans. Those that needed it, because they lacked financial resources, couldn’t qualify (see e.g. this LA Times op-ed).

There is one key difference in the “new” bonds issued through Proposition 41 as opposed to the old ones they are replacing. The old Cal-Vets program used monies collected from the vets to repay the bonds. So, while taxpayers were technically obligated by the bonds issued, they did not actually have to repay them; that was done by the vets who were beneficiaries of the program. Of course, this also meant the program could only be used by those who could repay the debt – hence the reason that the old program was under-utilized. The new program does not require the beneficiary to be able to fully re-pay the debt. So, presumably taxpayers will actually shoulder some if not all of the repayment obligation.

We think it is appropriate for taxpayers to help pay to house low-income (defined as earning no more than 80% of income earned by local families) and very low-income (defined as earning no more than 30% of income earned by local families) vets in California. We like that unlike the prior program this one will help homeless vets – a huge and ever-growing problem in California. (We’ll avoid the obvious rant about how reprehensible it is that brave men and women, who have endured combat and the associated physical and emotional scars, come home only to be forced to sleep on the streets.)  Also, we note that there are countless studies that show that paying to house very low-income individuals is far less expensive (i.e. more fiscally sound) for state and local governments when compared to allowing those individuals to remain homeless. Here is one study that shows that the total cost of “supportive housing” is about $600 per month while the aggregate costs to governments in dealing with the same individuals when they become homeless skyrockets to $2,897. So, from both a moral and a financial standpoint, this program seems to make sense. Add to this analysis the fact that this program is intended to work with local governments, non-profits, and private investors, to leverage their monies and expertise, resulting both in better results and increased economic activity (funding increased construction etc.) and this would seem to be something of a “no-brainer.” This point also eliminates another of our common “pet peeves” regarding bonds – this proposal uses bond monies to build assets (here buildings and houses) generally, that is a more responsible use of borrowed money (as opposed to using borrowed money to simply fund continued salary or other operating costs in a program).

The US Department of Housing and Urban Development (HUD) issued the most recent “Annual Homeless Assessment Report (AHAR) to Congress” in 2013. That study found that California has the highest percentage of homeless population in the U.S. and that after years of decline, the total number of homeless in California suddenly increased in 2013.  It is widely anticipated that as veterans continue to come home from the recent wars, those numbers will continue trending up.  Meanwhile, the number of homeless shelters in California declined.

Finally, we readily dismiss the single individual – Gary Wesley – who provided the argument against this proposition. His suggestion is that to address the present problem of homeless veterans the U.S. should avoid going to war in the future. Unless Mr. Wesley has a time machine, we don’t think that is sound policy.

VOTE YES

Proposition 42 – Legislative Constitutional Amendment Transferring Obligation To Pay Local Costs of “Open Meeting Laws” From State To Local Governments

Recommendation: Weak Yes

Although it is difficult to locate, the impetus for this Proposition appears to stem from the fiscal cut-backs that occurred in 2013.  During the initial State Budget, the Governor and legislature cut the payments made to local governments to cover expenses associated with Open Meeting laws by suspending the requirements that local governments comply, or at a minimum, local governments took that position.  (See this article).  What is even more deeply buried is the reason that suspending the payments could mean that the local governments would not need to comply with the open meeting laws – after all, the state has a long history of “unfunded mandates”; laws that obligate local governments to do or refrain from doing acts that require expenditure of resources without providing those local governments any payment.  (For an analysis of California’s unfunded mandates see ).

Undaunted, we set our Polito-researchers to the task.  It turns out that California is a strange state (we know, tell you something you don’t know).  California’s voluminous and oft-modified (thank you propositions) Constitution actually has a provision that prohibits unfunded mandates.  It is found in the California Constitution, article XIII B, section 6, subdivision (a).  Of course, over the years, the legislature has still found ways to avoid payments.  In particular, one Polito-friendly contact we spoke with who deals with information requests on behalf of local schools told us that while expenses for such requests are carefully tracked (to enable reimbursement by the state), they haven’t actually seen a reimbursement from the state in years.  For a discussion of the history and treatment of unfunded mandates in light of Article 13b of the state constitution see the 2011 case of California School Boards Assoc. v. Brown.

So, while we were unable to find authority for the proposition that the State’s failure to fund reimbursements for “open meeting” laws would necessarily relieve local governments from the obligation to comply (assuming the State used some of the clever tactics employed in the past), there is a realistic fear that such an argument could succeed.

Separately from the fear that “Open Meeting” laws could be undermined in this way we also agree with the proponents’ underlying premise:  That “Open Meeting” laws should be considered core principles of good government and therefore part of a local government’s obligations to fund its own functions.

Moreover, responsibility for paying half of the “Open Meeting” laws – those incurred under the Brown Act” was already transferred to local governments by initiative in 2012. So, it seems sensible to give the same treatment to the other half of these important laws.

Finally, we are also mindful of the unproven “whispers” that local governments routinely “pad” their reimbursement requests and that transferring the cost obligations to those local governments will create an incentive for efficiency.

In short, while it is hard for us to get excited about foisting more expenses onto local governments, at the end of the day this expense seem properly placed at the local level.  Interestingly, even local governments are not really opposing this measure.  We found only one reference to an opponent (which we could not independently verify) to Prop 42, no editorial boards opposing the Proposition, and no funds expended against the Proposition.

Vote:  Yes. 

 

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