California Proposition 57, Bonds to Pay Off State Government's Deficit (March 2004)

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California Proposition 57, or the Economic Recovery Bond Act, was on the March 2, 2004 statewide primary ballot in California as a legislatively-referred bond act, where it was approved.

Proposition 57 authorized the state to sell $15 billion in long-term bonds to pay off accumulated deficits. Proposition 57 would only have gone into effect if Proposition 58 (the California Balanced Budget Act) also passed, which it ultimately did.

Supporters of Proposition 57 spent over $8.4 million to pass it, while opponents spent about $400,000; so that altogether, supporters outspent opponents by about 20-to-1.

Propositions 57 and 58 were the centerpiece of Gov. Arnold Schwarzenegger's plan to resolve California's budget problems.[1] Schwarzenegger campaigned heavily for the propositions' passage. Schwarzenegger's rival in the 2003 recall election, state senator Tom McClintock, was one of the chief opponents of Proposition 57.

Election results

Proposition 57
ResultVotesPercentage
Approveda Yes 4,056,313 63.4%
No2,348,91036.6%

Text of measure

Comparison of Proposition 57 borrowing to previously authorized borrowing, prepared by the LAO

Title

The ballot title was:

The Economic Recovery Bond Act.

Question

The question on the ballot was:

"Should the state of California borrow 15 billion dollars ($15,000,000,000) through the sale of bonds to provide financing for California's budget deficit?"

Summary

The summary of the ballot measure prepared by the California Attorney General said:

  • A one time Economic Recovery Bond of up to fifteen billion dollars ($15,000,000,000) to pay off the state's accumulated General Fund deficit as of June 30, 2004.
  • The Economic Recovery Bond will only be issued if the California Balanced Budget Act is also approved by the voters.
  • The bonds will be secured by existing tax revenues and by other revenues that could be deposited in a special fund.

Fiscal impact

See also: Fiscal impact statement

The California Legislative Analyst's Office provided an estimate of net state and local government fiscal impact for Proposition 57. That estimate was:

  • One-time increase, compared to a previously authorized bond, of up to $4 billion to reduce the state's budget shortfall.
  • Annual debt-service savings over the next few years.
  • Above effects offset in subsequent years by higher annual debt-service costs due to this bond's larger size and the longer time period for its repayment.

Campaign funding

The "Yes on 57" group spent just over $8.2 million to urge voters to adopt Proposition 57. $5.3 million of that was from Arnold Schwarzenegger's California Recovery Team.[2]

By comparison, the group opposing Proposition 57 spent a mere $406,634.[3] 70% of that came from just one donor, Stephen Bing, who chipped in $284,750.00.

Path to the ballot

Proposition 57 was voted onto the ballot by the California State Legislature via ABX5 9 (Proposition 57).

Votes in legislature to refer to ballot
Chamber Ayes Noes
Assembly 65 13
Senate 27 12

External links

References