Senate settling on infrastructure bond package

After months of negotiations, an $11.7 billion transportation and
infrastructure plan to repair roads, ease traffic, strengthen levees, and
expand affordable housing is coming together in the Senate. A similar
proposal, with new school construction funding, will be unveiled in the
Assembly in January. Both houses hope to get their proposals ready within
two weeks, when the new legislative session gets under way.

And Gov. Schwarzenegger’s own plan, which Capitol sources say may be pared
down from its original $50 billion price tag to $35 billion and may be
phased in over time rather than in one lump, is scheduled to be unveiled on
Jan. 5.

Combined, the election-year proposals call for a historic infusion of money
to build and maintain highways, schools, water projects, high-speed rail,
housing development, local street improvements, even bike trails and
neighborhood green belts. Hopeful that new cash is on the way, even fanciful
projects are getting a new look, such as an upper deck for miles of
Interstate 405 in Los Angeles, or an extension and renovation of L.A.’s
I-710.

But while many projects are gaining at least tacit support, the method of
paying for them is proving divisive.
The core dispute is over money: Should California sell billions of dollars
of voter-approved General Obligation bonds to raise the money–bonds that are
backed by the state’s General Fund? Or should the state sell revenue bonds
backed by fuel tax money from Proposition 42, the transportation funding
measure that voters approved five years ago?

Members of both parties say the Democrats generally favor GO bonds, and
that the governor favors a mix of GO and revenue bonds. Both they say both
finance schemes–plus others, such as boosting the fuel tax by a penny or
two, or a quarter-cent hike in the statewide sales tax to pay down the
bonds–are all on the table. A penny increase in the fuel tax brings in $175
million; a quarter cent sales tax hike brings in about $1 billion. Whatever
plan is ultimately approved will require voter approval.

“The public seems to be okay with raising the gas tax, if the money is
dedicated to a specific project and actually gets there. But you need to
restore the Proposition 42 money before you start talking about raising the
gas tax,” said Steve Schnaidt, a former Senate transportation consultant.

“The problem is that if you redirect the Prop. 42 revenues, you’re not
really getting any new money, you aren’t really sure you’ll have enough to
do what you want,” he added. The Senate proposal contains money to keep
Proposition 42 whole.

As the final negotiations get under way on the transportation piece of the
complex proposals, there has been an unusual exodus of key transportation
experts from the Capitol. Even by the standards of the Capitol, where staff
turmoil is not unknown, the departure of five top experts in less than a
month is surprising.

The exodus includes Andrew Antwih from the Assembly, Schnaidt and Randall
Henry from the Senate, Diane Eidam from the California Transportation
Commission’s staff, and Joel Riphagen from the Legislative Analyst’s Office.
All took new jobs elsewhere.

“It’s not a purge, they left for their own reasons. But everybody’s talking
about it,” one staffer said. Another described it a as a “brain drain.”

Senate Leader Don Perata’s heavily rewritten infrastructure plan, amended a
half-dozen times this year, is still being reworked. Already at $10.3
billion, Senate aides say it has grown by another $1.4 billion to include
additional money for affordable housing sought by Sen. Tom Torlakson,
D-Antioch, the chairman of the Senate’s Democratic Caucus. That put the
Senate package, which includes scores of local road construction projects,
at $11.7 billion, but the figure could grow.

The California Alliance for Jobs, which represents construction companies
and workers, offered a $30 billion to $40 billion bond plan that includes an
immediate upgrade of the 25 most dangerous roadways in California, as
identified by Caltrans, plus a quarter-cent sales tax increase to pay down
the bonds.

Some combination of fees, taxes and borrowing will ultimately finance the
huge infrastructure proposals. But that mix is still unclear.

“There are lots of numbers floating around,” said Robert Oakes, a spokesman
for Torlakson. “General Obligation bonds, revenue bonds that are paid with
fees or taxes– that’s all part of the discussion. But there are only so many
slices in the pie.”

That pie is the concern of Democratic state Treasurer Phil Angelides, who is
running for governor next year, who favors a large infrastructure bond, but
notes that a $50 billion bond requires a $3.4 billion-a-year debt service
payment.

Environmentalists’ concerns are rising with the emphasis on affordable
housing and port improvements–in part because of fears that a surge in
development and construction could hurt the environment.

“A number of environmental groups, including those on the resources side,
environmental health and environmental justice, are concerned there will be
concers or desires or issues raised by people in January who have so far not
been involved in these discussions,” said Gary Patton, executive director of
the Planning and Conservation League.

The governor’s press aides declined to discuss the governor’s position on
the Legislature’s infrastructure proposals. But Democrats and Republicans
alike noted that many of the themes of the Senate and Assembly’s plans are
likely to emerge in the governor’s state of the state speech on Jan. 5
“We may all be riding together on this,” said an Assembly Democratic staffer
familiar with the proposals.