There’s just one measure on California’s March primary ballot: A $15 billion school construction bond with a familiar, but confusing name.
It’s called Proposition 13. But, no, it’s not connected to the historic property tax measure from the 1970s often referred to as Prop. 13. The number 13 has simply cycled through, leading to some bewilderment about what’s on the ballot.
The Howard Jarvis Taxpayers Association has even asked the Legislature to “retire” the number 13 to avoid confusion with the past measure, but has been unsuccessful. “We’ve had to answer a lot of phone calls on that very question,” said Howard Jarvis President Jon Coupal.
Supporters of this ‘new Prop. 13,’ as it’s been called, say it’s needed to repair and modernize the state’s K-12 schools, community colleges and public universities. Meanwhile, a prominent taxpayer’s group has opposed the measure, saying the state should use its multibillion-dollar budget surplus and hold off on more borrowing.
State Superintendent of Public Instruction Tony Thurmond, who supports the bond, said it would help make aging schools earthquake safe and remove mold, asbestos and lead pipes.
It would also modernize school vocational centers, he added, noting 10 percent of California’s schools are at least 70 years old.
“Most school districts struggle just to keep up with basic, basic maintenance and repairs,” Thurmond said. “They need help from our state to be able to handle some of these larger needs that will be able to keep our kids safe and help schools deal with lead and mold and seismic needs.”
The proposed bond is the result of Assembly Bill 48, which the Legislature passed last year and Gov. Gavin Newsom signed into law, authorizing the measure to appear on the ballot. It gained strong bipartisan support, passing 78 to 1 in the Assembly and 35 to 4 in the Senate.
The Yes on 13 campaign is led by a coalition of teachers unions and the state’s building industry. The main opposition comes from the Howard Jarvis Taxpayers Association, whose mission includes preserving the historic Proposition 13, approved in 1978, and its property tax protections for homeowners and businesses.
‘Extremely Costly Debt Service’
Coupal with Howard Jarvis said he believes the goals of the new Prop 13 bond are worthy. But he said the state should use its $5.6 billion budget surplus for school repairs rather than going further into debt.
“This is going to be an extremely costly debt service,” Coupal noted. “It’s $15 billion worth of school construction. But it’s going to nearly double in terms of cost when you add in the interest costs.”
The nonpartisan Legislative Analyst’s Office estimates it will cost $26 billion over 35 years, including $11 billion in interest. That equates to a debt payment of $740 million each year.
Coupal said the state’s total debt payments have jumped from about $3 billion per year two decades ago to about $8 billion per year currently.
California voters have favored similar bonds for school facilities in recent years. Between 1998 and 2019, voters approved five such measures: Proposition 1A (1998), Proposition 47 (2002), Proposition 55 (2004), Proposition 1D (2006) and Proposition 51 (2016), according to ballotpedia.org.
‘Incredible Opportunity’
When asked if Newsom considered using the state’s surplus on school repairs, a spokesperson pointed to his statements at a January budget press conference. His comments did not directly address the question.
“It's an incredible opportunity and it's also an equity based bond that focuses on high needs areas of our state,” Newsom said in January.
David Lang, a Sacramento State professor who studies the economics of education, said it’s not always the right call to rely on a surplus when paying for capital improvements.
“It depends,” Lang said. “Is there a fear of a (financial) crash on the horizon? Are interest rates historically low. You may want to ensure money is around for a rainy day.”
Thurmond, the state schools superintendent, agreed there are downsides to using existing state funds.
“One thing that you have to consider when you are using surplus dollars is that from year to year the economy changes,” he said. “We have been putting money away in the rainy day fund because we know that at some point there will be an economic downturn. One of the benefits of a bond funded program is it becomes a stable resource available for school districts to apply to.”
Implications For Property Taxes
To seek that money, Coupal said, local districts would need to provide matching funds through their own local bond proposals. He said one of his biggest concerns about the measure is that it raises the maximum amount local school districts can borrow.
For elementary and high school districts, for example, the limit would be raised from 1.25 percent to 2 percent of assessed property value.
In this respect, the ‘New Prop. 13’ intersects with and chips away at the old property tax measure of the same name.
“It is inevitable that we will see a host of new local bond proposals all coming with property tax increases for homeowners," Coupal said. "The property tax implications are definitely there.”
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