California Legislature likely to ask voters to borrow $20 billion for climate, schools

SACRAMENTO, California — With California’s Legislature facing billions of dollars in budget deficits, it is likely to ask voters for help on Wednesday.

Lawmakers will vote on whether to put two $10 billion bonds on the November ballot. If voters approve, the money could be used to build new schools and help communities prepare for the impacts of climate change.

California was swimming in money just a few years ago while budget surpluses during the pandemic exceeded $100 billion. But the state had to drastically reduce expenditure to cover deficits totaling more than $78 billion over the past two years as revenues fell due to rising inflation and an economic slowdown in the state’s crucial technology sector.

The money from the bonds could offset some of those cuts and also fund a number of priority projects across the state in the coming years.

But the money isn’t free. The climate bond alone will cost taxpayers more than $19 billion to service, with annual payments of $650 million a year, putting even more strain on state finances.

Asking voters for permission to borrow large sums of money is always risky, especially if you do it multiple times during the same election.

In addition to the two statewide ballots, voters will likely be asked to approve hundreds of local lending proposals, including a huge $20 billion housing bond for the nine counties surrounding San Francisco Bay.

Recent history shows that voters are tired of these bonds.

In 2020, despite a history of approving statewide school bonds, voters rejected a $15 billion education bond proposal — which would have been the largest in state history. And earlier this year, voters rejected just narrowly approved proposal 1 allowing the state to borrow more than $6 billion to house the homeless. The result was widely seen as a warning to lawmakers considering taking on more debt.

“I thought the razor-thin margin on Proposition 1 would be a wake-up call for these ill-defined bonds,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “Whether it’s education, homelessness, climate, Californians feel like they’re not getting their money’s worth.”

Advocates say voters are smart enough to recognize the great need that will be met — most school facilities are built with a combination of state and local money. But the demand for state money is so great that there is a waiting list of projects worth more than $3 billion, according to Democratic Assemblyman Al Muratsuchi, who sits on the committee that approves the funding.

A large portion of the climate bond would go toward improving water supplies and helping prepare for wildfires. Statewide, nearly 400 water systems do not meet state safety standardsMeanwhile, 15 of the 20 most destructive wildfires in state history occurred in the past decade. Heat waves last longer and become more severe, endangering public safety. In addition, severe winter storms in recent years have caused devastating flooding.

“It’s something that’s more tangible for people here and more real because they’ve seen it so many times,” said Melissa Romero, deputy legislative director for California Environmental Voters, an advocacy group that supports the bond.

Negotiations on the education bond have been going on for nearly two years, and the end result has not pleased everyone. The bond money would only apply to public schools and community colleges, with the exception of the University of California and California State University systems.

In addition, some advocacy groups argue that the bond would benefit wealthier school districts at the expense of poorer districts, a problem they say is a persistent problem with the state’s program for financing the construction of school facilities.

“It would continue the status quo, with some nominal equity adjustments that won’t really address the underlying problem,” said Nicole Gon Ochi, deputy director of Public Advocates, a nonprofit law firm and advocacy group.

Muratsuchi said the bond would make it easier for districts to qualify for the state’s emergency financial aid program and would allow districts with fewer resources to go through the complex process of applying for state grants.

In particular, the question is whether $10 billion is enough to make a difference, especially given how the money would be distributed.

“I’m concerned that the money in this bond is spread out in so many different directions that we’re not going to see the results that we want to see,” she said.

Democratic Assemblyman Eduardo Garcia noted that “difficult decisions had to be made” given the competing priorities for limited funding.

“We also had to consider the dynamics of what voters and members of this House would support,” he said.