Milken Institute Takes a look at CA Issues

Scott Lay
Publisher of The Nooner

Yesterday, elected, business, education and policy leaders gathered for the first California Policy Summit sponsored by Milken Institute, a nonpartisan, nonprofit think tank funded by investor Michael Milken. It was a thorough day on pressing issues facing the Golden State on issues such as the housing crisis, higher education degree access and completion to meet the workforce needs, workforce gender equity, and the state’s business climate.

The event was at the new Kimpton Sawyer Hotel in Downtown Commons development, adjacent to the Golden 1 Center, the relatively new home of the Sacramento Kings. The half-mile between the State Capitol and the summit and the invite-only nature of the event provided a real separation from the politics that will be prevalent through the end of the month, which is the end of the two-year legislative session.

Okay, outgoing state Treasurer John Chiang got some jabs in against the Trump Administration, but that was announced ahead of time in his press release for the event. Even among the politically mixed audience, let’s just say that there was little disagreement with the jabs following the President’s wildfire tweets this week.

Chiang was the first substantive speaker of the day, which was moderated by longtime GOP political operative, who is now a faculty member at USC and director of the Sacramento Bee‘s “Influencer Series.”

Chiang made a pitch for “Green Bonds,” which are state-backed bonds using general obligation bonds, lease-revenue bonds, or revenue bonds. General obligation (G.O.) bonds, backed by the state General Fund, require voter approval, while revenue bonds, backed by a revenue stream or savings that can be used for debt service do not.

To understand the difference, G.O. bond proceeds might be used for a forest rejuvenation if it leads to measurable reduction of the effects of emissions. There’s no revenue stream or savings, although it “greens” the state. Revenue bonds could be used for solar on public buildings, with the net reduction in electricity bills beyond the amortized cost of the panel installation and maintenance being the “revenue” stream that services the bond debt. A more straightforward revenue bond example would be paying for the installation of bike share racks up front, with a contractual agreement with the bikeshare company on a revenue share of user rental fees, with the state’s share used to service debt.

The advantage of G.O. bonds is that the bond purchasers are less interested in individual projects, but rather the state’s General Fund condition. With revenue bonds, bond purchasers likely would want to know the projects to be funded before the bond goes to market and not yield it to a bureacracy based on “qualifications” for a project. Anyway, I hope that is correct and makes sense.

Senate President Pro Tem Toni Atkins (D-San Diego) followed Chiang. Atkins began with comments on poverty and housing, borrowing from her history of growing up poor in Virginia in a home with no running water. Atkins proudly shared highlights of the 2018-19 State Budget, with a particular focus on funding for education, housing and wildfires. As she noted that the Legislature will tackle more than 1,000 bills over the next four weeks, there were noticeable groans in the audience–either from the workload or the content.

Following Atkins were panel discussions on the issues I listed above. Before the panel on housing–one of the best that also described why it is such an intractable problem, former Senate President Pro Tem and current Sacramento mayor Darrell Steinberg talked about what the city is doing on housing and several other issues. As we were the hotel that is part of the Downtown Commons project that includes the Kings arena, he talked about his legislative efforts that smoothed the environmental review process for the project. He also expressed regret that the accelerated timeline for project legal challenges was not broadened across more projects under CEQA.

However, his pride certainly shows as the project takes shape and notes that if the acceleration wasn’t provided, the project likely wouldn’t be this far along, as (paraphrasing) “billionaires who wanted to move the Kings to Seattle would still have it tied up in court.”

There were no elected Republicans as speakers or panelists. The Milken Institute is truly nonpartisan, so I don’t know if it was lack of invitations or declined ones.

The issues are on the table and solutions have been offered. The only question is whether attendees can walk that half-mile to the Capitol and bring them to fruition.

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