Business Rallying to Proposition 51

Joel Fox

Editor and Co-Publisher of Fox and Hounds Daily


California’s housing crisis is a major reason members of the business community are supporting the state school construction bond, Proposition 51. Passing a statewide bond puts pressure on the General Fund because state general obligation bonds have first call on state funds, however dealing with housing costs is an issue that troubles advocates and analysts across the political spectrum. Prop 51 would ease the costs of home building on one hand and could also relieve local property taxes, another addition to housing costs, on the other.

Much of the conversation on Proposition 51 centers around the need for school construction money to build new schools or fix up crumbling school structures that house millions of students. State money is used to match contributions made by local taxpayers to build and repair schools. If there is not enough money to accommodate school building, school boards look for other sources of revenue.

A principal revenue source comes from levying a fee on new housing projects. Those fees make it more expensive to build and the costs are passed on to homebuyers increasing an already expensive housing market. High on the list of concerns for companies and small businesses doing business in California is the cost of housing for employees. It’s hard to keep employees who can’t afford local housing or bring in employees from other states who see sticker shock when they look at California housing prices.

One remedy is to keep the fees down. It won’t solve the housing problem in California but if the bond fails it could add to the problem of housing costs.

That’s why a list of business organizations including the California Chamber of Commerce, California Business Roundtable, Bay Area Council and Los Angeles Chamber of Commerce are all on board in support of the initiative.

Governor Jerry Brown doesn’t like the idea. With an additional burden to the state budget in mind, he thinks the school funding responsibility belongs to local communities.

Local jurisdictions already carry a portion of the school construction costs when voters locally pass general obligation bonds to match the state money. Local G.O. bonds are paid with increases in property taxes.

If the state bond fails, the likelihood is there will be even higher local bonds to meet school construction needs. In turn, the property taxes required to pay those increased bonds will add to housing costs.

While the need to have safe schools is highlighted in the campaign to pass Proposition 51, the cost of housing is an important factor for business in rallying behind the measure.

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