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Decision '94 / SPECIAL GUIDE TO CALIFORNIA'S ELECTIONS : Propositions : 181: Bonds for Rail and Air Projects : WHAT IT IS

October 30, 1994

An outgrowth of the movement to reduce pollution and congestion by enticing more motorists to take mass transit, this proposal would authorize the sale of $1 billion in bonds to finance expanded rail services for California. It does not stipulate specific projects to be financed and in fact would permit the state broad discretion to determine how to spend the funds generated by the sale of the bonds, as long as the state uses the funds to expand and improve the state's passenger rail network, including intercity, commuter and urban services.

The measure requires at least 15% or $150 million of the funds to be spent on intercity rail services such as Amtrak's San Diegan, which runs between Santa Barbara/San Luis Obispo, Los Angeles and San Diego. Apart from that stipulation, the bond money could be used for purposes ranging from the acquisition of rights of way to the purchase of rolling stock, but could not be used to pay for day-to-day operations of transit systems.

The general obligation bond issue would be backed by the state, meaning that general fund revenues would be used to pay the principal and interest on the bond loan. Assuming the bonds are sold at a 6% interest rate, it would cost about $1.6 billion to pay them off over their 20-year life.

Proposition 181 is the third and last in a recent package of transportation bond issues totaling $3 billion to be presented to the voters for approval. The bond issues were part of a 10-year, multibillion-dollar plan conceived in 1989 to relieve congestion and upgrade California's transportation system. Part of the plan approved by voters included a 9-cents-per-gallon gasoline tax. The first bond issue passed in 1990, but the second issue fell victim in 1992 to the growing distaste among voters for incurring more debt.

If Proposition 181 does not pass, state officials will be required by a proposition previously approved by voters to make up for its loss with transportation dollars intended for highways. Its failure probably would cause the delay or cancellation of some road projects scheduled in the years ahead.

ARGUMENTS FOR

By providing the financing for projects designed to make California's rail service more efficient and reliable, Proposition 181 would help lure increasing numbers of motorists out of their automobiles and into mass transit. And fewer cars on the road mean less traffic congestion and better air quality.

At the same time, a massive rail construction program could create thousands of jobs and help stimulate the economy. An expanded and improved rail network is essential for economic growth, which is dependent on California having a fast and efficient transportation system. Failure to improve the transportation system would threaten California's economic vitality.

Nowhere was the value of a reliable, efficient rail system better demonstrated than in the 1989 Loma Prieta earthquake and the 1994 Northridge earthquake. After the collapse of vital highway bridges, it was the rail systems that helped keep the San Francisco and Los Angeles areas moving.

ARGUMENTS AGAINST

In this era of dwindling tax revenues, California can ill afford this spend now, pay later approach. At a time when California state government is awash in red ink, the voters should not be asked to approve another bond issue that increases the debt burden.

Even with the millions of dollars that have been invested in mass transit, only a relatively small portion of the population travels by rail. Most rail services cannot operate from fare box revenues alone; government invariably must bail them out.

WHO SUPPORTS IT

The Planning and Conservation League and a bipartisan group of state officials that includes Senate Transportation Committee Chairman Quentin L. Kopp (I-San Francisco), state Sen. Marian Bergeson (R-Newport Beach) and Gov. Pete Wilson's Secretary of Business, Transportation and Housing Dean R. Dunphy and Secretary for Environmental Protection James M. Strock.

WHO OPPOSES IT

State Sen. Phil Wyman (R-Tehachapi) and Tom McClintock, a taxpayer advocate, former assemblyman and candidate for state controller.

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