Are school bonds free? According to the standard ballot question, YES!

Richard Rider, Chairman, San Diego Tax Fighters Undesignated 5 Comments


Sometimes we “smart guys” are not. Just because WE understand a fundamental aspect of a political issue doesn’t mean that the VOTERS know what they are voting on. Because we are so “smart,” too often we self-appointed pundits fail to emphasize to others the fact that crucial information is being hidden from voters.

Such is the case with local bond propositions — which are ALWAYS dishonestly presented. And our failure to understand and fight this misrepresentation has helped perpetuate the California “something for nothing” con job on taxpayers.

The fact is that few voters read beyond the official “ballot question” of a bond. That summary is a single LONG sentence that supposedly impartially summarizes the matter being placed before the voters. The truth is that it’s blatant propaganda written by proponents, with zero input from the opposition. County Council mindlessly accepts such “questions” unless there’s a stunning lie contained in it — which proponents are usually clever enough to avoid.

The problem is not just the obvious propaganda aspect — it’s what is always OMITTED. EVERY such summary ALWAYS leaves out a CRUCIAL point — HOW the bonds will be paid for — WHO is paying for the bonds.  As the excellent article below by my longtime taxpayer friend Joel Fox details, the government lies through omission. And it’s systemic throughout the state.

In San Diego we have eleven such bond measure on various local ballots. It’s clear that they are “cookie cutter” summaries — using the same language, and omitting the same facts.  Here’s a link to the official ballet “question” posed by each of to our 35(!) local prop ballot questions in the county — including 11 K-12 and community college bond measures.

At this link, one can click on a question to go to the more detailed proposition information — including the useful ballot ARGUMENTS that too few read. But almost no one does this — or even visits this page at the Registrar of Voters website.

Let’s take one bond question as an example.Remember, they ALL read the same — it appears all were written by the same hired guns promoting such bonds:

MIRACOSTA COLLEGE JOB TRAINING, COLLEGE TRANSFER, VETERAN SUPPORT MEASURE. To upgrade classrooms and career training facilities for science, healthcare, technology, advanced manufacturing, other growing local industries, provide job training/placement to Navy/ Marines/ other veterans, improve access to affordable higher education to local students, improve disabled access, repair, construct, acquire classrooms, facilities, sites/equipment, shall MiraCosta Community College District issue $455,000,000 in bonds, at legal rates, subject to local control, requiring annual audits, and independent citizen oversight?

In the ballot book, the government then distills the question down for the REALLY low information voters to grasp:

Bonds — Yes                                   Bonds — No

In other words, something for nothing. This summary omits the critical point that the measure levies HIGHER PROPERTY TAXES on all homeowners and businesses. And indeed, that fact should be the OPENING clause of the ballot question — “Should we pay higher property taxes for . . . .”

But it’s not. Instead, each bond question concludes with this meaningless clause:  . . . “shall [fill in the government agency hyping the bonds] issue $XXXXXX in bonds, at [or below] legal rates, subject to local control, requiring annual audits, and independent citizen oversight?”

Sounds great! Bonds issued for good causes — apparently without a tax increase — and the government will make sure the money is well spent (yeah, that’s been working SOOOO well up to now, right?).

In addition, let’s remember that such school bonds no longer require the 2/3 majority vote — it’s now 55%. That 2/3 threshold is designed to offset the low information voter factor — to make sure that the people paying the taxes are protected from tax increases too easily passed.

As a result (including proponent campaign spending that will be AT LEAST 100 times more than the opposition can muster), most of these bonds will pass. Many beleaguered property owners will find one or more tax increases on their property tax bill starting next year.

Contrary to popular belief, California property tax bills are FAR higher than the national average. Indeed, the median California homeowner’s bill is 93% higher than the median property tax paid by homeowners in the other 49 states.

With 180 or more such bond measures on local California ballots this November (and given that most will pass), our property tax bills (and resulting rents) will pull even further ahead of the national average. Oh joy!

As the article below details, this misrepresentation must end. Perhaps through legislation, perhaps through lawsuits, perhaps through public pressure, perhaps through a constitutional amendment passed via the initiative process.  But regardless, this reform should be pursued.

Henceforth no legitimate taxpayer group should EVER endorse ANY such measure that does not clearly state in the summary question that the bonds will be paid with a TAX INCREASE. Indeed, if the taxpayer organization is REALLY legit, it should automatically OPPOSE any such bond proposition using this deceitful strategy — the “neutral” option should be off the table.

Sadly, this year’s massive bond increases will escape such reform. And in this state, such reform is “iffy” for future elections, as California’s dominant public employee labor unions LOVE this stealth method of raising taxes.  While the bond money doesn’t go directly for their higher salaries and their bloated, underfunded pensions, it frees up general fund money for such spending — money is fungible.

Are Bonds Free?

Joel Fox

Editor of Fox & Hounds and President of the Small Business Action Committee

Friday, October 21st, 2016

Voters in California have hundreds of local bonds to consider in this election but I suspect many voters don’t understand how the bonds are funded. They won’t find out by reading ballot summaries.

I can’t speak for all the bond summaries throughout the state, but I looked over the 24 bonds on Los Angeles County ballots on the County’s webpage and not once did I read that the bonds are paid for by an increase in property taxes. Do you think that simple statement might change the results of bond elections?

In the private sector, the Federal Trade Commission enforces truth in advertising laws. We could use some truth in ballot information in the public sector, too.

Practically all the summaries dealing with the bonds funding homelessness issues or school repairs tell the voters that the millions of dollars in bonds would be acquired at the legal rates. The bond summaries say what the bonds will be used for. Sometimes a bond summary mentions a citizens oversight committee or periodical audits or that the money cannot be used for salaries or pensions.

The only thing the summaries do not mention is that property taxes will be raised to pay for the bonds. Kind of an important fact that’s left out for the voters who will be paying those increased taxes. Most voters don’t dive in the details of ballot measures but rely on the short summaries provided to decide how to vote.

In the speeches I’ve given this election cycle on the statewide ballot propositions, I’ve found myself explaining the difference between state general obligation bonds and how they are financed versus the revenue bond financing mechanism. This is all because of Proposition 53 on the ballot that would require a vote on revenue bonds exceeding $2 billion.

The response I get makes me feel that many voters do not have a grasp of how bonds are financed. Therefore, information about local general obligation bonds and their connection to property taxes is crucial.

The vote requirement for local bonds was placed in the 1879 rewritten state constitution. The idea of having a vote on local general obligation bonds, and a two-votes majority vote at that is because local general obligation bonds require the citizens to put up their property as collateral against the payment of the bonds. Since bonds take 30 years or sometimes more to pay off, the vote is obligating future property owners to meet the bond payment obligation. A super majority vote under these circumstances is certainly justified.

But it would help to let the voters know what they are getting into. Some voters may feel the bond is paid off with general fund revenues and that all the voters are doing is approving a shift of general funds to cover the bonds. After all, that is the way state general obligation bonds are funded – once passed by voters and issued, the state general obligation bonds have first call on the state general fund.

However, local voters are often unaware that they are authorizing a property tax increase when approving a local G.O. bond.

That should be corrected. Perhaps state legislation is necessary.


Comments 5

  1. Richard,

    You make many good points in your post. I especially agree that voters should be informed that their property tax will increase and by how much if the bond passes. However, you lose me when you say, as you have on many occasion, that:

    “California property tax bills are FAR higher than the national average. Indeed, the median California homeowner’s bill is 93% higher than the median property tax paid by homeowners in the other 49 states.”

    This is akin to stating that Lexus owners pay 93% higher sales tax than owners of a Honda. Of course they do; the price of what is being taxed is higher. I have never heard you complain that people living in La Jolla pay more sales tax (because they buy more stuff) than people living in El Cajon. An obviously fairer comparison is the tax RATE. By that measure, California is the 17th LOWEST.

  2. Well, to be fair, HQ, you easily get lost.

    Read just about any liberal commentary on Prop 13 and it will say that we pay low property taxes in California. Is that true or not? They NEVER mention that our property tax bills are on average far higher than the other states.

    I don’t recall you complaining about this dishonesty. Gosh, what a surprise!

    I realize you pine for the good old days when our property tax rates were high. Ideally you’d like our property tax bills to double — at least. And that tells us a lot about you, HQ.

    The bottom line is that, because of high property values, we pay high property tax BILLS. And BILLS, not RATES, is what people care about. Moreover, just because we have much higher housing prices, why should that mean that government gets the windfall — converting these big bills into pay and benefits well above what is paid in the rest of the nation?

    Our median household income is only 13% higher than the other 49 states. Why should we pay police and firefighters SIXTY percent more than they earn in the other states? Should we double property taxes so thes “public servants” can make a “living wage”?

  3. Richard,

    I get easily lost??? I barely realized that rant as a response to my comment.

    “I realize you pine for the good old days when our property tax rates were high. Ideally you’d like our property tax bills to double — at least. And that tells us a lot about you, HQ.”

    WHERE DID THAT TIDBIT OF MISINFORMATION COME FROM?? Yes, I was screaming at you because you couldn’t be more wrong. I am in favor of keeping Prop 13 just the way it is. When someone buys a home with a mortgage, one of the reasons they do so is to have predictable costs so no, I don’t want to see anyone’s property tax double.

    Where you are correct is in realizing that items of greater value generally result in a higher tax bill hence my Lexus vs. Honda analogy. You may be upset that housing cost more in California than in your beloved Texas, but the price of housing, in fact the value of anything, is determined by what someone is willing to pay for it. So what really annoys you is that people are willing to pay more to live in California. My suggestion to you is to get over it!

  4. The July 2015 California Policy Center report “For the Kids: California Voters Must Become Wary of Borrowing Billions More from Wealthy Investors for Educational Construction” listed 23 specific recommendations for reform of bond finance and bond programs. Here’s one that should be law:


    1 Bond measure ballot titles should be more accurate and objective, perhaps using standard language similar to this that balances construction projects with debt finance plans:

    Shall [NAME OF DISTRICT] be authorized to borrow up to [$xxxxx] in the next [x] years for construction, reconstruction, rehabilitation, replacement, furnishing or equipping of specified school facilities by selling bonds and paying the buyers back, with interest, within [xx] years after the bonds are issued?

    Find a state legislator willing to introduce this simple bill in 2017. (Note: it will be opposed by special interests who prefer the current deceptive wording.)

  5. Kevin,

    That language is better than what we have now, but even better would simply be to say “If Prop xxx passes, each homeowner will see an increase on their annual property tax bill of xxx dollars per $100,000 of the home’s assessed valuation.”

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