One measure on California’s ballot would make it easier for local governments to build critical infrastructure and affordable housing with borrowed money. Proposition 5 would lower the percentage of votes needed for a bond to pass, from today’s two-thirds supermajority to a 55% majority.

General obligation bonds allow local governments to finance big projects, such as roads, libraries and parks. Over time, Californians pay them off by paying higher property taxes.

A number of bond measures on this year’s ballot could benefit immediately if Prop. 5 passes. Sacramento County has proposed a $415 million bond for fire station improvements. In San Francisco, a $390 million bond would fund improvements to hospitals and pedestrian safety projects. And in the state’s rural and underserved areas, where community hospitals are under imminent threat of closures, a Prop. 5 victory could help them keep their doors open.

“It’s pretty much a no brainer,” said Assemblymember Cecilia Aguiar-Curry, the Democrat of Davis who authored the legislation that put the measure before voters. “Prop. 5 gives local communities an option. Right now, they don’t have anything in the toolbox except for the two-thirds.”

She called the measure, which applies to special districts, cities and counties, an “opt-in” for government officials to have flexibility in how they pass a bond.

“They can either do a two-thirds bond with no guardrails on it, or they can have a bond at 55% threshold with guardrails – with accountability, transparency, citizens’ oversight, independent audits,” she said.

But opponents including Susan Shelley, vice president of communications for the Howard Jarvis Taxpayers Association, said Prop. 5 would authorize countless government entities to put bonds on the ballot, sugarcoating their descriptions and underplaying their costs. Those costs, Shelley said, add up over time.

“Some of the proponents have said this is not a tax increase, but this is an engine for tax increases forever — and it will absolutely result in higher property taxes over and over again and people will start losing their homes if that happens,” she said.

Darien Shanske, a law professor at UC Davis, said the idea that bonds would push somebody into insolvency is “very, very improbable.”

“Our norm as a democratic society is that every vote is equal,” Shanske said. “A supermajority rule is a deviation from that norm. It allows one-third of voters to essentially block what a large majority would like to do.”

Voters are divided over Prop. 5, with 48% percent saying they would approve the measure, according to polling by the Public Policy Institute of California.

The measure is one of the more expensive ones on the ballot. Opponents, including the California Chamber of Commerce and the National Federation of Independent Business, have raised about $30 million. Prop. 5 supporters, such as the pro-development group California YIMBY and the labor organization the California State Building and Construction Trades Council, have raised about $5 million.

California constitution restricts borrowing

The requirement for a two-thirds vote to take on local debt was codified in the 1879 California constitution for local government entities and school boards. Nearly a century later, voters passed the landmark Proposition 13, which restricted property tax assessments and further constrained government spending.

“We vote on (bonds) in the constitution as a matter of policy really because it’s an obligation on future generations,” said Michael Coleman, a California local government finance expert who consults for cities. “Do you want to enter into this contract that commits future generations to paying this off? But future generations also get the benefit of these public improvements.”

Shanske describes it another way: A community passes a bond to build a new bridge. Over the course of multiple generations, people have a chance to enjoy the bridge and pay it off through taxes or tolls.

“But the actual amount of money of a big project divided over a whole community spread over 30 years is typically pretty low,” he said. “The notion of local politicians and local voters deliberately overburdening their property tax base is pretty unlikely, especially since they would also need to get outside investors to sign off on it.”

Shelley from the taxpayers association said the increased charges connected to bonds can ripple out in the economy and affect many people.

“You would see these higher taxes passed through as higher rents, higher consumer prices, even a little small donut shop in a strip mall will have a higher operating cost because the property owner will be passing those higher property taxes right through on the lease,” she said.

Californians have already made an exception once, voting in 2000 to amend the constitution for school bonds, lowering the voter threshold to 55%.

“That really opened up and made it a lot easier for schools to pass these measures. And that’s basically what Prop. 5 would do – bring cities and counties and special districts into the same sort of ability level,” Coleman said.

Coleman tracks votes on general obligation bonds for his work advising California cities. According to him, roughly half of general obligation bonds pass. Of those that fail, about half of them receive over 55% of votes but cannot clear a two-thirds margin. If Prop. 5 passes, he expects to see a 70 to 80% passage rate for general obligation bonds.

“There’s a lot of needs out there,” Coleman said. “I think we’ll see more local governments say, ‘Hey, now there’s a real chance that we’ll be able to get this passed – that the will of the community will be able to be realized at the ballot box.’”

California community hospitals ask for earthquake bonds

Over the years, many housing and infrastructure bonds have failed by slim margins. Those campaigning for Prop. 5 have referenced some near misses. In 2023, a fire protection bond in Santa Cruz County failed despite receiving 66% of the vote. A 2022 affordable housing bond in Berkeley failed with 59% of the vote. In Whittier, a 2017 library bond failed with 66%.

Those misses also include attempts by the Antelope Valley Healthcare District, which has tried and failed three times to pass a bond for its community hospital north of Los Angeles, according to the Association of California Healthcare Districts. In 2022, it failed with 57% of votes.

The district is one of 77 health care districts, a type of “special district,” across California. They were formed in the 1940s to bring critical services such as hospitals, ambulance providers, and skilled nursing facilities to rural and underserved communities.

The Beach Cities Health District medical complex in Redondo Beach on Oct. 27, 2024. Photo by Jules Hotz for CalMatters

“The difficulty, though, is because they’re community-owned and they’re public entities, they’re very limited in how they can finance large-scale or even medium to small size infrastructure projects,” said Sarah Bridge, a vice president of advocacy and strategy at the Association of California Healthcare Districts. “We have really small margins.”

The 33 health care districts operating community hospitals fall under a state mandate to retrofit their buildings for earthquake safety by 2035. But so far, Antelope Valley Healthcare District and many others are still working to secure the funds to make those changes. If they fail to meet the state mandate, they will be forced to close.

At least two health care districts have bonds on the November ballot, including one in Redondo Beach.

From his office window, Tom Bakaly, chief executive officer of Beach Cities Health District, looks out at a sea of asphalt. But that would change if voters in three Los Angeles cities approve a $30 million bond, at an estimated cost of $3 per $100,000 of assessed value for property owners.

The asphalt would transform into two acres of open space for community health and wellness programs, such as yoga and Zumba. In an adjacent corner of the health campus, a youth mental health facility, which has had close to 9,000 visits over the past two years, would expand. And the 1960 hospital would be demolished due to seismic issues.

The Beach Cities Health District Administrative Offices and Shirley Rogers Student Services Center in Redondo Beach on Oct. 27, 2024. Photo by Jules Hotz for CalMatters

“The vision is to create a place where people can come and be well,” Bakaly said. “I think it’s a great opportunity for voters to decide what they want.”

In the small coastal town of Cambria, the city’s Community Healthcare District has proposed a $5.9 million bond to build an ambulance station.

“We consider (our ambulances) our lifeline,” said Laurie Mileur, board member of Cambria Community Healthcare District.

She said that the ambulance crew operates out of a 70-year-old building that’s not designed for 24-hour use. The new building would include a garage for the ambulances, a decontamination space and more storage.

According to Mileur, the bond would cost property owners roughly $50 a year, on average.

“It’s a cup of coffee a month,” she said. “We feel it’s time for the community to step up and share this commitment to our service.”

It’s their second attempt. Two years ago, the health care district’s bond for a new ambulance station failed at 61.4%, a shortfall of roughly 200 votes.

“For a small agency who really doesn’t have the cash reserves that could actually pay for infrastructure, we really rely on bonds. And setting such a high threshold makes it very difficult,” she said. “We’re confident we’re going to get over 60% again. It’s whether or not we can get to 66.7%. It would be heartbreaking if we lost by one vote.”

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Cayla Mihalovich is a California Local News fellow.

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.