If recent private polls are any indication, Californians may be on the verge of saying "no" to the proposed $11 billion water bond scheduled for a vote this coming November. Given the likely defeat, the governor and legislature may well reschedule the vote for 2012 hoping voters will be in a happier and more generous mood when it comes to their money.
The unfortunate fact is that most of the water bond makes a lot of sense. The state water system is a half step away from collapse, which would cause havoc for farmers and users everywhere. Much of the fragile delta ecosystem, the gathering point for a sizable portion of California's fresh water network, has been held together by berms more than one hundred years old. A bad earthquake or collapsed lock from excessive flow could do in the state big time. To be sure, the proposed water bond is far from perfect, but compromises are necessary when promoting major public policies.
The problem is not the water bond, per se, but California's excessive reliance upon bonds in recent years. In 1991, California ranked 32nd among the 50 states in bond indebtedness on a per capita basis. Today, the state's bond debt is $140 billion, $70 billion of which has been enacted during the Schwarzenegger administration. That represents a per capita indebtedness of more than $1,600, well above the national average. The state now has the lowest credit rating in the nation, which means higher interest rates on the bonds it redeems. More than 6 percent of the budget now goes to paying interest on bond debt. That's a lot of money in a state that doesn't have nearly enough.
Who's responsible for this mess? We all are. You might remember that in 2004 shortly after his election, Governor Schwarzenegger asked the voters to "cut up the state's credit cards" by passing Proposition 57, a $15 billion bond to balance the then out-of-balance state budget. In this case, we borrowed money only to pay it back over nine years. If that's not a credit card mentality, it's hard to know what is. You may also remember how excited Californians were later that year when we passed a $3 billion dollar bond to promote stem cell research.
In this instance, a bond was used as the method to finance a project of immediate interest to a select community of beneficiaries. Stem cell research is important, but financing it over 30 years doesn't make sense.
None of this is to say that bonds are frivolous or unnecessary; quite to the contrary. Bonds are best used as a device to finance long-term infrastructure projects that will last over decades -- projects such as roads, public land acquisitions, and, most of the kinds of long-term projects intended in the proposed water bond. But Californians feel a bit overwhelmed by our recent rush to bonds, which has put the current proposal in jeopardy.
Moving the water bond vote to 2012 may buy time for the economy to repair and the voters to feel better about their own financial conditions. But until we become more particular about the bonds that should be placed before the public, all proposals--worthy and not--are sure to suffer.