To pay for major construction projects, such as roads, bridges, dams and prisons, the state often uses money collected from taxes. Another way the state pays for these projects is by selling a special kind of bond, called a “revenue” bond, to investors. Once a project is completed, fees, such as bridge tolls, are then used to pay back the bond. Under current law, the state may sell revenue bonds without voter approval.
State of CaliforniaProp. 53 — Public Vote on Revenue Bonds Initiative Constitutional Amendment - Majority Approval Required
State of California
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Requires statewide voter approval before any revenue bonds can be issued or sold by the state for certain projects if the bond amount exceeds $2 billion.
What is this proposal?
Easy Voter Guide — Summary for new and busy voters
Information provided by The League of Women Voters of California Education Fund
The way it is now
What if it passes?
Voters would have to approve revenue bonds that add up to more than $2 billion for a specific state project. Bonds sold at the local level, for example by cities, counties, or school districts, would not be affected.
Budget effect
The effect is hard to predict. There probably won’t be very many projects using revenue bonds that cost $2 billion or more. Very large construction projects could be affected, such as high-speed rail or regional water systems. The cost will depend on whether voters approve specific bonds and, if they don’t, whether the state decides to pay for the project in a different way.
People FOR say
- The state should be required to get voter approval before taking on expensive building projects.
- Prop 53 would give voters a voice and hold the state accountable for its spending.
People AGAINST say
- Having to wait for an election could make it hard for the state to respond to disasters and emergencies.
- Voters from across the state should not be able to decide what is best for a project that affects a local community.
Pros & Cons — Unbiased explanation with arguments for and against
Information provided by The League of Women Voters of California Education Fund
The Question
Should statewide voter approval be required before any revenue bonds can be issued or sold by the state for projects where the bond amount exceeds $2 billion?
The Situation
The state funds its operations and infrastructure by using annual tax revenues (“pay-as-you-go”), and by borrowing money through selling bonds to investors who, over time, are paid back with interest.
There are two main types of bonds: general obligation bonds and revenue bonds. The state repays its general obligation bonds out of the state General Fund. Revenue bonds are typically repaid using the revenue received from fees and other charges paid by the users of the projects (such as bridge tolls, rent, and utility rates). General obligation bonds require statewide voter approval before the state can issue them to pay for a project; revenue bonds, however, do not require statewide voter approval under existing state law.
The Proposal
Statewide voter approval would be required before revenue bonds could be issued or sold by the state for any projects costing over $2 billion. This law would apply to:
- all projects financed, owned, operated or managed by the state; and
- all projects financed, owned, operated, or managed by joint agencies formed between the state and local city or county governments, another state, or a federal government agency.
Dividing large projects into separate smaller projects in order to avoid the requirement of statewide voter approval would be prohibite
Fiscal effect
Unknown. Financial impact on state and local governments, both short-term and over time, would depend on factors such as: which projects are affected, the outcome of a statewide vote, and whether alternative projects or activities are implemented instead that could result in higher or lower costs compared to the original project.
Supporters say
Proposition 53 will:
- Ensure that voters directly choose whether or not the state can implement extremely large, expensive projects, such as the bullet train and the proposed tunnels under the Delta.
- Close the loophole in state law that requires voter approval for general obligation bonds but not billion-dollar revenue bonds.
- Protect California’s long-term fiscal health by discouraging spending that adds to the state’s debt load.
- Mandate transparency about the true costs of projects.
Opponents say
Proposition 53 will:
- Take away local control by requiring a statewide vote for many local projects, even when they are funded by local users and ratepayers.
- Prevent or delay repair and maintenance of the state’s water systems – the most pressing infrastructure issue the state currently faces.
- Prevent or delay repair and maintenance of infrastructure projects and systems after emergencies or natural disasters.
- Jeopardize California’s long-term economic health and safety due to deferring necessary infrastructure work.
Details — Official information
YES vote means
State revenue bonds totaling more than $2 billion for a project that is funded, owned, or managed by the state would require statewide voter approval.
NO vote means
State revenue bonds could continue to be used without voter approval.
Summary
Attorney General of California
- Requires statewide voter approval before any revenue bonds can be issued or sold by the state for certain projects if the bond amount exceeds $2 billion.
- Applies to any projects that are financed, owned, operated, or managed by the state, or by a joint agency formed between the state and a federal government agency, another state, and/or a local government.
- Prohibits dividing projects into multiple separate projects to avoid statewide voter approval requirement.
SUMMARY OF LEGISLATIVE ANALYST’S ESTIMATE OF NET STATE AND LOCAL GOVERNMENT FISCAL IMPACT:
- Fiscal impact on state and local governments is unknown and would depend on which projects are affected by the measure, whether they are approved by voters, and whether any alternative projects or activities implemented by government agencies have higher or lower costs than the original project proposal.
Background
Legislative Analyst's Office
State Pays for Infrastructure Projects Using Cash and Borrowing. The state builds various types of infrastructure projects like bridges, dams, prisons, and office buildings. In some cases, the state pays for projects on a pay-as-you-go basis using tax revenues received each year. In other cases, the state borrows money to pay for projects, especially for larger projects.
State Borrows Money Using Bonds. The main way the state borrows money is by selling bonds to investors. Over time, the state pays back these investors with interest. The state sells two main types of bonds: general obligation bonds and revenue bonds. The state repays general obligation bonds using the state General Fund, which is funded primarily by income and sales taxes. In contrast, the state usually repays revenue bonds using revenue from fees or other charges paid by the users of the project (such as from bridge tolls). Figure 1 shows how a state revenue bond generally works. (For more information on the state’s use of bonds, see the “Overview of State Bond Debt” later in this voter guide.)
Voter Approval Not Required for State Revenue Bonds. Under the California Constitution, state general obligation bonds need voter approval before the state can use them to pay for a project. State revenue bonds do not need voter approval under existing state law.
Impartial analysis / Proposal
Legislative Analyst's Office
Requires Voter Approval of Certain State Revenue Bonds. The measure requires statewide voter approval of revenue bonds that meet all of the following conditions:
- State Sells the Revenue Bonds. Revenue bonds are sold by the state, as well as certain associations that the state creates or in which the state is a member. The statewide voting requirement does not apply to bonds sold by cities, counties, schools, community colleges, and special districts.
- Bonds Sold for State Project. The revenue bonds are sold for a project that is funded, owned, operated, or managed by the state. The measure also contains provisions to prevent a single project from being separated into multiple projects to avoid voter approval.
- Bonds for the Project Exceed $2 Billion. The revenue bonds sold for a project total more than $2 billion. Under the measure, this amount would be adjusted every year for inflation.
Financial effect
Legislative Analyst's Office
The measure’s fiscal effects on state and local goveMeasure Likely to Cover Relatively Few Projectsrnments are unknown. It is unlikely there would be very many projects large enough to be affected by the measure’s requirement for voter approval. However, for those projects that are affected, the fiscal effects would depend on what actions the state, local governments, and voters take in response to this measure’s voting requirement.
Measure Likely to Cover Relatively Few Projects
Few Projects Cost Over $2 Billion. Relatively few state projects are likely to be large enough to meet the measure’s $2 billion requirement for voter approval. Two state projects that are over $2 billion and might use revenue bonds are:
(1) the California “WaterFix” project, which would build two tunnels to move water through the Sacramento-San Joaquin River Delta; and
(2) the California High-Speed Rail project. It is possible other large projects could be affected in the future, such as new bridges, dams, or highway toll roads.
Uncertain Which Projects Would Be Affected. While it is unlikely that very many projects would be large enough to be affected by the measure, there is some uncertainty regarding which projects would be affected. This is because the measure does not define a “project.” As a result, the courts and the state would have to make decisions about what they consider to be a single project. For example, in some cases a project could be narrowly defined as a single building (like a hospital). In other cases, a project could be more broadly defined as including multiple buildings in a larger complex (like a medical center). A broader definition could result in more projects meeting the $2 billion requirement, thus requiring voter approval.
How Government Agencies and Voters Respond Would Affect Costs
Government and Voters Could Take Different Actions.
When a proposed project meets this measure’s requirements for voter approval, governments and voters could respond in different ways. These responses, in turn, would determine the fiscal effects, if any, of this measure:
- On the one hand, if the state held an election and voters approved the project, the state could proceed with the project as planned using revenue bonds. As a result, there would be little fiscal effect from this measure.
- On the other hand, if voters rejected the project or the state chose not to hold an election as required by this measure, the state would not be able to use revenue bonds for the project. Without access to revenue bonds, the state and/or local governments might take other actions to meet the concerns the project was intended to address. They might (1) replace the large project with other smaller projects, (2) perform other activities that would reduce the need for the project, or (3) find other ways to pay for the project instead of using revenue bonds. These actions could result in either higher or lower net costs depending on the specific alternatives that governments pursued and how they compared to the original project proposal.
Some Actions Could Result in Higher Costs. Some types of government and voter response to this measure could result in higher costs for the state and local governments. For example, it could be more expensive in some cases for state and local governments to complete several smaller projects than it would have been for the state to build the original large project. This could happen if the large project was a more efficient way to meet the concerns that the project addressed.
The state also could fund a project in a different way than revenue bonds that might be more expensive. For example, the state could partner with a private company that would sell bonds to fund the project. The state would then have to pay back the private company. This could result in higher costs for the state because the private company would need to make a profit on the project. Also, the private company would probably pay higher interest rates than the state. The private company would likely pass these higher borrowing costs on to the state.
Some Actions Could Result in Lower Costs. Other types of responses could result in lower state and local costs. For example, state and local governments might find ways to make better use of existing infrastructure. For instance, local water agencies might implement water conservation measures, which could reduce the need to build new dams or other projects to provide more water. If existing infrastructure could meet the state’s needs adequately with these types of actions, there would be savings from not having to spend the money to build a new project.
The state also could fund a project in a way that might be cheaper than using revenue bonds. For example, the state could borrow money using general obligation bonds. While state general obligation bonds require voter approval, there would be some savings because they have lower interest rates than revenue bonds.
Published Arguments — Arguments for and against
Arguments FOR
Proposition 53, the Stop Blank Checks initiative, is simple. It only does two things:
(1) It requires California voter approval for STATE projects that would use over $2 billion in state revenue bonds.
(2) BEFORE THAT VOTE, it ensures full disclosure of the TOTAL COST of any state revenue bond project greater than $2 billion.
Currently, other state bonds for water, school and transportation projects require voter approval. But a loophole in state law allows politicians and unaccountable state agencies to circumvent a public vote and borrow BILLIONS in state revenue bond debt for massive state projects WITHOUT VOTER APPROVAL.
Proposition 53 will STOP POLITICIANS FROM ISSUING BLANK CHECK DEBT to complete billion dollar state boondoggles. Take California’s bullet train. They told us it would cost California taxpayers $10 billion. Now we know it’s going to cost more than $60 billion! Yet, you don’t have a right to vote on that huge increase!
Right now, there is NO VOTE BY THE LEGISLATURE OR THE PEOPLE required to issue these massive state mega-bonds. Unelected and unaccountable state bureaucrats have all the power and you have to pay through higher water rates or increased fees!
Proposition 53 says IF YOU HAVE TO PAY, YOU SHOULD HAVE A SAY.
Proposition 53 just GIVES YOU A VOICE, A VOTE, added TRANSPARENCY, and it HOLDS POLITICIANS ACCOUNTABLE. That’s it! Read the initiative for yourself.
Proposition 53 STOPS POLITICIANS FROM LYING about the real cost of state mega-projects. Willie Brown, once the state’s most powerful politician, wrote that lowballing initial budgets is commonplace with public projects. He said, “The idea is to get going. Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.”
Despite the scare tactics of the politicians, bureaucrats and corporations that feed off of the state’s public debt, Proposition 53 DOES NOT IMPACT LOCAL PROJECTS, the University of California, freeway construction or needed response after a natural disaster.
Proposition 53 SIMPLY APPLIES THE LONG-STANDING CONSTITUTIONAL PROTECTION against politicians imposing higher debt without voter approval to MASSIVE STATE REVENUE BONDS.
Proposition 53 just ENSURES FULL BUDGET DISCLOSURE AND VOTER APPROVAL of state revenue bonds for California’s mega-bucks projects that will affect future generations.
Join California’s leading state and local taxpayer organizations, small businesses, working families and nearly one million Californians who put Proposition 53 on the ballot. Vote YES on 53!
DINO CORTOPASSI, Retired farmer
JON COUPAL, President
Howard Jarvis Taxpayers Association
JOHN MCGINNESS, Elected Sheriff (Retired)
— Legislative Analysts Office
Arguments AGAINST
PROP. 53 ERODES LOCAL CONTROL AND CONTAINS NO EXEMPTION FOR EMERGENCIES/NATURAL DISASTERS
Prop. 53 is opposed by a broad, bipartisan coalition of organizations including California Professional Firefighters, California Chamber of Commerce, California Hospital Association, firefighters, paramedics, family farmers, environmentalists, nurses, law enforcement, and local governments because it would erode local control and jeopardize vital infrastructure improvements in communities across California.
ERODES LOCAL CONTROL BY REQUIRING STATEWIDE VOTE FOR SOME LOCAL PROJECTS
Groups representing California’s cities, counties and local water agencies, including League of California Cities and Association of California Water Agencies, all oppose Prop. 53. Under this measure, cities and towns that come together to form a joint powers agency or similar body with the state to build needed infrastructure could have to put their local project on a statewide ballot. That means voters in faraway regions could veto some local projects your community needs and supports—like water storage or bridge safety repairs—even though those voters don’t use or care about your local improvements.
NO EXEMPTION FOR EMERGENCIES OR NATURAL DISASTERS
California Professional Firefighters, representing 30,000 firefighters and paramedics, warns: “Prop. 53 irresponsibly fails to contain an exemption for natural disasters or major emergencies. That flaw could delay our state’s ability to rebuild critical infrastructure following earthquakes, wildfires, floods or other natural or man-made disasters.”
THREATENS WATER SUPPLY AND DROUGHT PREPAREDNESS
The Association of California Water Agencies says: “Prop. 53 could threaten a wide range of local water projects including storage, desalination, recycling and other vital projects to protect our water supply and access to clean, safe drinking water. Prop. 53 will definitely impede our ability to prepare for future droughts.”
JEOPARDIZES ABILITY TO REPAIR OUTDATED INFRASTRUCTURE
Our communities already suffer from a massive backlog of local infrastructure needs, including improving water supply and delivery, making safety repairs to bridges, overpasses and freeways, and renovating community hospitals to make them earthquake safe. Prop. 53 will jeopardize local communities’ ability to repair aging infrastructure. The California State Sheriffs’ Association says: “Reliable infrastructure is critical to public safety. This measure erodes local control and creates new hurdles that could block communities from upgrading critical infrastructure such as bridges, water systems and hospitals.”
FINANCED AND PROMOTED BY MULTI-MILLIONAIRE WITH A PERSONAL AGENDA
This measure is financed entirely by one multi-millionaire and his family, who are spending millions in an attempt to disrupt a single water infrastructure project. Irrespective of one’s position on that single project, his initiative has far-reaching, negative implications for other infrastructure projects throughout California. We cannot allow one multi-millionaire to abuse the initiative system to push his narrow personal agenda.
OPPOSED BY A BROAD BIPARTISAN COALITION:
- California Professional Firefighters
- California State Sheriffs’ Association
- Association of California Water Agencies
- League of California Cities
- California Hospital Association
- California Chamber of Commerce
Prop. 53 is a misguided measure that:
- Erodes local control by requiring a statewide vote on some local projects.
- Disrupts our ability to build critically needed water storage and supply.
- Contains no exemptions for emergencies/natural disasters.
www.NoProp53.com
LOU PAULSON, President
California Professional Firefighters
TIM QUINN, Executive Director
Association of California Water Agencies
MARK GHILARDUCCI, Director
California Office of Emergency Services
— Legislative Analysts Office
Replies to Arguments FOR
Prop. 53 doesn’t give you a say. Quite the opposite. Prop. 53 erodes your voice and the voice of your community. Please read it for yourself.
PROP. 53 ERODES LOCAL CONTROL BY FORCING STATEWIDE VOTES ON SOME LOCAL PROJECTS
Local government groups representing California’s cities, counties and local water districts, including the League of California Cities and Association of California Water Agencies, oppose this measure, warning it could give voters in faraway regions the power to deny local projects your community needs.
PROP. 53 DOES NOT INCLUDE AN EXEMPTION FOR EMERGENCIES/DISASTERS
California Professional Firefighters warns Prop. 53’s failure to contain an exemption for emergencies “could delay our state’s ability to rebuild critical infrastructure following earthquakes, wildfires, floods or other natural disasters.”
PROP. 53 WOULD JEOPARDIZE MUCH NEEDED REPAIRS TO WATER SUPPLY, BRIDGES, AND OTHER CRITICAL INFRASTRUCTURE
Prop. 53 will jeopardize your community’s ability to fix aging infrastructure, including improving water supply, making bridge and freeway safety repairs, and renovating hospitals to make them earthquake safe.
PROP. 53 IS A SELF-INTEREST ABUSE OF THE INITIATIVE PROCESS
Prop. 53 is a multi-million dollar attempt to stop one single project. We cannot allow one well-financed individual to abuse the initiative process and jeopardize vital infrastructure and safety projects around the state.
PROP. 53 IS OPPOSED BY A BROAD, BIPARTISAN COALITION OF ORGANIZATIONS INCLUDING:
- California Professional Firefighters
- California State Sheriffs’ Association
- Association of California Water Agencies
- California Hospital Association
- League of California Cities
- Firefighters, paramedics, family farmers, environmentalists, nurses, cities, counties, local water districts, and law enforcement.
www.NoProp53.com
LOU PAULSON, President
California Professional Firefighters
KEITH DUNN, Executive Director
Self-Help Counties Coalition
SHERIFF DONNY YOUNGBLOOD, President
California State Sheriffs’ Association
— Legislative Analysts Office
Replies to Arguments AGAINST
Proposition 53 trusts voters. Proposition 53’s opponents are afraid of voters.
OPPONENTS INCLUDE SPECIAL INTERESTS WHO HAVE FOUGHT TAX REFORM FOR DECADES, EVEN PROPOSITION 13. They include insiders who profit from massive state revenue bond projects, and politicians and bureaucrats who don’t trust you to decide whether to approve boondoggles like the $64 billion bullet train and the $6 billion Bay Bridge fiasco that now requires $6 tolls.
IF TAXPAYERS HAVE TO PAY, THEY SHOULD HAVE A SAY! Prop. 53 holds politicians accountable by giving you a vote on state mega-projects paid for by state revenue bonds over $2 billion. Voters will have the right to decide, just as we do with all other kinds of state bonds. And Prop. 53 finally unmasks the true cost of all multibillion dollar state bonds.
PROP. 53 TRUSTS VOTERS to decide whether to approve the massive multibillion dollar increase in the bullet train’s price tag.
PROP. 53 TRUSTS VOTERS—California taxpayers—to decide by a simple majority whether to spend $17 billion to tunnel water under the Delta to Southern California.
PROP. 53 WOULD HAVE TRUSTED VOTERS to decide whether extravagant design changes on the Bay Bridge were worth $5 billion in cost overruns and outrageous tolls that working families can’t afford.
Prop. 53 clearly exempts local projects. Read it yourself at www.YESon53.com.
The Sacramento Bee said Prop. 53 won’t hurt disaster relief because “ . . . emergency repairs are traditionally paid for by the federal government or other sources—not revenue bonds.”
IF YOU TRUST TAXPAYERS AND VOTERS more than lobbyists, politicians and bureaucrats, VOTE YES ON PROPOSITION 53!
JON COUPAL, President
Howard Jarvis Taxpayers Association
KAREN MITCHOFF, Contra Costa County Supervisor
MAURY HANNIGAN, California Highway Patrol Commissioner (Retired
— Legislative Analysts Office
Read the proposed legislation
Who gave money?
Contributions
Yes on Prop. 53
Total money raised: $5,034,361
No on Prop. 53
Total money raised: $22,772,199
Below are the top 10 contributors that gave money to committees supporting or opposing the ballot measures.
Yes on Prop. 53
1
CORTOPASSI, DEAN A.
$3,534,331
2
CORTOPASSI, JOAN
$1,500,000
No on Prop. 53
1
Brown for Governor 2014
$4,107,500
2
California Democratic Party
$1,884,210
3
State Building & Construction Trades Council of California
$1,346,814
4
Doerr, III, L. John
$1,000,000
5
Laborers Pacific Southwest Regional Organizing Coalition
$800,000
6
Perenchio and affiliated entities, A. Jerrold
$500,000
6
San Manuel Band of Mission Indians
$500,000
6
San Pablo Lytton Casino
$500,000
7
International Union of Operating Engineers
$375,000
8
California Construction Industry Labor Management Cooperative Trust
$350,000
More information about contributions
Yes on Prop. 53
By State:
California 100.00%
By Size:
Large contributions (100.00%)
Small contributions (0.00%)
By Type:
From organizations (0.00%)
From individuals (100.00%)
No on Prop. 53
By State:
California 93.07%
District of Columbia 2.74%
New York 1.32%
Florida 0.83%
Other 2.03%
By Size:
Large contributions (100.00%)
Small contributions (0.00%)
By Type:
From organizations (86.52%)
From individuals (13.48%)
More information
News (4)
Proposition 53 Aims To Give Voters Say On Big Projects — October 14, 2016 Capital Public Radio
Election 2016 FAQ: Proposition 53, public vote on revenue bonds — October 3, 2016 California Counts
Elecciones en California: Proposición 53, detenga los cheques en blanco — August 28, 2016 La Opinion
Proposition 53: A battle over debt — July 19, 2016 Capitol Weekly
Opinions & Analysis (12)
Yes on Prop. 53
No on Prop. 53
Videos (3)
Educational
— October 18, 2016 The Rose Institute of State and Local Government at Claremont McKenna College
Educational
— October 22, 2016 Sacramento State University
Sacramento State College’s Project for an Informed Electorate provides non-partisan videos on California’s ballot Propositions. Each video includes an appearance by a representative from the California Legislative Analyst’s Office (LAO). The LAO writes the state’s impartial analysis on each Proposition.
Educational
— October 6, 2016 KCET
Additional Resources (1)
More Nonpartisan Resources
Ballot.fyi Proposition 53 Overview — Ballot.fyi
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Who supports or opposes this measure?
Yes on Prop. 53
Organizations (7)
Elected & Appointed Officials (2)
No on Prop. 53
