On Independence Day, George Skeleton’s Los Angeles Times column argued for lowering the vote for local government infrastructure bonds from two-thirds to 55%. He linked such a move to American democracy and majority rule while declaring it a major change to Proposition 13. I disagree on all points.
The two-thirds vote for local general obligation bonds is not a product of Proposition 13. In 1879, a new California constitution was adopted which included the requirement for a two-thirds vote to pass local bonds.
Property owners through higher property taxes pay off local general obligation bonds. In effect, these property owners must put up their home or property as collateral in case there are insufficient funds to pay the debt to bondholders.
Edwin Godkin, a noted liberal of his day, who founded the Nation magazine, was a critic of the 1879 constitution. Writing about the document, Godkin said it was a terrible example of constitution writing; it contained some ugly provisions particularly about Chinese immigrants. However, Godkin said one of the few improvements in constitution writing in the hundred years since the U. S. constitution was written, was controls put on debt. He said debt become quite as dangerous to popular government as kings had been.
Skelton points out that state general obligation bonds require only a simple majority vote to pass. The difference is that state general obligation bonds are backed up by the general fund into which all taxpayers contribute. Local general obligation bonds are supported exclusively by property taxpayers.
In the case of local bonds, the two-thirds vote assures a community consensus. This is particularly true in low voter turnout elections. The recent Los Angeles mayoral election had a 23% turnout. If a bond appeared on the local ballot under the majority vote rule, 12% of the voters could raise property taxes and not all those voters would be property taxpayers.
As for the Declaration of Independence to which Skelton hitched his argument, the document’s main author also had grave concerns about government debt. Thomas Jefferson wrote, “…the principle of spending money to be paid by posterity, under the name of funding is but swindling futurity on a large scale.”
In an echo of the Jefferson sentiment, the United States Supreme Court recognized the rightness of requiring special protection for future taxpayers on long-term bond commitments. In a West Virginia case, Gordon v Lance in 1971, the court declared: “in voting to issue bonds voters are committing, in part, the credit of infants and of generations yet unborn, and some restriction on such commitment is not an unreasonable demand.”
There is no mention of majority rule in Jefferson’s Declaration. However, it does call for instituting a “new Government, laying its foundation on such principles and organizing its powers in such form, as to them (the people) shall seem most likely to effect their Safety and Happiness.”
If the people decide that in organizing powers for their safety and happiness to require a two-thirds vote for debt and taxes that falls within the Declaration’s meaning.
Even though the change of the law on infrastructure bonds would not technically be a change to Prop 13, both sides in the debate over the proposal are arguing that reducing the two-thirds vote is a move to amend Prop 13.
One reason is because there are other measures in the legislature that Skelton did not focus on that would also lower the two-thirds vote for specific local tax measures. These other proposals would be a change to Prop 13.
If the infrastructure bill passed, the rhetoric surrounding the move would claim a modification of Proposition 13. New efforts would follow. The strategy is to chip away at the iconic taxpayer protection measure a piece at a time.