California Proposition 1, School Construction Bonds (1982)
Proposition 1 authorized the State of California to sell $500 million of general obligation bonds to provide funds for the construction of elementary and secondary school facilities. It also authorized the State School Building Lease-Purchase program to borrow from California's general fund in order to finance school facilities construction prior to when the proceeds from the bond sales are received.
Under the terms of Proposition 1:
- No more than $150 million of the funds raised from the bond sale could be used for the reconstruction or modernization of existing school facilities.
- At least $350 million of the bond money was to be used only for the construction of new facilities.
A general obligation bond is a bond that is backed by the full faith and credit of the issuing entity; in this case, the State of California. To be backed by the full faith and credit of the State of California means that the state is pledged to use its taxing power to assure that sufficient funds are available to pay off the bonds.
Proposition 1 added Sections 17680, et seq., to the California Education Code.
Proposition 1's official ballot summary said:
- "This act provides for a bond issue of five hundred million dollars ($500,000,000) to provide capital outlay for construction or improvement of public schools."
The fiscal estimate provided by the California Legislative Analyst's Office said:
- "Under current law, the state can sell general obligation bonds at any rate of interest up to 11 percent. Assuming that the full $500 million in bonds are sold during 1982-83 at the maximum interest rate of 11 percent and are paid off over a 20-year period, the interest cost on the bonds would be approximately $577 million. Therefore, the total cost to the General Fund of paying off both the principal ($500 million) and interest ($577 million) on these bonds would be about $1.1 billion.
- The sale of the bonds authorized by this measure could also increase state and local costs to the extent it results in higher overall interest rates on bonds issued to finance other state and local programs.
- The interest paid by the state on these bonds would be exempt from the state personal income tax. Therefore, to the extent that the bonds are purchased by California taxpayers in lieu of taxable bonds, the state would experience a loss of income tax revenue. It is not possible, however, to estimate what this revenue loss would be."
Path to the ballot
The California State Legislature voted to put Proposition 1 on the ballot via Assembly Bill 3006 (Statutes of 1982, Ch. 410).
|Votes in legislature to refer to ballot|
- PDF of the mailed November 2, 1982 voter guide for Proposition 1
- Hastings California I&R database
- California Law Library, November 2, 1982 ballot propositions
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