BILL ANALYSIS                                                                                                                                                                                                    



                                                                  ACA 5
                                                                  Page  1

          Date of Hearing:   August 19, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                    ACA 5 (Calderon) - As Amended:  July 14, 2009 

          Policy Committee:                              ElectionsVote:6-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This measure proposes to amend the California Constitution to  
          require that an initiative authorizing the issuance of state  
          general obligation bonds be approved by at least 55% of those  
          voting on that initiative.

           FISCAL EFFECT  

          1)One-time General Fund costs of about $220,000 to include the  
            analysis of this measure and the arguments for and against the  
            measure in the statewide voter information guide.

          2)Annual General Fund savings in reduced bond debt  
            payments-likely in the tens of millions of dollars-to the  
            extent initiative bond measures fail due to the higher  
            threshold for voter-approval.

           COMMENTS  

           1)Purpose  .  The author notes that there are two ways to place  
            general obligation bond measures on a statewide election:  (1)  
            through a two-thirds vote of both houses of the Legislature  
            and approval of the governor, and (2) through an initiative  
            petition circulated to receive the requisite number of valid  
            signatures.  The author argues that the second method lacks  
            the fiscal and legislative oversight he believes is necessary  
            when considering measures that make the state responsible for  
            long term debt.  ACA 5 would make approval of initiative bond  
            measures subject to a higher voter threshold.

           2)Initiative Bonds  .  Since establishment of the initiative  
            process in 1911, only 17 of 331 initiatives have proposed the  








                                                                  ACA 5
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            issuance of general obligation bonds, however, 12 of the 17  
            measures have been proposed just in the last 20 years.  Nine  
            of the 17 bond measures were approved by voters.  Of the nine  
            approved measures, seven would have met the 55% threshold  
            proposed under ACA 5.  The two bond measures that would not  
            have passed under this measure's higher threshold were $2  
            billion for rail transportation in 1990 and $5.4 billion for  
            water and parks in 2006.

           3)Related Legislation  .  ACA 3 (Blakeslee), pending on this  
            committee's Suspense file, would prohibit any initiative  
            authorizing general obligation bonds in an amount exceeding $1  
            billion unless the measure provides for additional tax or fee  
            revenues and/or the elimination of existing programs to fully  
            fund repayment of the bonds.
           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081