California Proposition 29, Bonds for Veterans (1984)
Proposition 29 provided $650 million to provide farm and home aid for California veterans.
The fiscal estimate provided by the California Legislative Analyst's Office said:
1. 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. The principal portion of these repayments would average $26 million per year. In addition, the state would have to pay interest on the borrowed funds. We estimate that if the bonds were sold at an interest rate of 10 percent, the annual cost of these interest payments would average approximately $34 million.
If the payments made by those veterans participating in the farm and home loan program did not fully cover the costs of making principal and interest payments on the bonds, the state's taxpayers would be required to pay the difference. Throughout its history, however, the loan program has been totally supported by the participating veterans, at no direct cost to the taxpayer.
2. Other Fiscal Effects
Increased Borrowing Costs. Generally, an increase in the amount borrowed by the state tends to raise the rate of interest on borrowed funds. Consequently, the state and local governments could incur higher costs under other bond programs as a result of this measure. The size of any such costs cannot be estimated.
Revenue Loss. 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 are purchased by California taxpayers in lieu of taxable investments, the state would collect less income tax revenue. It is not possible to estimate what this revenue loss would be.
Path to the ballot
The California State Legislature voted to put Proposition 29 on the ballot via Assembly Bill 2354 (Statutes of 1984, Ch. 391).