California Proposition 142, Home Loans for Veterans (1990)
Proposition 142 approved a bond issue of $400 million for housing for California's veterans through the Cal-Vet program.
Proposition 142 continued a tradition that began in 1921 when California's voters approved the first of a series of ballot propositions that prior to 1990 had approved a total of close to $7.1 billion of general obligation bonds to finance the "Cal-Vet" program of farm and home purchase assistance for veterans.
Historically, loans made under the Cal-Vet program have been paid back by the veterans who receive them in an amount sufficient to reimburse the Cal-Vet program for the loan, the costs of operating the program and the costs resulting from the sale of the bonds. As a result, although California taxpayers are technically obligated to repay these bonds, they have never had to do so. The main advantage to veterans of this program is that they are able to receive interest rates lower than those charged in the general mortgage marketplace because the government is able to borrow at lower interest rates than individuals are.
The fiscal estimate provided by the California Legislative Analyst's Office said:
Direct Cost of Paying Off the Bonds. The bonds authorized by this measure probably would be paid off over a period of up to 25 years. Assuming all of the authorized bonds are sold at an interest rate of 7.5 percent, the cost would be about $900 million to pay off both the principal ($400 million) and interest (about $500 million). The average payment for principal and interest would be about $37 million per year.
Throughout its history, the Cal-Vet program has been totally supported by the participating veterans, at no direct cost to the taxpayer. However, if the payments made by those veterans participating in the program do not fully cover the principal and interest payments on the bonds, the state's taxpayers would pay the difference.
- Hastings California I&R database
- Los Angeles Law Library, 1990 ballot propositions (dead link)
- November 1990 election results (pages 9-10)
- California Department of Veterans Affairs