Bonds on the ballot: Will billions of dollars help California cope with climate change?
In SummaryCompeting plans to seek voters' approval for “climate resiliency” bonds emerge from three sides of state government: the Assembly, the Senate and the governor.
Given California’s international leadership in addressing climate change, it isn’t surprising that voters will be asked this November to approve billions of dollars in bonds to help the state become more resilient.
But why settle for one ballot proposal when you can have three?
Competing plans for “climate resiliency” bonds come from three sides of state government: the Assembly, the Senate and Gov. Gavin Newsom.
If any of these proposals are approved by voters in November, the money would be broadly spent, mostly to fund building and retrofitting projects and state grants to communities to prepare for the impacts of climate change.
That’s part of $12.5 billion for wide-ranging climate-change programs in the governor’s proposed budget.
It’s anyone’s guess which, if any, of the proposals will prevail, or how lawmakers will ultimately determine the key elements of what voters will see.
The only certainty is that the three proposals will generate a lot of questions.
What is climate resilience, anyway?
Climate scientists used to talk about “mitigation” — changing behavior and harnessing technology. But, with the world unable to put the brakes on greenhouse gas emissions, the current approach focuses on ‘resilience,’ devising strategies for coping with an unpredictable and dangerous new climate.
Resilience projects are aimed not so much at preventing sea level rise, wildfires, droughts and extreme heatwaves, but helping people and communities survive.
Nevertheless, this doesn’t mean the state has given up trying to reduce carbon emissions, said Kate Gordon, Senior Climate Advisor to Newsom.
“This is the opposite of throwing up our hands,” Gordon said.
“We need to find strategic places where infrastructure can be improved,” she said. “We need to reduce our climate risk, particularly among our more vulnerable communities. We are being proactive and thoughtful.”
The stakes are high. If greenhouse gas emissions continue to rise, by the end of this century, the average acres burned from wildfires would increase by 77 percent, losses could reach $18 billion from rising seas and heat-related health emergencies will increase dramatically, according to the state’s Climate Change Assessment.
What is the governor proposing?
Newsom is seeking $4.75 billion, the most of the three proposals.
He recommends spending 80 percent of the funding on projects that address immediate risks from floods, fires and drought. The rest of the money would tackle slower-moving, long-term risks from rising seas and extreme heat.
What clearly distinguishes Newsom’s plan is an emphasis on water — including groundwater management, flood control, reviving the Salton Sea and ensuring safe drinking water in communities around the state.
He would allocate as much as 60 percent of the bond money for water-related projects, particularly in the San Joaquin Valley, an oft-repeated priority for the governor.
“Low income communities around the state don’t have access to safe and affordable drinking water,” said Jared Blumenfeld, Secretary of the state Environmental Protection Agency. “Communities are being forgotten.”
Blumenfeld said the bond money would be used to help cities come up with matching money to access federal funds for improving water infrastructure. Those projects could include upgrading sewage systems, constructing water treatment plants and modernizing pipelines.
Newsom’s plan would allocate a half-billion dollars to harden infrastructure — making homes and buildings more able to withstand fire, in other words. One idea is to provide funds for fire-safe building materials and roofs.
He would spend another $250 million for forest clearing and fuels-reduction projects.
What are the Senate and Assembly proposing?
To begin with, the two bills’ authors have opted for an approach of using a voter-friendly name, akin to the “Citizens For a Better Tomorrow and Protection of Puppies Act.” In other words, a bill that sounds so wholesome that it would seem shameful to oppose.
Thus, there are two identically-titled bills: the Wildfire Prevention, Safe Drinking Water, Drought Preparation, and Flood Protection Bond Act of 2020, one authored by Assemblyman Eduardo Garcia, a Democrat from Coachella, and one by Sen. Ben Allen, a Democrat from Santa Monica.
Garcia’s legislation is being rewritten, and his staff declined to provide details. But it is expected to build on a previous proposal for a $3.9 billion bond that would put a premium on climate resilience projects in low-income communities, including expanding efforts to reduce pollutants that threaten public health.
Allen’s bill calls for a bond to raise $4.1 billion, which sets aside $1.6 billion for wildfires. Allen called the potential for climate change impacts to the state a “serious liability” and said he’s confident voters will want to do what it takes to respond.
“People recognize that they are already starting to see the costs associated with climate change, real dollars,” he said. “I think people who are paying attention understand this is a modest investment for the future.”
Those proposals are all different. How does this get resolved?
Negotiation, horse trading, deal-making, arguments, brinkmanship: The stock and trade of Sacramento lawmaking.
As they sit now, the proposals are just the opening gambit for their authors, who have laid out their priorities but expect to compromise and tailor their legislation to accommodate colleagues’ requests.
Resources Secretary Wade Crowfoot acknowledged that not all of the bond proposals are aligned. But he said that the existence of three robust plans signals the intention of all parties to reach some agreement.
“I’m encouraged by the collective commitment by the governor and the legislative to advance a resilience bond,” Crowfoot said. “I’ve been involved in climate stuff for 20 years, resilience has always a backburner issue. In my conversations with legislators, they understand the threats and importance of this.”
In any event, the bills must get through their houses of origin by the end of January in order to stay alive to face what are sure to be future legislative battles during the rest of the session.
It seems as if there’s always a bond measure on the ballot. What gives?
There is almost always a bond measure on a California ballot.
In addition to the scores of propositions that crowd the state ballot, there have been 37 bond measures before voters since 2000.
California voters approved $112 billion in general obligation bonds between 2000 and 2010.
But voters dug deep in 2018, approving the $4 billion California Drought, Water, Parks, Climate, Coastal Protection and Outdoor Access for All Act, the $3 billion Veterans and Affordable Housing Bond Act and the $1.5 billion Children’s Hospital Bond Act.
The spending spree has been such that the state still hasn’t doled out some $34 billion in recent bond money.
Why does all this cost so much and who pays for it?
It’s not remotely cheap to shore up — or relocate — an entire coastal city as sea level rises, for example. But some experts say the cost of that work would be overshadowed by repair or reconstruction costs after a disaster such as storm surge occurs.
The U.S. Environmental Protection Agency’s most recent assessment of California’s 20-year water infrastructure needs puts the price tag at $51 billion, to repair community water systems, ramp up storage and more closely monitor threats to clean residential water supplies.
Given the state’s climate to-do list, even billions in bond money won’t do much more than spackle over needed repairs and upgrading.
And, as per usual, California taxpayers ultimately pay for bonds.
Technically the state sells bonds to investors who often regard government bonds as a safe return. Then the state pays off the loan at a set interest rate, depending on its credit rating. California’s bond rating was upgraded last year by the firm Moody’s for the first time in five years.
But there’s more to it.
The state Legislative Analyst’s Office estimates that the cost of borrowing $1, adjusted for inflation over a 30-year repayment period, ultimately pencils out at $1.40.
And, if you look at state-issued bonds as debt, as many economists do, then taxpayers could eventually pay. It gets a bit dizzying to consider the amounts the state is on the hook for.
A sobering analysis from the state Legislative Analyst from last November estimates that the state’s annual debt service from the general fund will grow from $5.7 billion in 2019 to $6.4 billion in 2023‑24.
The report notes that the calculations do not include new bonds that might be authorized in the meantime, such as the $15 billion school bond on the March ballot.
State officials argue that dollars spent in preparation for climate change impacts are much less than the future price tag. But given the upfront costs, and so many pressing priorities, should the state nix this bond?
“Oh god no, we need the money for resiliency,” said Kathryn Phillips, the Sierra Club’s California Director.
“Climate change is gonna cost us a whole lot of money. But we can counter that by spending a lot of money now to make sure that we are able to adapt to the changes that are already happening. Or we can spend much, much more later. We are going to spend money either way.”