Prop 2, while being advertised as a rainy day fund on TV, is actually a complicated formula that prioritizes debt payback. Gov. Brown and the measure’s other backers have said that by speeding up debt payback, it will reduce debt service and free up money in the long-term for investments.

If only that were true.

If the last few decades of California history are any guide, Prop 2 will be just another budget measure that created incentives for more debt.

How is that possible? Because of the following dynamic: as the California budget has been strangled and chained increasingly under various budget restrictions and formulas like Prop 2, local governments and interest groups, searching for ways to fund starved priorities, have turned more and more to bonds. Put it another way: the more you clamp down on spending, and take money that could be used to restore fundamental programs for reserves and debt payoffs, the more you force people to look at borrowing.

It’s an important point lost in the total civic and journalistic void around Prop 2 and Gov. Brown’s austerity approach to budgeting. The “Wall of Debt” Gov Brown likes to talk about is not the product of political overspending. It’s the product of scarcity. Since it’s so hard to raise taxes (in part because of rules and in part because of politicians like Brown and Gov. Schwarzenegger who pose as fiscally responsible and skeptical of taxes), borrowing has looked attractive. The state itself has led the way in borrowing, both by going to voters and by borrowing from its hundreds of special funds. Local governments also have embraced borrowing in a big way to come jup with money.

You’re seeing the dynamic again this year. School districts, having been starved of funds for years (and used as a source of borrowing by the starved state, I might add, via deferrals), are desperate to get the money it takes to educate. Despite an increase in state spending, California still lags. The result: a record number of school bond measures on local ballots.

Prop 2, of course, represents a Sacramento mentality; if we decree here that we’ll have reserves (albeit a very limited one) and will pay back debt, everyone will follow. Earth to Sacramento and Prop 2: just because you think there’s enough money for public services that have been starved for decades doesn’t mean that there’s actually enough.

Needs are what they are. And Sacramento’s favored whips and chains usually have nothing to do with needs; Prop 2’s formula is all about budget funds and tax revenues, not what the public needs, just as Prop 98’s formula is all about economic and budget data, not the state’s educational needs. (Prop 13 is also a tax limitation formula that undergirds so many other formulas). Even worse, Prop 2 limits the reserves of school districts; that’s another reason why districts, instead of saving to pay for needs, may be more inclined to borrow.

The ads say Prop 2 will save money. But debt is a costly way to pay for things, Prop 2, which creates incentives for new debt, will almost certainly do exactly the opposite of what its backers promise.