#181 Passenger Rail And Clean Air Bond Act of 1994.

by Mary Beth Barber
Copyright 1994, California Journal

$1 billion legislative bond act that provides funds for acquisition of
rights of way, capital expenditures and acquisitions of rolling stock for
intercity rail, commuter rail, and rail transit programs. Background: In
1989, transit organizations and legislators agreed on a 10 year, $60 billion
mass transit program. Approximately $18 billion was to be provided from state
resources for capital outlay, and the rest from the federal and local
governments. The first parts of the state program included two bond measures
and a permanent gasoline tax increase Propositions 108, 111 and 116 and
were approved by a slim margin in 1990. Two subsequent, $1 billion bond
proposals, one in 1992 and the other in 1994, were placed on the ballot by
the Legislature. The 1992 proposal, Proposition 156, failed. Proposition 181
is the 1994 $1 billion bond proposal.

Proposal: This measure allows the state to sell $1 billion in general
obligation bonds with maturity of up to 20 years in order to provide funds
for rail capital outlay. Three types of rail service would benefit:
intercity rail between cities in California and other parts of the country
(for instance, Amtrak); commuter rail service from regional cities to urban
centers during heavy commute hours (San Francisco's "Caltrain" and Los
Angeles' Metro Link); and urban rail transit that provides regular service
throughout the day within an urban or metropolitan area (San Francisco Bay
Area Rapid Transit BART and the Los Angeles Metro Red and Blue Lines).
General fund revenues would be used to pay interest on the bonds, estimated
to be at least $630 million if bonds are sold at an interest rate of 6
percent. Rates may be higher, however, in light of the recent downgrading of
California's bond credit rating. Future rail operating costs of proposed rail
projects are unknown, but are expected to potentially be in the tens of
millions of dollars annually since fare revenues cover only a portion of
operating costs.

Arguments for: Proponents include Senate Transportation Committee
Chairman Quentin Kopp (I San Francisco) and Dean Dunphy, secretary for the
Business, Transportation and Housing Agency. They argue that the bond money
will expand rail service throughout the state, reduce traffic congestion,
improve air quality, provide jobs for California workers and help stimulate
the state's economy.

Arguments against: Opponents include state Senator Phil Wyman
(R Bakersfield); Republican Tom McClintock, a candidate for controller and
state Senator Marian Bergeson (R Newport Beach). They argue that rail
projects will be utilized by a relatively small portion of the population,
not enough people currently use existing rail to justify building more
projects and the money ought to be used to repair and maintain California
highways. Also, they argue that the state has a plethora of general
obligation bond debt and a low bond rating. They also note that some
members of the Legislature including the measure's author, Assemblyman Jim
Costa (D Fresno) pushed for its removal from the November 1994 ballot.


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