GF&A Committee: “No” to “No Blank Checks”
Government Finance & Administration Committee Recommends Opposition to“No Blank Checks” 2016 November Ballot Initiative
May 20, 2016
The Government Finance and Administration (GFA) Committee on Thursday voted to oppose the “No Blank Checks” Revenue Bond Approval, a proposed constitutional initiative that has qualified to appear on the 2016 November ballot.
In summary, the initiative would require statewide voter approval for the state to issue revenue bonds exceeding $2 billion for any single project that are financed, owned, operated or managed by the state or any joint agency created by or including the state. As counties are aware, unlike general obligation bonds, revenue bonds are not currently subject to voter approval requirements; they can be approved with an identified and designated revenue source that will be used to repay investors.
The $2 billion threshold would be adjusted annually to reflect inflation (determined by the Consumer Price Index). Voter approval must be achieved at a “statewide election” which could be interpreted to mean the vote could be held during a primary, general or special election. Additionally, the initiative would prohibit the division of projects into multiple separate projects to avoid the voter approval requirement.
The Legislative Analyst’s Office, in its fiscal analysis of the initiative, stated that the fiscal effect on state and local governments is unknown and would vary by project. CSAC staff has noted that since the measure’s definition of impacted projects leads us to believe that counties that have entered into a JPA with the state or are part of a state-created JPA would be subject to the revenue bond voter-approval requirements, counties could experience impacts associated with the passage of this initiative. Staff also noted concerns regarding undefined terms within the initiative, specifically “revenue bond” and “project.”
Following arguments by both the proponents (Kurt Oneto, Partner, Nielsen Merksamer Parrinello Gross & Leoni, LLP) and opponents (Brandon Castillo, Partner, Bicker, Castillo & Fairbanks) and discussion by the GFA Committee, the Committee voted to recommend a position of “Oppose” to the CSAC Executive Committee, which will either approve or reject that recommendation at its next meeting in August. From there, the Executive Committee will recommend a position to the CSAC Board of Directors, which will review that recommendation in September and approve a CSAC position.