☆ HJTA’s Susan Shelley: Prop 5’s ballot label under-informs voters because governments just want more tax money (part 2)
Prop 5 lowers the votes needed for most local bonds from two-thirds to 55%, but you wouldn’t know it if you read the ballot label. In part 2 of this Opp Now exclusive Q&A, Howard Jarvis Taxpayers Assn’s Susan Shelley discusses how her organization sued the State for more transparency but lost on appeal. Voters might even think Prop 5 raises the threshold for expensive borrowing. Instead, Prop 5 could soon nudge CA cities into bankruptcy.
Opportunity Now: Prop 5’s ballot label doesn’t explain that it lowers the voter threshold from two-thirds down to 55%. Why not?
Susan Shelley: The Howard Jarvis Taxpayers Association went to court over that. We won the decision at the Superior Court level, and then it was overturned by an appellate court.
Our argument was that this is critical information that voters need to know. It's not going up from 50%; it's coming down from two-thirds. That fact is in all the other materials that the Attorney General prepared, but he left it out of the ballot label, which is what many voters see exclusively.
It was not an issue of space because there were more words that he could have used before he hit the maximum word count on the ballot label. So there was no reason to leave it out. But he left it out; and when we sued to have it put back in, we lost on appeal.
ON: Why did you lose?
SS: Everybody in government wants to make it easier to raise your taxes. For example, the Taxpayer Protection and Government Accountability Act was taken off the ballot. We think that was a completely unjustified decision; but the reasoning was that it makes it harder to raise taxes, and this impedes the functioning of government.
ON: But in the case of Prop 5, what's the State's interest in letting local governments raise taxes? Is it because the State doesn’t want to grant as much money to local governments?
SS: I think that might be part of it, that if the local governments can borrow money, they won't be coming to Sacramento and demanding money from the budget to build their infrastructure projects.
But really, the budget, whether it's the state budget or the local budget, is just a more fiscally sound place to find the money.
ON: Why is using money from the budget better than raising bond money?
SS: When you go on the credit card and pay interest for 30 or 40 years, everything costs roughly twice as much, especially when interest rates are up and you're burdening all these future governments with debt payments that they have to make ahead of current needs.
So it's not good to incentivize more debt. Of course, debt has its place. There are times when it's a great way to finance projects that will continue to be there when the payments are made 30 years later.
But with the $10 billion statewide ballot measure Proposition 4, you're going to have 30 or 40 years of debt payments for things like pop-up tents at a farmers' market. Is that a good use of borrowed money?
ON: We doubt it is. But won’t there be legitimate local projects that Prop 5 will help pass?
SS: When local governments issue more and more bonds, it takes more money out of the local budgets for future governments because they have to put bond repayments ahead of current needs.
After 10 or 20 years of doing this, you could have municipalities flirting with bankruptcy.
When you make it easier to pass bonds at the local level for everything, it’s going to have a negative impact on future residents of that community.
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