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Arnold continues to talk up massive pork debt-fest

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  • 12/29 Associated Press
    Published Thursday, December 29, 2005, by the Associated Press Governor, legislature to focus on neglected public works projects By Steve Lawrence After a year
    Message 1 of 1 , Jan 1, 2006
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      Published Thursday, December 29, 2005, by the Associated Press

      Governor, legislature to focus on neglected public works projects

      By Steve Lawrence

      After a year of sounding like former Republican Gov. Ronald Reagan and
      calling for new powers to cut spending, Gov. Arnold Schwarzenegger has
      shifted gears.

      He's begun to sound a bit more like another former California
      governor, Democrat Pat Brown, who presided over an era when the state
      built freeways, water projects and universities.

      "I want to create an infrastructure -- a huge infrastructure -- that
      reduces the gridlock of our roads, builds the facilities that our
      cities and counties need, speeds up the movement of goods ... and
      delivers more energy and water and all the resources that we need to
      grow," Schwarzenegger said in a recent speech.

      The emphasis on public works projects comes on the heels of voters'
      rejection of the four ballot measures the Republican governor
      championed in the Nov. 8 special election. That included Proposition
      76, which would have capped state spending and given the governor
      greater authority to make midyear cuts.

      It also comes as Schwarzenegger prepares for re-election saddled with
      low approval ratings, particularly among the Democrats and
      independents who account for two-thirds of California's registered
      voters.

      "I think he understands he needs to build a record if he is running
      for re-election and a legacy if he is not," said Sherry Bebitch Jeffe,
      a political scientist at the University of Southern California. "He
      has taken a page from the Pat Brown playbook."

      A spokesman for the governor said Schwarzenegger's emphasis on
      rebuilding California is part of a long-term plan, not a new
      direction. Department of Finance spokesman H. D. Palmer also said the
      governor will continue efforts to control state spending.

      Nonetheless, 2006 is shaping up as a year when the governor and
      lawmakers focus on tackling a huge backlog of public works projects,
      ranging from highways, to port access, to school construction, to
      levees.

      "There are lots of needs because we have neglected lots of things,"
      said Senate President Pro Tem Don Perata, D-Oakland. "California has
      not invested in a long time in things that make California work."

      The state is supposed to draft an annual plan laying out its public
      works needs but hasn't done so since 2003.

      It faces a $160 billion to $200 billion shortfall in transportation
      funding alone over the next 10 years, said Democratic Sen. Tom
      Torlakson, chairman of the Select Committee on California
      Infrastructure.

      "Our transportation system has been unraveling," Torlakson said.
      "We're 50th in the nation in the amount we spend per citizen on
      transportation, 49th in the nation in the condition of the roads, and
      we have the most congested areas in the nation."

      Finding a way to pay for a massive program to ease traffic, improve
      levees and build other projects in an era of continuing state budget
      deficits won't be easy.

      The Legislature's budget analyst, Elizabeth Hill, announced in
      November that the state would have a brief respite from deficits in
      2006 if lawmakers don't increase spending beyond projected levels.

      But she warned that deficits would return in 2007 unless the
      Legislature and the governor made additional budget cuts or raised
      revenue.

      During a postelection trip to China, Schwarzenegger said the package
      he would propose could cost "much, much more" than $50 billion.

      "We're looking at something really big," he said.

      But Palmer said the governor hasn't decided which projects to include
      in his proposal, how much it would cost or how to pay for it.

      He also said the governor was looking at more than just borrowing
      money by selling general obligation bonds, a traditional financing
      method that requires voter approval and can cost the state about a
      dollar in interest for every dollar it borrows.

      "He said, 'Think outside the bond,'" Palmer said.

      Alternatives include imposing user fees or assessments on industries
      that would benefit from the improvements or requiring local
      governments to chip in, Palmer said.

      Assembly Speaker Fabian Nunez, who is drafting his own infrastructure
      legislation, said lawmakers should identify a revenue source to pay
      off the additional debt, possibly through a tax increase, if they
      approve the use of bonds.

      "It's a discussion we're going to have to have," the Los Angeles
      Democrat said.

      The California Alliance for Jobs, a construction industry group, is
      recommending that lawmakers and the governor approve a $30 billion to
      $40 billion bond measure as a first step in dealing with the backlog.
      The group advocates a quarter-cent sales tax increase to help pay off
      the bonds.

      Palmer said Schwarzenegger won't accept a tax hike.

      Assembly Minority Leader Dick Ackerman, R-Tustin, also opposes a
      general tax increase but said the package could include revenue bonds
      that would be paid off "by people actually getting the benefit" of
      levee upgrades, water projects and certain other improvements.

      The state should also take more of a pay-as-you-go approach to
      financing public projects instead of selling bonds, Ackerman said.

      "You can't bond everything," he said.

      State Controller Steve Westly, a Democratic candidate for governor in
      2006, joined the debate by calling for legislation that would impose
      more accountability for bond spending. He proposed creating an
      oversight commission that would have final say over which projects get
      funded.

      Proposition 53, a constitutional amendment lawmakers added to the 2003
      special election ballot, would have allotted a small percentage of the
      state's general fund each year for public improvements. Voters
      soundly rejected it.

      Assembly Minority Leader Kevin McCarthy, R-Bakersfield, said voters'
      attitudes may have changed since then.

      "We are living off of infrastructure that was built not when Jerry
      Brown was governor, but when his father was governor," he said.

      But he added that Republicans aren't likely to support a huge bond
      measure.

      "Our members are going to see what is the need, what is the
      prioritization, where is the money going and how to pay for it," he
      said. "I don't think our caucus is going to put generations in debt.
      We are supportive of building the infrastructure of California. We're
      just not supportive of living in deficit."

      State Treasurer Phil Angelides, another Democratic gubernatorial
      candidate, also is leery of a huge bond measure. He warned that
      paying it off without a revenue increase could eat into money needed
      for education, health care and other programs.

      Some lawmakers are considering adopting a series of bonds instead of
      just one mega proposal. Spreading the bonds over several elections
      would ease the impact on the state's budget and credit ratings,
      Torlakson said.

      The state hasn't been neglecting its needs completely. Voters have
      approved nearly $74 billion in bonds since 1996, including $37.5
      billion for public schools and universities.

      Lawmakers already have placed a $600 million library construction and
      renovation bond measure on next June's ballot and a $9.9 billion
      measure on the November ballot to begin construction of a high-speed
      rail system.

      Perata is proposing an $11.7 billion bond measure that would provide
      money for flood protection, port improvements, low-cost housing and
      transportation projects.

      He said lawmakers and the governor should try to put such a bond on
      the June 6 primary election ballot instead of waiting until November.
      If they make that their goal, they would have to act by early
      February.
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