Bonds are not free money. The question is: do voters know that when they vote on bonds? If you follow bond election campaigns you know that in most cases supporters of bonds don’t tell voters that state bonds obligate money from the General Fund or that local bonds raise taxes. It is time for transparency when it comes to the bonds on ballots.
When voters pass statewide bonds they are obligating the General Fund to cover the bond’s costs (once they are issued) before any other expenditures are made from the General Fund. When voters approve local general obligation bonds voters are creating a debt that taxpayers must cover through property tax increases.
But voters often are not aware supporting bonds add a burden to the General Fund or raise property taxes. Last Friday, Sacramento Bee columnist Dan Walters reported on recently proposed bonds in the legislature and what they might mean to the state budget. Before the November election I wrote that of the ballot label summaries in all 24 bonds on local ballots in Los Angeles County, none told the voters an affirmative vote would raise their property taxes.
At least recently with state bonds a notation in the title and summary informed voters the bond would be paid from the General Fund. That was not always the case.
The simple solution for local bonds is for the ballot summaries to carry notification that if a local bond passes, property taxes go up. Voters can then fairly weigh that fact against the benefits the new bonds may bring to a community.
There is an effort in the legislature to fix this problem.
AB 1194 would offer notice to voters that property tax increases are tied to their bond vote. Authored by Matt Dababneh (D-Encino), AB 1194 would add two sentences to the ballot label, to read: “The average assessed valuation for residential property in the area affected by the bond is _____. Based on this, your property taxes could increase by ___ if this bond is approved.” The numbers can easily be calculated by local officials.
In fact, the California Association of County Treasurers and Tax Collectors back the bill. In a letter of support, the association wrote the bill “will increase ballot measure transparency and ensure voters are receiving clear and concise information regarding the implications of local bond measures on their residential property.”
California has long recognized the need to be wary of bonds that add taxes to property. A two-thirds vote requirement to pass local general obligation bonds was added to the 1879 state constitution. The supermajority vote was put in place because property owners, in essence, were putting up their homes and property as collateral against payment for the bonds. Also, since the life of the bond runs 30 years or more, the bond vote is obligating future property owners to meet the payment obligation. In 2000, the vote requirement to pass school bonds was dropped to 55% when Proposition 39 passed.
Even with the two-thirds vote requirement it is important that voters get all information possible before they make a decision at the polls. Making voters aware that their vote for a bond would raise their property taxes is information all voters should be clear about.
Legislators who expound often about the need for transparency should have no trouble supporting this bill.