Summary
SB 986 requires the ballot label for state and local bond measures to include an estimate of the amount of interest due on a bond.
Background
According to the Legislative Analyst’s Office, California voters have approved about $126 billion in general obligation bonds supported by the State’s General Fund since 2000. According to the State Treasurer’s Office, California’s current outstanding and authorized debt total is equal to almost 1/3 of the State’s approximately $300 billion budget.
While this debt may be paid off over extended periods of time, it is important that voters are equipped with sufficient information to make informed decisions about prudent borrowing. Current law, requires both state and local governments to provide fiscal impact information to the voters for bond measures. This information is usually disclosed on the ballot label in the form of an annual payment estimate that combines both principal and interest into a single payment.
This form of disclosure blurs exactly how much state money is repaid annually to advance the objectives of the measure and exactly how much money is expended on the cost of borrowing. Consequently, there has been a lack of transparency and consistency among previous bond measures disclosing the precise cost of borrowing money. Prop. 51 (2016) is an example of a ballot label that clearly presents the cost of borrowing by distinguishing between principal and interest. Meanwhile, Prop. 1 (2014), Prop. 68 (2018) and Prop. 14 (2020) are examples of ballot labels that do not distinguish between principal and interest and omit the particular cost of borrowing. This lack of clarity ultimately hinders the voter’s ability to make an informed evaluation of the return on investment for taxpayer money.
Proposal
SB 986 provides voters with greater consistency, clarity, and transparency regarding the cost of borrowing by requiring an explicit disclosure of interest due on the ballot label for state and local bond measures.