The political arena in California heated up over the last week as Gov. Gerry Brown stepped up his campaign against Proposition 53, which will be on the Nov. 8 ballot. Dean Cortopassi, a wealthy Central Valley farmer and tomato cannery owner, contends that proposition 53 is necessary because politicians refuse to either fully disclose or accept the long-term cost of billions of dollars in local and state government borrowing.
This proposition would require any revenue bond — a kind of debt that is paid back over time through revenue generated by the project rather than taxpayer dollars — of $2 billion or more to be approved by California voters. Used to finance building, dams, and infrastructure projects like the High-Speed Rail project, revenue bonds are generally designed with the state government assuming a role somewhat akin to a broker.
Cortopassi argues that Proposition 53 is the next step toward increased transparency, by expanding the number of bond offerings that are contingent on voter approval. The proposition would create a new mandate in the state’s Constitution. The proposed $2-billion threshold would be adjusted for future inflation.
If passed, it’s possible that the California’s High-Speed Rail project will be put up for another vote. A series of statewide public polls have showed the train project has lost significant support since 2008, when voters approved general obligation bonds as seed money. The initiative would allow the public not to provide additional funding in the wake of the rail’s delays, overrun costs, and questionable revenue estimations. The entire project could be stopped dead in it’s tracks and would have to look for alternative sources of funding.
To fight funding issues, the California High-Speed Rail Authority has told its design engineers that the future system will have shorter trains and smaller station platforms, reducing the capacity of individual trains by 50% and potentially the capacity of the entire Los Angeles-to-San Francisco route. This is the second time that operating parameters have been reduced this year.
Opponents of Proposition 53 argue that the proposition could stall or even squelch other large infrastructure projects like Governor Brown’s proposed Delta Tunnels project. Critics say that Proposition 53 is an indirect way of stopping the high-speed train system and the sweeping proposal to build twin underground tunnels to transport water through the Sacramento-San Joaquin River Delta region.
However, Cortopassi says it’s about the state’s debt. He calls revenue bond debt “cockroach debt because it grows in the dark,” as quoted in the Los Angeles Times.
If you think your property or business may be taken for the high-speed rail project or any other project, you can learn more about your options by giving us a call at (866) EM-DOMAIN.