BILL ANALYSIS
ACA 5
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Date of Hearing: July 7, 2009
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Paul Fong, Chair
ACA 5 (Charles Calderon) - As Amended: June 16, 2009
AS PROPOSED TO BE AMENDED
SUBJECT : Initiatives: state general obligation bonds.
SUMMARY : Requires an initiative measure that would authorize
the issuance of state general obligation (GO) bonds to be
approved by at least 66 percent of the voters who vote on the
measure.
EXISTING LAW :
1)Allows electors to propose statutes and amendments to the
Constitution and to adopt or reject them through the
initiative process.
2)Requires any ballot measure that appears on the statewide
ballot to receive a majority of the votes cast on the measure
in order to be approved.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Amendments : Due to the fact that the committee
previously considered another proposal that would require
certain initiative bond measures to have a funding source and
that there is a proposal pending in the Senate that would
require all initiative measures that impose new state or local
costs to have a funding source, the author is proposing to
amend this measure to delete the similar provisions of this
measure that would require an initiative bond measure to have
a funding source. As a result, the only change to existing
law made by this measure would be to increase the vote
threshold for approving an initiative bond measure from a
majority to 66 percent. This analysis reflects those proposed
author's amendments.
2)Purpose of the Constitutional Amendment : According to the
author:
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ACA 5 is a measure that seeks to reform the initiative
process in California as it pertains to the issuance of
statewide [GO] bonds that qualify for the ballot via
signatures. The measure increases the threshold for voter
approval for these signature generated bond initiatives to
[66]% . . .
There are two ways to issue statewide [GO] bonds in
California:
1) A bond measure is approved by a 2/3 vote of both
legislative houses (subject to the legislative process) and
then goes to the ballot where it is subject to a vote of
the electorate, with a simple majority vote necessary for
approval.
2) A bond petition may be circulated by voters to qualify a
measure for the ballot, where it then appears at the next
election for approval by a simple majority.
The first method is the most common. It subjects the
measure to legislative vetting and providing a
constitutional check before it appears on the ballot.
The second method, while not as common, lacks the fiscal
and legislative oversight that is necessary when
considering measures that leave the state responsible for
long term debt. When a bond is considered by the
legislature, the long term costs and benefits are carefully
weighed as they must make considerations on the long term
debt service that goes with issuing the state's debt. This
simply does not occur when a bond qualifies via signatures.
Additionally, it takes away discretion from the
legislature by adding unanticipated fiscal pressure that
accompanies this un-vetted debt.
While there is no doubt that these bonds help to fund
important projects, there is a question as to whether
voters realize the full fiscal impact of approving these
bonds. As the state faces almost yearly fiscal crisis, the
legislature is left to deal with the consequences of the
voters' decisions at the ballot box. It is akin to a
college student running up the tab on their parents' credit
card, knowing that ultimately they are not responsible for
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having to pay down the debt. Adding the [66]% threshold to
these types of measures would have the same effect as the
2/3 vote of the legislature for these measures- it
emphasizes the gravity of incurring such large amounts of
long term debt.
3)Initiative Bond History : Since the creation of California's
initiative process in 1911, just 17 of the 331 initiative
measures that have appeared on the statewide ballot have
proposed to issue state GO bonds - about five percent. Of
those 17 initiatives, nine have been approved-a success rate
of slightly more than 50 percent. By comparison, about
one-third of statewide initiative measures that have appeared
on the ballot have been approved by voters. The following
table details the 17 initiative bond measures that have
appeared on the ballot since 1911.
--------------------------------------------------------
|Election|Prop. | Subject | Amount |Pass/Fa|
| | # | | | il |
|--------+------+--------------------+-----------+-------|
|Nov. | 11 |UC Construction |$1.8 | Pass |
|1914 | | |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 38 |Los Angeles State |$1.25 | Fail |
|1914 | |Building |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 9 |Highways |$40 | Pass |
|1920 | | |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 14 |Housing |$100 | Fail |
|1948 | | |million | |
|--------+------+--------------------+-----------+-------|
|Jun. | 70 |Parks |$776 | Pass |
|1988 | | |million | |
|--------+------+--------------------+-----------+-------|
|Jun. | 116 |Rail Transportation |$1.99 | Pass |
|1990 | | |billion | |
|--------+------+--------------------+-----------+-------|
|Nov. | 128 |Forestry |$300 | Fail |
|1990 | | |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 129 |Drug |$740 | Fail |
|1990 | |Enforcement/Prisons |million | |
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|--------+------+--------------------+-----------+-------|
|Nov. | 130 |Forest Acquisition |$742 | Fail |
|1990 | | |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 138 |Forests & Parks |$300 | Fail |
|1990 | | |million | |
|--------+------+--------------------+-----------+-------|
|Jun. | 180 |Parks |$1.998 | Fail |
|1994 | | |billion | |
|--------+------+--------------------+-----------+-------|
|Nov. | 50 |Water |$3.44 | Pass |
|2002 | | |billion | |
|--------+------+--------------------+-----------+-------|
|Nov. | 61 |Children's |$750 | Pass |
|2004 | |Hospitals |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 71 |Stem Cell Research |$3 billion | Pass |
|2004 | | | | |
|--------+------+--------------------+-----------+-------|
|Nov. | 84 |Water & Parks |$5.388 | Pass |
|2006 | | |billion | |
|--------+------+--------------------+-----------+-------|
|Nov. | 3 |Children's |$980 | Pass |
|2008 | |Hospitals |million | |
|--------+------+--------------------+-----------+-------|
|Nov. | 10 |Alternative Fuel |$5 billion |Fail |
|2008 | |Vehicles | | |
--------------------------------------------------------
4)Outstanding Initiative Bond Measures : According to
information from the State Treasurer's office, there are 71
authorized and outstanding GO bonds as of May 1, 2009. Of
those 71 bonds, only seven were placed on the ballot by
initiative - the remaining 64 bonds were placed on the ballot
by the Legislature. Those seven bonds account for about 12.5
percent of the total amount of bonded indebtedness authorized
by the voters, and for about 17.6 percent of the long term
bonds that have been authorized, but not yet issued.
5)Initiative Bond Measures Only : The 66 percent vote
requirement for initiative bond measures that is proposed by
this constitutional amendment applies to initiative bond
measures only; there would be no similar supermajority vote
requirement for costly initiative measures that were not bond
measures. The reason for this distinction is unclear.
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In fact, initiative bond measures make up a relatively small
portion of all bond measures and a very small portion of
General Fund spending. In the 2009-10 budget year, the debt
service on initiative bond measures will be approximately $360
million - about 7.3 percent of the state's debt service for
all general obligation bonds for the fiscal year. The
remaining 92.7 percent of debt service for general obligation
bonds will be for bonds that were placed on the ballot by the
Legislature.
Initiative bond measures also make up a relatively small portion
of spending on initiative measures that have been enacted by
the voters. Although a comprehensive accounting of the amount
of money that is spent annually to implement initiatives that
were approved by the voters is not available, the amount of
annual spending required by initiative measures that were not
bond measures clearly dwarfs the amount of spending required
by initiative bond measures. In fact, the spending required
by Proposition 49 for after school programs will exceed $540
million in the 2009-10 fiscal year - more than the debt
service for all of the initiative bond measures in the fiscal
year.
Given these facts, it is unclear whether it is desirable to
require a supermajority vote to approve initiative bond
measures without also imposing a similar requirement on the
proponents of all initiative measures.
6)Is the 66 Percent Vote Requirement an Insurmountable Barrier ?
The 66 percent vote threshold that this measure proposes to
require for initiative bond measures is so high that it may
serve to prevent any initiative bond measure from being
authorized by voters in the state ever again. Of the 17
initiative bond measures that have appeared on the statewide
ballot since the initiative process was established, none of
them received the 66 percent threshold that would be required
by this constitutional amendment, and only two (Prop. 11 in
1914 and Prop. 70 in 1988) of the 17 were approved by more
than 60 percent of the voters. As such, even if it is the
committee's desire to increase the vote threshold for voters
to approve initiative bond measures, it is unclear whether a
66 percent threshold would be appropriate. Given California's
history with initiative bond measures, a 66 percent threshold
for approval for initiative bond measures would appear to
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impose a de facto ban on initiative bond measures in the
state.
7)Supermajority Vote Requirements : Currently, all state ballot
measures require a simple majority to be approved by the
voters, regardless of the changes to state law made by the
ballot measure. If this constitutional amendment is approved
by voters, it would mark the first time that any measure that
appears on the state ballot would require more than a simple
majority to pass.
8)Related Measures : ACA 3 (Blakeslee), which is pending in the
Assembly Appropriations Committee, would require initiative
bond measures of $1 billion or more to identify a funding
source. ACA 3 was approved by this committee on a 7-0 vote.
SCA 14 (Ducheny), which is pending in the Senate Appropriations
Committee, would require all state initiative measures that
would result in a net increase in state or local government
costs, instead of just bond measures, to identify a funding
source.
9)Approval by Voters : As a constitutional amendment, this
measure requires the approval of the voters to take effect.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094