California Proposition 17, Bonds for New Prison Construction (1984)

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California Proposition 17, or the New Prison Construction Bond Act Of 1984, was on the June 5, 1984 statewide primary ballot in California as a legislatively-referred state statute, where it was approved.
  • Yes: 2,835,869 (57.8%) Approveda
  • No: 2,067,033 (42.2%)

Proposition 17 provided $300 million for "the construction, renovation, remodeling, and deferred maintenance of state correctional facilities."

Election results

California Proposition 17
Approveda Yes 2,835,869 57.8%

Fiscal impact

The fiscal estimate provided by the California Legislative Analyst's Office said:

1. Cost of Paying Off the Bonds

The general obligation bonds authorized by this measure would be paid off over a period of up to 20 years. Under current law the state can sell bonds at any interest rate up to 11 percent.

Given current market conditions, the bonds probably would be sold at an interest rate of about 9 percent. If the full $300 million in bonds were sold at this rate and paid off over a 20-year period, the interest cost to the state would be approximately $284 million. The interest cost would be more or less if the bonds were sold at interest rates above or below 9 percent. The cost of retiring the bonds would be paid by the State General Fund using revenues received in future years.

2. Other Fiscal Effects

Generally, increased borrowing tends to increase interest rates. The state and local governments could incur higher costs under other bond finance programs if the bond sales authorized by the measure result in a higher overall interest rato on state and local bonds. These additional costs cannot be estimated.

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 were purchased by California taxpayers in lieu of taxable investments, 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 17 on the ballot via Senate Bill 310 (Statutes of 1984, Ch. 4).

External links