LOS ANGELES — An initiative proposed for California's November 2016 ballot could slow major infrastructure projects by requiring a referendum to authorize state revenue bonds.
"The measure could create new hurdles for large projects," said Stephen Walsh, a Fitch analyst. "It is not to say projects would not get done, but it adds time and expense when you have an additional round of voter approval required."
The "No Blank Checks" campaign seeks a
Dean Cortopassi, a wealthy Stockton farmer, who ran ads last year decrying the state's debt level, spent $4 million to gather the 585,000 signatures needed. It qualified for the ballot on November 2.
The California constitution requires a majority vote of the people to authorize the issuance of state general obligation bonds, but revenue bonds, the target of the initiative, are authorized by the state legislature. Such bonds are repaid by revenue from the project that can include user fees, tolls, or rents.
Though there are few statewide projects that have used $2 billion or more in revenue bonds for funding, Walsh said it is not clear what kind of projects the initiative includes.
Utilities typically use money collected from ratepayers to fund projects issuing revenue bonds. The local utilities are expected to contribute part of the funding for large water projects, Walsh said.
The initiative takes aim at state projects, but if the court decides something counts as a state project, it could limit a utility's ability to issue revenue bonds to fund projects, he said.
There is "substantial uncertainty" regarding the fiscal impacts of the measure, according to a state Legislative Analyst's Office report, because it is unclear how the courts or government would interpret the measure and which projects would be included.
"It is also unclear how the measure's provision related to projects fully or partially funded, owned, or operated by the state would apply to certain local projects funded by revenue bonds," according to the
Though its authors say they are targeting projects that have larger significance, the LAO said it is not clear if local projects that receive state funding through a grant would be included.
The measure's proponents say it is not aimed at any specific project, but Cortopassi has come out in opposition to the California Water Fix, a project that would construct twin tunnels through California's Sacramento-San Joaquin Delta. That project would divert water from the Sacramento River, maximizing water exports from the San Francisco Bay Delta to the southwest San Joaquin Valley.
Agricultural and residential ratepayers would finance a large share of the $25 billion twin tunnels project if it passes regulatory approvals and garners political support, according to Fitch.
"He has come out as on record of having problems with the tunnels, but his main concern is large projects that add to the California ledger – and that voters have no say in that," said Kurt Oneto, attorney for the campaign and a partner with Nielsen, Merksamer, Parrinello, Gross & Leoni.
So far, the coalition supporting the initiative is comprised of small business organizations and taxpayer organizations, said Tom Ross, the effort's campaign manager.
The California Chamber of Commerce came out in opposition to the measure in July saying it would delay vital public works construction projects in California, including those involving water security and highway improvements. The building trade unions are also opposed.
"Clearly, we know we are going to be up against those big guys," Ross said of the opposition.
