Proposition 5

Proposition 5 lowers the approval level for local government bonds if their purpose is affordable housing for low- and middle-income residents, or for public infrastructure including roads, water, and fire protection bonds. Currently approval requires a “Yes” vote from, at least, two-thirds of the ballots cast. Prop 5 lowers approval to 55%.

Prop 5 does not authorize any specific borrowing. It simply lowers the approval level for local bond measures for the above purposes.

In addition, if approved, Prop 5 would require that these new bonds have specific accountability conditions, including a citizen’s oversight committee and annual independent financial and performance audits.

The third authorization in the measure allows local governments to assess property taxes above 1% to repay affordable housing and infrastructure bonds if approved by 55% of voters instead of current two-thirds approval requirement.

Fiscal Effect

The Legislative Analyst’s Office does not identify any specific direct financial cost to the State if Prop 5 is approved. But their analysis did estimate that an additional 20 % to 50 % of local bond measures would have passed if Prop 5’s lower voter approval had been in effect.

Consequently, more future local bond measures are likely to pass, and those costs will be assumed by the local jurisdictions where the measure applied.

“The amount of this increase is not clear. Based on recent trends, it could be at least a couple billion dollars over many years. . . These costs would be paid with higher property taxes,” according to the LAO’s analysis.

Arguments in favor of approval

Those favoring passage of Prop 5 argue, “We have a massive shortage of affordable housing for low- and middle-income Californians. . . Prop. 5 gives local communities more tools to make housing more affordable.”

“Unlike statewide bond measures, Prop. 5 requires that projects funded by local taxpayers must benefit those taxpayers. It also grants more power to those communities that choose to use Prop. 5 to solve real problems,” they stressed.

Prop 5’s language requires oversight of bonds approved in the future. These include a clear list of the types of projects to be funded; a check and balance to prevent conflict-of-interest for local officials involved in the bonds; an independent citizens’ oversight committee and audits. Independent performance and financial audits of all spending that must be posted publicly and reviewed by the State Auditor.

The amendment received endorsements from the California Democratic Party, State Building and Construction Trades Council of California, AIDS Healthcare Foundation, and California State Association of Counties.

Arguments against Prop 5 approval

The opposition to Prop 5 argues that it will raise local government debt, unsustainable debt, and result in higher taxes.

“Prop. 5 was written to define ‘infrastructure’ so broadly that it can include just about anything the politicians and special interests want to fund on the backs of taxpayers,” they noted.

Jon Coupal, President of the Howard Jarvis Taxpayers Association wrote that the State legislators “want to use local taxpayers as a credit card to keep spending. They want you to pay for affordable housing and other ‘infrastructure’ projects with higher property taxes.”

The amendment is opposed by the California Association of Realtors, California Chamber of Commerce, California Taxpayer Association, Howard Jarvis Taxpayers Association, and National Federation of Independent Businesses.

Financial support

The “Yes on 5” Political Action Committee has collected $5.3 million between Jan. 1 and Sept. 21, 2024, and had $4.5 million in cash for the final month. Since that time, they have raised another $46,000.

The two largest contributions were $2.5 million from Chan Zuckerberg Initiative Advocacy and the NPH Action Fund PAC. The California Professional Firefighters Ballot Issue Committee gave $100,000.

“Protect Prop 13, a project of Howard Jarvis Taxpayers Association, No on Prop 5” had collected slightly more than $800,000 from Jan. 1 through Sept. 21. With the aid of contributions prior to 2024, they had spent $1 million and still had $730,000 in cash.

Their largest contribution was $25,000 from the Western Electrical Contractors Association.

Current Poll results

Likely voters are split on Prop 5, according to the latest Public Policy Institute of California poll. Forty-nine percent of likely voters would vote “Yes”, and 50% would vote “No”. The Inland Empire was divided on similar percentages.

Of the 10 propositions, only 10 % of voters were most interested in Prop 5.

Democrats (70%) overwhelming supported it while only 14% of Republicans would vote “Yes.”