Proposition 5 explained: What California’s local bond ballot measure is asking you
Proposition 5 asks voters to lower the threshold required for local bond measures proposed by cities, counties and other districts throughout California.
Currently, most local bonds require a two-thirds vote to pass. If approved, Prop. 5 would require a vote of 55% for bonds to fund affordable housing and infrastructure projects.
The measure would apply to all future local bonds as well as those on the November 2024 ballot.
It was placed on the ballot by state lawmakers in 2023.
Prop. 5 itself is not a bond measure asking to borrow money. It aims to make it easier for local governments to do so in the future.
What a ‘yes’ vote means
A yes vote on Prop. 5 would lower the threshold for approving certain local bonds from 66.67% – or a two-thirds majority – to 55%.
The measure would only apply to local bonds to build affordable housing or public infrastructure.
The costs would likely be paid with higher property taxes, according to the California Legislative Analyst.
What a ‘no’ vote means
Voting no on Prop. 5 means there would be no changes to requirements for local special bonds and property taxes.
They would still be required to pass with a two-thirds supermajority vote.
Supporters of Prop. 5
Prop. 5 is supported by a slate of public unions – including nurses and firefighters – local governments, the League of Women Voters of California, and Habitat for Humanity California.
In official ballot arguments, supporters argue Proposition 5 would make it easier for communities to approve and build affordable housing and critical infrastructure projects.
“Without raising taxes, Prop. 5 shifts local public policy decisions and spending priorities away from state government, giving local voters and taxpayers more tools, more power and greater autonomy to address those issues in their own communities,” they wrote.
They also argue projects funded by local bonds are subject to “strict accountability requirements” including conflict of interest for local officials, independent citizen oversight, a clear list of projects to be funded and requirements that all funding must be spent to benefit the approving jurisdiction.
“Prop. 5 trusts local voters to prioritize what’s most important in their communities,” its supporters argue.
Meta CEO Mark Zuckerberg’s nonprofit advocacy group donated a total of $5 million to two committees supporting the yes campaign campaign. No other donations were reported as of early September.
Opponents of Prop. 5
Several business, real estate and taxpayer groups oppose Proposition 5, arguing it will lead to higher property taxes in California.
In official ballot arguments against the measure, the California Taxpayers Association, the California Hispanic Chambers of Commerce and the Women Veterans Alliance wrote that “bonds are not free money” – and taxpayers will be on the hook.
“Like a loan, mortgage or credit card debt, bonds have to be paid back – with interest. Interest charges turn a $20 billion bond into a $30 billion tax after principal and interest – and taxpayers pay those costs through higher property taxes,” they wrote.
“We already pay the highest income, sales and gas taxes in the country, and Prop. 5 will lead to even higher property taxes and higher costs for everyone,” their ballot arguments read.
The opponents also argue that Prop. 5 broadly defines “infrastructure” to apply to “just about anything the politicians and special interests want to fund on the backs of taxpayers.”
Under the ballot measure, public infrastructure bonds could include regular projects like roads, schools and wastewater facilities. It could also include projects related to expanding broadband internet, protecting against sea level rise, fire and emergency response equipment, and grants for home hardening against wildfires.
The opposition campaign has raised a total of about $1.8 million, mostly through committees managed by the Howard Jarvis Taxpayers Association and the California Business Roundtable.
Fiscal impacts of Prop. 5
If Prop. 5 passes, it would become easier to approve local bonds. As a result, communities may approve more borrowing projects and local governments may propose more.
According to the nonpartisan Legislative Analyst’s Office, “if local voters approve more bonds, local governments also would have more borrowing costs.
The LAO wrote those costs would be paid with higher property taxes.
“Recent local election results suggest that an additional 20 percent to 50 percent of local bond measures would have passed under Proposition 5 ‘s lower voter approval requirement,” the LAO wrote in its analysis of Prop. 5.
“Ultimately, any future bond approval would depend on decisions by local governments and voters,” the LAO wrote.
This story was originally published September 4, 2024 at 12:39 PM.
