Pete recommends:
Proposition 1: $11B Bonds for Affordable Housing – YES
Summary: $10 billion in bonds to kick-start housing construction in California, plus $1.25 billion to reseed the marvelous CalVet Home Loan program at no net cost to the state. Most of the $10 billion will provide low-interest loans to local governments and developers to build and renovate rental housing, with a requirement to reserve units for low-income renters. These loans will enable more housing projects to pencil out and actually get built, slowly easing our housing crisis.
See My Semi-biennial Lecture on Bonds, below, for my opinion of bonds in general.
Details: coming soon
Proposition 2: Double Size of Rainy Day Fund – YES
Summary: Revenue from state income taxes fluctuates wildly year-to-year, depending largely on capital gains from unpredictable real estate and stock markets. In 2014, after a series of grisly budget crises, voters wisely approved a strong “rainy day fund” to hold reserves deposited in high-revenue years for use in lean years. The rainy day fund currently tops out at 10% of the size of the General Fund. Prop 2 would double that to 20%. Given the enormous volatility in recent income tax revenue (down 18% in 2020, up 73% in 2021, down 34% in 2023, up 28% in 2024), this is eminently sensible.
Details: coming soon
Proposition 3: Make Permanent the Tax on High Incomes – YES
Summary: In 2012, voters increased state income taxes for high earners, making our tax system less regressive. The increase affects only the Top Two Percent: those with taxable incomes above $743,000 (for joint filers; half that for single filers). But the increase is temporary, set to expire in 2030. If that happens, roughly the top third of taxpayers, with incomes above $145,000, will all pay the same marginal rate, moving us closer to a regressive, flat income tax. Prop 3 will prevent the increase from expiring, ensuring that high earners continue to pay their fair share. The impact on the state budget will be significant: continuation of a revenue stream on the order of $10 billion annually, directed to education, healthcare, and other vital programs.
Details: coming soon
Proposition 4: Public Campaign Finance – YES
Summary: Currently, public financing of political campaigns is banned in California, except in charter cities such as Los Angeles and Oakland. Prop 4 would allow (but not require) the state and local governments to enact public financing. To receive public funding, candidates would first have to prove their viability, and then abide by spending limits. Fourteen states and the District of Columbia have some form of public finance, and the results are worth emulating. Prop 4 will make campaigns less about fundraising and wealth (with its ever-present danger of corruption), and more about ideas, communities, and serving the people.
Details: coming soon
Proposition 5: Recall Election Reform – YES
Summary: If the Governor of California is recalled, Prop 5 would promote the Lieutenant Governor to be the new Governor. It’s vastly preferable to our current procedure for choosing a replacement: a free-for-all election on the same ballot as the recall, with potentially hundreds of candidates; majority vote not required. The existing process encourages minority parties (looking at you, GOP) to instigate spurious recall elections, as they did in 2021, in an attempt to install their own Governor with a small fraction of the vote. We don’t need that circus again.
Details: coming soon
Proposition 37: Loans for Middle-Income Buyers of New Homes – YES
Summary: Provides low-interest loans to “middle-class” buyers of new homes, at no cost to the state. Buyers’ family income cannot exceed twice the median income in the area, and the purchase price must accommodate a conforming mortgage (e.g., maximum price of $1.04 million in Fresno or $1.56 million in San Jose). Buyers would put down 3% of the purchase price, the state would lend 17%, and the rest would be a conventional 80% mortgage. Buyers would repay the state at a rate that completely covers the state’s expenses, so Prop 37 won’t cost taxpayers a dime. By facilitating home sales, Prop 37 will help more owner-occupied homes get built, just as Prop 1 does for rental housing. A big win for everyone.
Details: coming soon
Proposition 38: $8.4B Bonds for Immunology Research – NO
Summary: A self-dealing “buy-a-law” subsidizing a single research lab to the tune of $4.2 billion, and other labs another $4.2B, likely providing negligible benefit for the state. Bond funding should always be for long-lived, tangible acquisitions such as buildings and infrastructure. But Prop 38 will squander interest-burdened bond money on salaries, chemicals, and other ephemeral expenses. It’s a serious misuse of bond funding and the initiative process itself.
See My Semi-biennial Lecture on Bonds, below, for my opinion of bonds in general.
Details: coming soon
Proposition 39: Voter ID – NO
Summary: Part of President Trump’s antidemocratic scheme to disqualify as many voters as possible, based on a pack of lies about purported “voter impersonation” and supposed lack of “public confidence and trust in the electoral process” (both quotes from the text of the proposition). There is absolutely no need for this destructive and wasteful measure.
Details: coming soon
Proposition 40: Billionaire Tax – SOON
Summary: coming soon
Details: coming soon
Proposition 41: Thwart the Billionaire Tax, Part 1 – NO
Proposition 42: Thwart the Billionaire Tax, Part 2 – NO
Summary: Regardless of how you vote on Prop 40, you should definitely vote “no” on the countermeasures, Props 41 and 42. They are poison pills designed to kill the Billionaire Tax forever, but they would have detrimental impacts far beyond that. Prop 41 would invalidate any tax which is excluded from the Appropriations Limit, while Prop 42 would prohibit wealth taxes and retroactive taxes. These measures would straitjacket the Legislature if some future emergency requires tapping these capabilities, even temporarily. Both measures have mouthwatering candy coatings to induce unwitting voters to swallow them. Stop drooling. If you oppose the Billionaire Tax, then vote against Prop 40. But don’t restrict how the state can tackle future crises.
Details: coming soon
Proposition 43: Close the “Upland Loophole” on Local Taxes – NO
Summary: Prop 218 of 1996 requires that special taxes (i.e., taxes that fund specific programs) must be approved by a two-thirds vote of the electorate. But in 2017, the state Supreme Court ruled that special taxes proposed by initiative can be approved by simple majority. That case was California Cannabis Coalition v. City of Upland; hence the Upland Loophole. Prop 43 would effectively reverse the court’s decision, requiring a two-thirds vote of the electorate to enact, extend, or increase local special tax initiatives. There are many good reasons to oppose Prop 43. I like the argument that two-thirds of voters will approve a special tax only when there’s an urgent crisis, which will be far more damaging and expensive to fix than if it had been prevented earlier by a simple majority who care about the public good.
Details: coming soon
Proposition 44: Require Clinics to Spend 90% on Healthcare – NO
Summary: Remember those nuisance propositions about dialysis clinics a few years back? Prop 44 is a tired retread of those, this time targeted at community health clinics in medically underserved areas. More extortion than legislation, this measure was intended to be withdrawn before the ballot was finalized in exchange for boosting union membership at certain clinics. But negotiations broke down, and here we are. There is no reason anyone should vote for Prop 44.
Details: coming soon
Proposition 45: Speed Up Environmental Reviews – SOON
Summary: coming soon
Details: coming soon
My Semi-Biennial Lecture on Bonds
When California wants to finance a large project, it asks voters for permission to take out a loan. Props 1 and 38 on this ballot are just such requests. If voters approve, the state may take out loans for the projects by selling general obligation bonds, which are paid back with interest over 20-30 years. The bond payments come out of the state’s main budget, the General Fund. So when we vote on bond measures, we are really voting on whether the projects in question ought to be added to the state’s budget.
“Wait a minute!” I hear you cry. “What about those interest payments? Won’t we end up paying more for interest than for the bonds themselves?” This may once have been so, but at today’s rates, each dollar of bond money will cost only fifteen cents in interest, accounting for inflation. (See details on p. 80 of your ballot pamphlet.)
“Okay,” you admit, “but loans are still more expensive than pay-as-you-go.” This is true. Still, loans are the only way to buy a house, or a car, or anything else that you need immediately but can’t pay for yet. It’s worth paying the premium of interest to get the funding now.
“Well and good,” you continue. “But there are $18 billion in bonds on this ballot. Isn’t that too much to borrow?” For you, yes, but the State of California can handle it. Bond payments today amount to about 3% of the General Fund, down from a high of nearly 6% sixteen years ago and below the historical average of 4%. Props 1 and 38 would increase it to about 3.5%, still within reasonable limits.
The bonds on this ballot fund long-lived, tangible acquisitions, such as apartment buildings, water and sewage infrastructure, and college dorms. It’s sensible to make extended payments for things that will be used far into the future.
[Here I depart from the usual lecture:] It is not sensible, however, for bonds to fund operational or transient expenses such as lab administration, research staff salaries, consumable goods, and other indirect costs, as Prop 38 proposes. Prop 38 is a flagrant violation of sensible bond-use principles. For this reason and others, I oppose Prop 38. [End of departure.]
Remember, too, that California’s population continues to grow by millions every decade. (Yes, there was a brief lull after the pandemic, but that’s over. This is still the best state to live in, and everyone knows it.) Borrowing makes particular sense if you know your income will go up in the future. As the state grows, over time the General Fund will grow too.
There is one last reason to vote for a bond measure. In addition to being formal requests for permission to take out loans, bond measures are also looked upon as referenda on the merits of the proposed projects. If a bond measure fails, legislators are likely to believe that the public feels the project is not worthy of receiving state funding. By voting no, you may have meant, “Yes on the project but no on the bonds,” but your message to Sacramento will read, “No on the project.” So if you vote down a bond measure just because you don’t like bonds, you may well have killed forever the project the bonds were to have funded.