California Proposition 18, Bonds for Parks and Recreation (1984)
Proposition 18 approved $370 million for "specified acquisition, development, rehabilitation, or restoration of real property by state, counties, cities and districts for park, beach, recreational, or historical preservation purposes."
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 normally 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 $370 million in general obligation bonds were sold at a 9-percent interest rate and paid off over a 20-year period, the interest cost to the state would be approximately $350 million. This cost would be more or less if the bonds were sold at interest rates above or below 9 percent. The cost of paying off the bonds would be paid from 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 this measure result in a higher overall interest rate 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 would be 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.
State and local agencies would incur additional ongoing costs to operate and maintain the facilities acquired or constructed with the bond funds. These costs would be offset to some extent by additional revenues from the new facilities. The net cost for operation and maintenance cannot be determined and would depend on the nature of the facilities financed with bond proceeds and on how state and local agencies manage them.
To the extent that the state acquires privately owned lands under this measure, local governments would experience a reduction in property tax revenues. This loss would depend on (a) the local property tax rate and (b) the assessed value of the lands acquired. Under existing law state payments to school districts would increase automatically to cover the property tax revenue losses incurred by school districts, but no state payments would be made to cover the property tax losses experienced by other local entities.
Path to the ballot
The California State Legislature voted to put Proposition 18 on the ballot via Assembly Bill 2099 (Statutes of 1984, Ch. 5).