California Proposition 56, Bonds for Higher Education (1986)
Proposition 56 provided for a bond issue of $400 million to provide capital for construction or improvement of facilities at California's public higher education institutions, including the University of California's nine campuses, the California State University's 19 campuses, the California Community College's 106 campuses, and the California Maritime Academy.
The fiscal estimate provided by the California Legislative Analyst's Office said:
Paying Off the Bonds. For these types of bonds the state typically would make principal and interest payments over a period of up to 20 years from the state's General Fund. The average payment would be about $35 million each year if the bonds were sold at an interest rate of 7 percent.
Borrowing Costs for Other Bonds. By increasing the amount which the state borrows, this measure may cause the state and local governments to pay more under other bond programs. These costs cannot be estimated.
State Revenues. The people who buy these bonds are not required to pay state income tax on the interest they earn. Therefore, if California taxpayers buy these bonds instead of making taxable investments, the state would collect less taxes. This loss of revenue cannot be estimated.
Paying Off Loans to Community Colleges. This measure appropriates future revenue from the state's tidelands oil to replace any bond money lent to the community colleges. The amount required for this purpose would depend on the amount of money lent to the community colleges.