Proposition 53: A Win For Voters
Of all the initiatives crowding California’s dense ballot in 2016, Proposition 53 may be the most straightforward – and the biggest win for taxpayers. It’s a simple idea, but effective. Prop. 53 does two things:
- Requires a public vote on state mega-projects costing over $2 billion in state revenue bonds
- Ensures full-disclosure of the total cost of a project before they’re brought to a public vote
But what’s a revenue bond? How is that different from, say, any other type of bond? And what the heck is a bond, anyway? I’m so very glad you asked.
Bonds are loans used for specific projects – in this case, construction of large infrastructure projects. They are debts accrued by the state, and paid back with interest over a fixed period of time to the creditor. California uses two types of bonds to build big public works projects: general obligation (GO) bonds, and revenue bonds. The difference is simple: GO bonds are paid back by the state using existing revenue sources – such as income taxes, property taxes, etc. from the General Fund. Revenue bonds, however, are paid off using a specified revenue stream from the project itself – think tolls on bridges or tickets for high speed rail. The cost of building these projects largely falls on the people actually using them – as opposed to everyone living in a city, county, or the state.
But who votes on revenue bonds? Not the Legislature. In fact, there isn’t even a public vote required to issue billions in state revenue bonds. An army of state-appointed bureaucrats have the power to issue billions in state revenue bonds that we have to pay. Because they are appointed, not elected, there is no voter recourse when they play fast and loose with these bonds. In contrast, GO bonds have one critical safeguard against these overzealous spenders: they require statewide voter approval.
The goal of Prop. 53 is to bring transparency and accountability to the system by extending the power to approve state revenue bonds to the voters.
Right now, unaccountable bureaucrats are easily influenced by the special interests who financially benefit from multibillion dollar megaprojects. That’s why construction unions are pouring millions into stopping Prop. 53.
Voter approval is only required for GO bonds; revenue bonds, on the other hand, are solely in the hands of state bureaucrats.
But surely the politicians and special interests in Sacramento wouldn’t abuse such power, right? Not the case.
Two esteemed columnists from the Sacramento Bee, Dan Morain and Dan Walters, both noted that politicians are increasingly using the revenue bond loophole to fund projects that aren’t popular with the voters.
Perhaps the most egregious example is the high-speed rail. In 2008, voters approved nearly $10 billion in GO bonds via Prop. 1A for the bullet train boondoggle. They were told the budget amounted to $33 billion. Eight years later, after numerous delays and altered plans, the cost has risen to over $60 billion. Adding to the problem, politicians plan on abusing the revenue bond loophole to make up the cost difference – either through cap-and-trade revenue or with inflated ticket prices.
Proposition 53 simply extends that voter approval requirement to revenue bonds costing over $2 billion. It’s that simple. It only applies to a handful of state mega-projects that cost over $2 billion in state revenue bonds. With this much money on the line, we deserve a voice in the process.
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