Governor wins support for 57, 58
March 5, 2004
Mirroring the reluctant support voiced by politicians and newspaper editorials,
voters throughout the state on Super Tuesday lent their support to the propositions
Gov. Arnold Schwarzenegger declared will save California.
Propositions 57 and 58 both passed by wide margins.
I think its the best of a bad situation, said City of La
Verne Mayor Jon Blickenstaff. I dont like the idea of that big of
a bond to pay off debt, but I dont think we have a choice at this time.
Of the other two propositions facing California, Proposition 55 which
will float a bond for more than $12 billion to build and renovate facilities
from public kindergarten to universities barely slid by.
Proposition 56, designed to balance the budget with several novel approaches,
was criticized for lowering the votes needed for the legislature to pass budgetary
measures. The initiative died with two thirds of votes cast against it.
But most eyes are on Propositions 57 and 58, the fates of which are linked.
If one fails, they both fail.
Proposition 57 is an attempt to stop the budgetary bleeding. It authorizes
the State to issue up to $15 billion in bonds that would help California finance
its budget deficit.
To repay the bonds, the State will take a larger portion of local governments
sales tax revenue.
The State will cover this loss by increasing the citys cut of local
property tax. Then, to complete the circle, the State will reimburse schools
for their contributions to the local governments by tapping into the States
This debt juggling is referred to as the triple flip.
Together Proposition 57 and Proposition 58 will provide Californias
leaders the tools necessary to restore confidence in the financial management
of the State, said Dean Okimoto of the McGeorge School of Law at the University
Okimoto added, However, out-of-control borrowing has made California
the lowest credit rated state in the nation, which is on par with many Third
World countries. Moreover, Proposition 57 will plunge California $15 billion
deeper in debt, plus billions more in interest.
Assistant City Manager Bob Russi said the council took an action to support
propositions 57 and 58. Russi echoed Blickenstaffs assessment of the bond
City of La Verne Finance Officer Ron Clark is less enthusiastic. Im
a little skeptical of the whole thing, he said. Its a little
Clark said that one problem is that the City of La Verne receives sales tax
revenue monthly and will only receive the reimbursement funds on a semi-annual
to annual basis, which will definitely affect the City financially.
Were losing sales tax, Clark said. Are they going
to give us back what we lose? Somehow, were supposed to be made whole.
Proposition 58 is designed to balance General Fund budgets in the future.
The proposition also allows for midyear budget adjustments. This means the
Governor can halt any current legislative activity throughout the fiscal year
to declare a financial emergency and attempt to fix the problem.
It allows for a rainy day fund and also prohibits passing any further deficit
Its so they never have to do Proposition 57 again, Clark
Fallout from the passage of these measures reaches the pockets of University
of La Verne students receiving financial aid.
According to Leatha Webster, director of financial aid at ULV, although things
do not look good for the Cal Grant program, Propositions 57 and 58 could mitigate
It will be a dreary situation if these bonds pass or not, Webster
She said that the grants will be reduced from $9,708 to about $5,400 for new
and returning students at public institutions, such as California State or University
of California schools, but the impact at private schools will be less.
For private institutions, its just for new students, Webster
said. Continuing students have a leg up as it wont affect them
at least this upcoming year.
With the two propositions passed, she said there is some wiggle room that
could lead to awards being raised, but not back to their previous levels.
Because there is so much red ink, the Cal Grant program is going to
change either way, she said.