California Proposition 46, Local Tax Increases Allowed for Bond Repayment (1986)
Proposition 46 allows local governments and schools to increase the property tax rate above 1% for the period necessary to pay off new general obligation bonds under these conditions:
- If two-thirds of those voting in a local election approve the issuance of the bonds; and
- The money raised through the sale of the bonds must be used exclusively to purchase or improve land and buildings.
The official ballot summary said, "Currently Constitution limits ad valorem property taxes to maximum of 1% of the property's full cash value. An exception to the 1% limit is provided for ad valorem taxes or special assessments to pay interest and redemption charges on indebtedness approved by the voters before July 1, 1978. This measure would provide a further exception to the 1% limit; it would be inapplicable to bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition."
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- See also: Amending the California Constitution
This text shows the previous version of Section 1 with provisions that Proposition 46 deleted printed in
strikeout type and new provisions added or inserted by Proposition 46 in italic type.
- (b) The limitation provided for in subdivision (a) shall not apply to ad valorem taxes or special assessments to pay the interest and redemption charges on (1) any indebtedness approved by the voters prior to
the time this section becomes effective.July 1, 1978, or (2) any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition.
The fiscal estimate provided by the California Legislative Analyst's Office said:
- By itself, this measure has no fiscal effect. The measure merely permits local voters to approve an increase in the property tax rate. No increase can occur in the property tax rate if this measure is adopted, unless two-thirds of those voting in a local election approve the issuance of general obligation bonds.
- If local voters approve the issuance of new general obligation bonds, state costs and revenues could be affected in two ways. First, state costs for tax relief programs could increase, because the cost of these programs rises as the local property tax rate increases. Second, state income tax revenues could decline as taxpayers deduct greater amounts for property tax payments on their state income tax returns.
Path to the ballot
The California State Legislature voted to put Proposition 46 on the ballot via Assembly Constitutional Amendment 55 (Statutes of 1984, Resolution Chapter 142).