A measure on California ballot would make it easier for local governments to build critical infrastructure and affordable housing with borrowed money. Proposition 5 would reduce the percentage of votes needed for a bond to pass, from the current two-thirds supermajority to a 55% majority.

General obligation bonds allow local governments to finance large projects, such as roads, libraries, and parks. Over time, Californians pay them back by paying higher property taxes.

A number of bond measures on this year’s ballot could benefit immediately if Proposition 5 passes. Sacramento County has proposed a $415 million bond for fire station improvements. In San Francisco, a $390 million bond would finance hospital improvements and pedestrian safety projects. And in rural and underserved areas of the state, where community hospitals face imminent closure, a Proposition 5 victory could help them keep their doors open.

“It’s a no-brainer,” said one Assembly member. Cecilia Aguiar-Currythe Davis Democrat who wrote the legislation that brought the measure to voters. “Support. 5 gives local communities an option. Right now they have nothing in the toolbox other than two-thirds.”

She called the measure, which applies to special districts, cities and counties, “voluntary participation” allowing government officials to have flexibility in how they issue bond.

“They can either issue a two-thirds bond with no safeguards, or they can have a bond at a 55% threshold with safeguards – with accountability, transparency, citizen oversight, independent audits,” she said.

But opponents, including Susan Shelley, vice president of communications for the Howard Jarvis Taxpayers Association, said Proposition 5 would allow countless government entities to place bonds on the ballot, watering down their descriptions and downplaying their costs. Those costs, Shelley said, add up over time.

“Some advocates have said that this is not a tax increase, but that it is a driver of tax increases forever – and it would certainly cause property taxes to increase again and again and again. people would start losing their homes if that happened,” she said. said.

Darien Shanske, a law professor at UC Davis, said the idea that the bonds would push someone into insolvency is “very, very unlikely.”

“Our standard as a democratic society is that every vote is equal,” Shanske said. “A qualified majority rule is a departure from this norm. This allows a third of voters to block what a large majority would like to do.”

Voters are divided on Proposition 5with 48% saying they would approve of the measure, according to a Public Policy Institute of California poll.

This measure is one of the most expensive on the ballot. Opponents, including the California Chamber of Commerce and the National Federation of Independent Business, have raised about $30 million. Supporters of Proposition 5, such as the pro-development group California YIMBY and the labor organization California State Building and Construction Trades Council, have raised about $5 million.

California Constitution Restricts Borrowing

The requirement of a two-thirds vote to incur local debt was codified in the 1879 California Constitution for local government entities and school boards. Nearly a century later, voters passed historic Proposition 13, which limited property tax assessments and further limited government spending.

“We’re voting on (the bonds) in the constitution as a political issue, really, because it’s a bond for future generations,” said Michael Coleman, a California local government finance expert who consults on cities. “Do you want to enter into this contract that commits future generations to pay? But future generations will also benefit from these public improvements.

Shanske describes it another way: A community passes on a bond to build a new bridge. Over several generations, people have the opportunity to benefit from the bridge and pay for it through taxes or tolls.

“But the actual amount of a large project spread across an entire community spread over 30 years is usually quite small,” he said. “The idea that local politicians and voters would deliberately overtax their property tax base is rather unlikely, especially since they would also need the approval of outside investors. »

Shelley, of the taxpayers’ association, said rising bond fees can ripple through the economy and affect many people.

“You would see those higher taxes trickle down in the form of higher rents, higher consumer prices, even a small donut shop in a strip mall will have a higher operating cost because the landlord will pass on those property taxes higher directly on the lease,” she said.

Californians have already made an exception once, voting in 2000 to amend the constitution on school requirements, lowering the electorate threshold to 55 percent.

“It really opened the door and made it much easier for schools to adopt these measures.” And that’s essentially what Proposition 5 would do: bring cities, counties and special districts up to the same level of capacity,” Coleman said.

Coleman tracks general bond votes for his work advising California cities. According to him, about half of the general obligations are accepted. Of those who fail, about half get more than 55 percent of the vote but fall short of a two-thirds margin. If Proposition 5 passes, he expects a 70 to 80 percent adoption rate for general obligation requirements.

“There’s a lot of need,” Coleman said. “I think we’ll see more local governments saying, ‘Hey, now there’s a real chance that we can pass this measure – that the will of the community can be achieved through the ballot box.’ »

California Community Hospitals Request Earthquake Bonds

Over the years, many housing and infrastructure bonds have failed by small margins. Those campaigning for Prop. 5 referred to a few near misses. In 2023, a fire guarantee in Santa Cruz County Failed despite having obtained 66% of the votes. A 2022 Berkeley Affordable Housing Bond failed with 59% of the votes. In Whittier, a 2017 library bond failed with 66%.

These failures also include attempts by the Antelope Valley Health District, which tried and failed three times to issue a bond for its community hospital north of Los Angeles, according to the Association of California Healthcare Districts. In 2022, he failed with 57% of the votes.

The district is one of 77 health care districts, a type of “special district,” across California. They were established in the 1940s to bring essential services such as hospitals, ambulances and skilled nursing facilities to rural and underserved communities.

The Beach Cities Health District medical complex in Redondo Beach on October 27, 2024. Photo by Jules Hotz for CalMatters

“The difficulty, however, is that because they are community-owned and they are public entities, they are very limited in how they can finance large-scale, or even medium-scale, infrastructure projects on a small scale,” said Sarah Bridge, vice president of the project. president of advocacy and strategy at the Association of California Healthcare Districts. “We have very small margins.”

The 33 health districts that operate community hospitals fall under the state mandate of renovate their buildings to protect them against earthquakes by 2035. But so far, the Antelope Valley Health District and many others are still scrambling to secure the funds needed to make these changes. If they do not comply with the state mandate, they will be forced to close.

At least two health care districts have bonds on the November ballot, including one in Redondo Beach.

From his office window, Tom Bakaly, executive director of the Beach Cities Health District, looks out at a sea of ​​asphalt. But that would change if voters in three Los Angeles cities approve $30 million bondat an estimated cost of $3 per $100,000 of assessed value to property owners.

The asphalt would transform into two acres of open space for community health and wellness programs, such as yoga and Zumba. In an adjacent corner of the health campus, a youth mental health facility, which has received nearly 9,000 visits over the past two years, would be expanded. And the 1960 hospital would be demolished due to seismic issues.

The Beach Cities Health District administrative offices and the Shirley Rogers Student Services Center in Redondo Beach on October 27, 2024. Photo by Jules Hotz for CalMatters

“The vision is to create a place where people can come and feel good,” Bakaly said. “I think it’s a great opportunity for voters to decide what they want.”

In the small coastal town of Cambria, the city’s Community Health District has proposed a $5.9 million investment deposit to build an ambulance station.

“We consider (our ambulances) our lifeline,” said Cambria Community Healthcare District board member Laurie Mileur.

She said the ambulance team operates in a 70-year-old building that is not designed for 24-hour use. The new building would include an ambulance garage, decontamination space and more storage .

According to Mileur, the deposit would cost homeowners on average about $50 per year.

“That’s one cup of coffee a month,” she says. “We believe it is time for the community to step up and share this commitment to our service.”

This is their second attempt. Two years ago, the health district’s bond for a new ambulance station failed 61.4 percent, a deficit of about 200 votes.

“For a small agency that doesn’t really have the cash reserves to fund infrastructure, we’re really relying on bonds. And setting such a high threshold makes things very difficult,” she said. “We are convinced that we will again exceed 60%. It’s a question of whether or not we can reach 66.7%. It would be heartbreaking if we lost by one vote.”

###

Cayla Mihalovich is a California Local News Fellow.

CalMatters.org is a nonpartisan, nonprofit media company explaining California politics and politics.