Legislators, Deukmejian Make Little Progress on Bond Package

SACRAMENTO —  Legislative leaders, after a face-to-face meeting with Gov. George Deukmejian, reported little progress Thursday in efforts to reach agreement on the governor’s plan to present voters this year with a record $4.5-billion bond financing package for roads, schools, prisons and environmental programs.

Conflicts have developed over minority contracting, the size of the overall bond package and the desire of Democratic legislators that the Republican governor go along with putting their own bond proposals on the ballot.

“We are still just talking about the overall amount. It’s way above what anybody thinks is rational,” said Assembly Republican Leader Pat Nolan (R-Glendale). “Everybody has a different idea of what should be in there.”

Other lawmakers said one of the issues that has held up approval of the package is the governor’s insistence that a $1-billion transportation bond measure be financed with general state tax revenues rather than using the traditional highway funding mechanism of gasoline taxes and user fees.

Democrats in the Assembly are pushing a rival $3.3-billion measure that would pay off the bonds with user fees and tax revenues.

Agreement must come soon in order to get at least some of the measures on the June primary ballot. Already, the legislators have missed two deadlines set by the secretary of state to get the measures on the ballot.

Aside from dealing with the magnitude of the dollars involved, the political leaders are trying to work their way past the emotional issue of minority contracting.

Assembly Democrats are insisting that the bond agreement include a provision requiring that 20% or more of the legal and financial work go to minority-owned firms.

Deukmejian, in agreeing to a bond proposal last year that was part of the state’s unsuccessful bid to win a federal atom smasher project, went along with goals of giving 15% of the business to firms owned by minorities and 5% to operations headed by women.

But the governor made it clear then that he was agreeing to the proposal only as it related to that single bond proposal. So far, he has not agreed to the blanket policy directive for all bond issues that Assembly Democrats want.

Assembly Speaker Willie Brown (D-San Francisco), who is pressing hardest for the minority contracting provision, left the meeting saying he will try to draft legislation that will satisfy any objections.

One concern raised in the past is a fear that Wall Street bond underwriters might balk if the provision is too legally restrictive. There have also been grumblings that since there are so few firms owned by minorities and women that dummy operations would be set up just to take advantage of the minority contracting requirements.

The Speaker, who is black, was asked about a published report suggesting that he might someday be hired as a bond counsel under the minority hiring provision. He is listed as a bond counsel in the Bond Buyer’s Directory of Municipal Bond Dealers, the “red book” that some consider the bible of the industry.

Questioned about the issue Thursday, Brown called suggestions that he might personally benefit “ridiculous.”

The biggest problem appears to be the size of the governor’s overall package. In his January budget proposal, Deukmejian outlined $3.9 billion in bond measures he wanted to present to voters, split between the June and November elections. Since then, he has added $850 million in prison bonds to the package and made other changes so that the total cost comes to about $4.5 billion.

But already, a $776-million park bond measure has qualified for the ballot.

And Democrats want a total of $1 billion added for bond measures they are pursuing to assist local agencies to make apartment buildings earthquake-safe, provide housing and shelter for the homeless, and construct and rebuild libraries.

Thus, with about $6 billion in proposals on the table and political leaders saying they will agree only to about $5 billion at the most, something has to give.

Sen. William Campbell (R-Hacienda Heights), a Senate negotiator who has been meeting privately with other legislators but did not attend the meeting with the governor, said: “The real question is how many bonds do we want to put on the ballot. We have never before had more than $1.8 billion on the ballot at one time. But now we are talking about trying to hold the line at $5 billion worth of bonds.”