California’s Prop. 5 would lower local property tax approvals to 55%. Is that fair? | Opinion

Proposition 5 is arguably the most consequential measure on the ballot this November for California communities struggling to invest in their own futures.

It deserves a “Yes” vote so local general obligation bonds can pass by a 55% yes vote, rather than two-thirds as is needed now. But voters must remain vigilant against spending proposals that miss the mark.

Whether it’s a fire district needing to update its buildings, a wastewater plant that requires upgrades or a city seeking to advance affordable housing, local governments can find themselves with major capital expenditures and only so much funding. That is when careful borrowing can make sense by selling general obligation bonds. And that can only happen if voters say yes.

The age-old question in California is how high the bar should be to approve any new property taxes to pay off these bonds. The state requirement has been a two-thirds yes vote for general obligation bonds issued by local governments since the 1800s. Prop. 5 seeks to lower an approval threshold that hasn’t changed in 125 years. This is a big deal.

Any approval percentage has a somewhat arbitrary quality to it, and Prop. 5 is no exception. Currently, voters can approve a state obligation bond on the ballot by a mere 50%. For school districts, the threshold is 55%. Cities in California can pass a new sales tax for general municipal purposes by 50%. If it’s a “special” sales tax that tells voters exactly how the money will be spent, two-thirds have to go along.

Is there some magic to 55%? The vast majority (about 80% according to proposition backers) of local bonds in recent years that had majority voter support, but didn’t reach two-thirds, would have passed if the threshold was 55%. This understandably has tax groups worried and opposed to the measure.

Rejecting a tax doesn’t make a need disappear, and delays in necessary projects can cost taxpayers more money. Voters are capable of deciding how to make local decisions. And it’s getting harder to get two-thirds of Californians (or just about anywhere in this nation) to agree on anything.

Prop. 5 would apply to new affordable housing proposals and local infrastructure projects. Its definition of qualifying affordable housing costs is pretty extensive. A local bond proposal could include costs to underwrite assistance for first-time home buyers, which some local voters may consider inappropriate to pay for via long-term financing. Prop. 5’s definition of qualifying infrastructure projects is expansive as well. Qualifying needs include open space and broad-band internet improvements.

There are undoubtedly some local proposals that Prop. 5 would enable that would go down to resounding defeats in many communities. And that is precisely the point. Prop. 5 gives local governments more control to respond to that community’s investment preferences. And if a super-majority of 55% of voters says yes, the investment happens and property taxes go slightly up.

Local governments have fewer viable options to find the funds for legitimate needs. The Legislature under then-governor Jerry Brown got away with directing additional property taxes to cities for redevelopment (a tool that was frankly abused). And with sales taxes in many municipalities approaching 10%, this source is fast reaching its maximum potential. And sales taxes disproportionately impact lower-income Californians, making it a regressive way to raise money.

Because of the landmark Proposition 13 back in 1978, our property tax rates remain low in comparison to the rest of the nation. A 55% super-majority to increase a local property tax is a reasonable threshold. But there remains no substitute for informed and engaged voters to make the right investment decisions. Vote yes on Prop. 5, and watch the details of any future local bond measures closely.

This story was originally published September 28, 2024 at 5:00 AM.