California to Vote on Bonds for Quake Costs

Borrowing plan comes on top of $5 billion budget deficit, $20 billion anticrime bill

CAUGHT between earthquake rubble and soaring fix-it bills, recession-mired California has decided to borrow against its future.

With quake damages to pay and a fragile economy that election-year politicians say can't bear so much as the hint of a tax increase, state legislators this week opted to put $4 billion in bonds on a June 7 ballot .

``It was the lesser of two evils by just about everyone's estimate,'' says Ken Ackbarali, vice president for First Interstate Bank. Most of the money will make up for a shortfall in paying for an estimated $20 billion in quake damages. Up to now, federal and state emergency funds have contributed $9.5 billion and $1.9 billion, respectively, while insurance outlays have run $3 billion to $3.5 billion.

The state needs the funds not only to repair and retrofit damaged highway bridges in the south but to implement quake-proofing improvements statewide.

Estimating almost no chance of emerging from recession until 1995, Mr. Ackbarali says: ``The good news is that the spending from all this borrowed money will stimulate lots of economic activity. That will be a definite boon.''

The bond measure has caused heated debate and even aligned Democratic and Republican foes. It comes after passage of a ``three strikes, you're out'' anticrime bill that will cost $20 billion over three decades. The state also faces a possible current-year budget deficit of $5 billion.

``The state of California is a fiscal basket case without any plan in sight except to saddle our children and grandchildren with these costs,'' said state Sen. Tom Hayden (D), a candidate for governor.

A third way

``In this debate between bonds and taxes, no one seems to want to discuss the third alternative. Nobody wants to talk about cutting spending,'' said state Sen. Rob Hurt (R). The state, however, has already cut deeply into health, education, welfare, prisons, and police.

Several Democrats favored a temporary rise in the state sales tax of one-quarter of a cent, similar to measures enacted after an 1989 earthquake leveled homes and freeways in Santa Cruz and north to San Francisco. But Gov. Pete Wilson (R), whose ratings began to slide in his first year after he broke a campaign pledge to not raise taxes, cannot risk a similar slide now. Long tarred by the worst ratings of any modern California governor, Mr. Wilson has begun to regain popularity, bringing him closer in polls to challenger Kathleen Brown (D).

If approved, the $4 billion bond measure will include $2 billion for earthquake aid and seismic reinforcing, including $950 million for seismic reinforcing of highways and bridges and $1.05 billion for aid to uninsured homeowners and repairs to local infrastructure. The package also contains money for two nonquake items: $1 billion for public schools and $900 million for University of California campus construction.

Meanwhile, officials from the Federal Emergency Management Agency (FEMA), already under fire for foot-dragging in national disasters from Hurricane Andrew to the 1989 quake, are under pressure to move quickly here. Of $4.7 billion appropriated to FEMA, $2.8 billion has been earmarked for local governments to repair damaged structures.

More than 2,000 buildings have been tagged unsafe by local authorities, including the Los Angeles Coliseum, with a repair bill estimated at $35 million. Other damaged landmarks include the Van Nuys City Hall complex ($7 million in damage); the Greek Theater ($250,000); and the Barnsdall Park and Recreation Center ($2 million).

In recent hearings before the House Appropriations subcommittee in Washington, California Rep. Jerry Lewis (R) reiterated state fears over the danger of long-term rebuilding projects that ``fall through the cracks.''

FEMA troubles

FEMA allegedly has not paid 41 percent of the $431 million promised to the Bay area to repair public facilities, a figure FEMA disputes. But several public figures, including Valery Veronin, acting director of facilities for Stanford University, have lauded FEMA for taking steps to streamline itself. Stanford has been in a dispute with FEMA for four years.

``The institution has obviously learned from all its black eyes elsewhere,'' says Jack Kyser, chief economist for the Los Angeles Economic Development Corporation.

Meanwhile, after two months of surveys, Los Angeles city building inspectors this week sent out 265 ``order to comply'' notices to owners of badly damaged buildings. Message: Complete repairs in 30 days or face demolition.

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