Reading the Fine Print: How to Spot the Loopholes, Legal Doozies and Loose Phrasing in California's Ballot Initiatives
Inside Sacramento’s domed Capitol building, where 120 senators and Assembly members tussle over budgets, a bill rumbled through the gummed-up system one night last fall like a freight train. Assembly Bill 1053 passed the usual hurdles so fast the Sacramento press corps barely caught it.
The bill, approved long after midnight on September 12, 2007, was tailored to please wealthy developers in cities like Oakland and Los Angeles. In Los Angeles, it complemented the needs of reclusive Denver billionaire Philip Anschutz, owner of Anschutz Entertainment Group (AEG) and Staples Center.
Quickly signed by Governor Arnold Schwarzenegger after a short flurry of negative media stories, the law was written by then–Assembly Speaker Fabian Núñez and presented by state Senator Mark Ridley-Thomas, a recipient, California newspapers reported at the time, of more than $8,000 in campaign contributions from Anschutz and AEG. The law, for which AEG lobbied, aimed to allow AEG to benefit from $50 million from the Housing and Emergency Shelter Trust Fund Act of 2006 — approved by California voters to help shelter the homeless, battered women and the working poor.
The Núñez–Ridley-Thomas bill relaxed the rules on who could tap the Housing Trust Fund authored by fellow Democrat Don Perata. The change allowed Business Improvement Districts to also use the money. The Community Redevelopment Agency, which will actually disburse the money, acted as Anschutz’s cheerleader, describing the glitzy sidewalk upgrades and other fixes to the Figueroa Corridor — which feeds Staples Center — as a good use of $50 million in public funds.
Although the state so far has awarded only $30 million, and $8 million is being promised for a community center, job center and playing fields in the Corridor, the episode is still sending waves of disgust and irritation through the affordable housing community.
Paul Zimmerman, executive director of the Southern California Association of Non-profit Housing, says, “AEG rubs me rawer” than a recent move in City Hall to again tap the Housing Trust Fund, this time to use $30 million in a proposed Civic Center Park for a decorative bridge, a canopy of man-made shade, and other pricey features. The park would be sited next to the still-unbuilt Grand Avenue luxury hotel-and-condo complex.
But the fake shade and park decorations city leaders want to finance with housing bond money don’t bother Zimmerman as much as the Staples deal. “The fact that they used monies, hard-fought monies for low-income housing, essentially for ‘street-scaping’ and making Figueroa nicer, is a little hard to swallow,” he tells L.A. Weekly.
Yet both expenditures are perfectly legal, local twists in California’s high-stakes bond-measure game. Fred Silva, an expert on bond measures and a senior fellow at California Forward, a nonpartisan group trying to improve state governance, says the loopholes are always spelled out in the fine print — 61 pages of which are jammed in back of California’s November 4, 2008, Official Voter Information Guide. “It’s really a buyer-beware situation,” Silva says.
Proposition 6, involving criminal justice, for example, contains 14 pages of fine print, including an easily missed clause that expands the use of hearsay in criminal trials. Proposition 10, focused on alternative energy, provides a cool $50 million for such vague items as “grants for reasonable costs associated with test and certification.” Voters beware, because that sentence uses a long-abused loophole phrase: “associated with.”
Proposition 7, involving solar energy, contains unfathomable language, including this: “After construction has commenced, the corporation may apply to the commission for authorization to discontinue construction.” Prop. 7 also claims that California utilities now use 10 percent solar and clean energy, but requires utilities to use 20 percent — by 2010. That’s a doubling, in just a year, that USC media professor Jonathan Wilcox, who has worked on several bond measures, notes is “physically, technically and economically impossible.”
Wilcox calls the vast sums approved by voters in recent years, plus the measures on Nov. 4, “the subprime-ization of California government.” Californians have approved about 60 percent of all bond measures in the past decade. In the blowout year of 2005, voters passed 75 percent of the 75 bond measures — trillions in public spending.
Voters have piled up a mountain of long-term debt that will be paid off by their kids, and, increasingly, by voters’ grandkids. Several bond measures on Nov. 4 come with debt that won’t be paid off until 2038 — 30 years down the road. But in many cases, you must read the fine print to learn that.
Tim Hodson, executive director of the nonpartisan Center for California Studies at Sacramento State University, and a member of the California Fair Political Practices Commission, has developed Hodson’s Rules, including: “If it mandates legislative funding and gives no funding source, that’s a no.” (Prop. 6, for instance, mandates that the Legislature find another $365 million in its deficit-ridden budget, providing no other way to fund it.)
“Several of these things will be in court,” Hodson says, “I have no doubt.”
CALIFORNIA Voters who don’t read the fatVoter Information Guide to its end — and such voters are believed to number in the millions — can be sitting ducks for the specialty ghostwriters who come up with dense pages of wording that no layman wants to read.
That’s hardly an accident, says veteran ballot-measure warrior Ted Costa, of People’s Advocate in Sacramento. California ballot measures, Costa says, stop just short of lying. Instead, voters should be extremely wary of easily corruptible phrases that allow expenditures on “other projects” or “similar improvements” or “related issues.”
“My favorite is the ‘clean water’ bonds to ‘study’ the Bay Delta — and they are still studying,” Costa says. “A lot of these measures start out as worthy, and then a couple of state assemblymen get invited to attach crap, crap, crap — crap that’s counter to the intent.” Recalling Schwarzenegger’s 2005 promise to voters that $15 billion in bonds that year would end California’s chronic budget deficits, Costa says, “Arnold called it the ‘bond to end all bonds.’ Arnold lied — and you can quote me. I’m really pissed at him.”
This time, Costa points to Proposition 1A, the high-speed train measure, as one “doozy” that might even out-loophole the Housing Trust Fund. Predicts Costa: “Voters will never see a shovel of dirt turned.”
To be fair, the Housing Trust Fund is being used to finance several thousand affordable-housing apartment units and shelters in California. “We would not be building much of any affordable housing in California without these bond proceeds,” says the housing advocate.
But, as with other measures on the Nov. 4 ballot, the Housing Trust Fund’s quieter purpose was not to build the housing that dominates its ballot title. Before it became an omnibus package of purported social good, it was a classic Sacramento scheme to help enhance large private projects Senator Perata wanted — particularly in his own Oakland.
Perata had in mind a $1 billion bond measure to help developers defray the costs of big “in-fill” projects. It was made palatable by transforming it into a $2.85 billion trust fund jammed with capital help for low-income housing. Its fine print still contained hundreds of millions of dollars for “in fill,” $300 million for “transit-oriented development” including vague “other uses,” and $200 million for parks near “residential” — a line L.A. leaders are using to justify $30 million for that downtown park with fake shade.
One November 4 measure that sounds altruistic is Proposition 3. But it mostly benefits private, nonprofit* children’s hospitals that won a nearly identical modernization bond but spent the funds more quickly than promised. Prop. 3 is near the top of the ballot. Wilcox says that once voter sticker shock sets in, measures farther down the list get more scrutiny.
That could hurt Proposition 12, which is ironic. Providing for veteran’s home loans, it is the sole bond measure that will be paid back by its recipients, the veterans, not taxpayers.
With a probable recession unfolding, critics of ballot-box financing hope for a replay of the early 1990s — when voters rejected most measures. “California is mortgaging the grandkids otherwise,” says Wilcox, “apparently with no end in sight.”
*This paragraph was amended Nov. 3, 2008, to correct an error about the type of institutions that will benefit from the proposition: private, nonprofit hospitals.
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