What is Proposition 5?

Just the Facts

If you're a California voter, Proposition 5 will be on your ballot on November 5.

• It asks you to decide whether the threshold required for voters to approve housing- and infrastructure-related bonds should be lowered from 67% to 55%.
• On the plus side, a “yes” vote on Prop 5 would make it easier for local governments to fund construction of affordable housing and other public infrastructure.
• On the con side, a “yes” vote on Prop 5 would result in higher property taxes, as a lower threshold for such measures to pass would lead to more government borrowing.

‍

Our Take

Like Proposition 33, Proposition 5 sounds like a good idea, but the consequences could end up making our state’s housing crisis worse. Bonds that are easier to approve will pass with greater frequency, resulting in more funding for housing and infrastructure projects. But money doesn’t grow on trees. In the case of a bond, it is borrowed from lenders and ultimately needs to be paid back. The only way the government can generate that revenue is to raise taxes, and higher property taxes mean higher housing costs, higher rents, and depressed housing development. Prop 5 would allow bond measures to sidestep the two-thirds approval that most property taxes and many other taxes in California would otherwise require, while still ultimately raising property taxes.

‍

THE DEEP DIVE

California’s housing crisis is prompting state and local governments to find ways to make more affordable housing available to more Californians. Funding such programs through bonds—essentially an interest-bearing loan obtained by a government entity—currently requires the approval of two-thirds (roughly 67%) of voters. Proposition 5 would allow local infrastructure and housing bonds for low- and middle-income Californians to pass with just 55% of the vote.

‍

Who Is Behind It?

Proposition 5 was written by California State Rep.  Cecilia Aguiar-Curry, who tried unsuccessfully to get it on the ballot for seven years. The measure is supported by the California Professional Firefighters, League of Women Voters in California, AIDS Healthcare Foundation, California Labor Federation, California YIMBY, Habitat for Humanity California, California Teachers Association, Middle Class Taxpayers Association, AARP California, and the State Building and Construction Trades Council of California. It is also supported by the California Democratic Party.

‍

A Little History Is in Order 

According to FOX40, the two-thirds voter-approval requirement to take out bonds in California dates back to the late 1800s and was reinforced by Proposition 13 in 1978. It has proven to be a difficult standard for local governments to meet in order to borrow money. For example, a San Diego measure in 2020 asking to borrow $900 million to expand permanent and supportive housing failed with 58% of voters in favor. In 2022, a $400 million bond for transit repairs in San Francisco failed with 65% of voter support.

‍

In the early 2000s, California voters approved a constitutional amendment removing the two-thirds requirement for school improvement-related bond measures, setting it at 55% instead. Proposition 5 would do the same thing for local measures related to affordable housing and public infrastructure projects. If approved, the lower approval threshold would apply for all such bonds on the ballot this year and in the future.

‍

Prop 5, which was placed on the ballot by the state legislature, originally included tax hikes that were removed by lawmakers earlier this year. The legislature also amended the original language to bar local governments from buying single-family homes to convert into affordable housing. This concession was made to keep the California Association of Realtors from actively opposing the measure.

‍

Prop 5: Pros

Supporters of the measure argue that requiring a supermajority to pass local bond measures is undemocratic, as it allows a minority of voters to overrule the majority. They point out that California’s current standard of two-thirds approval is higher than most states, which require 51% approval.

‍

They also argue that Prop 5 would:

• Reduce local governments’ dependence on state or federal spending to address issues facing their community.
• Give local residents more control to make decisions about and fund critical projects.
• Apply solely to funds related to affordable housing, supportive housing, or public infrastructure such as roads, bridges, fire protection, and water systems.
• Require local jurisdictions to conduct annual audits to ensure that the funds are being used as intended.
• Prohibit the revenue from bonds from being used for local government salaries or operating expenses.
• Prohibit an entity owned or led by any member of the local governing board that voted to place the bond on the local ballot from bidding on any funded work.

‍

Prop 5: Cons

Opponents of Prop 5, who include The California Chamber of Commerce, Howard Jarvis Taxpayers Association, National Federation of Independent Businesses, and the California School Boards Association, argue that it would:

‍

• Increase debt in the state, which would necessitate local property tax increases for homeowners, renters, farmers, and businesses.
• Raise the overall cost of living in California, as local businesses and property owners will pass their higher taxes onto consumers.
• Shift the financial burden for state programs onto local taxpayers.
• Allow politicians to use loopholes to fund almost anything as "infrastructure.”

‍

Here is the full text of the ballot measure:

‍

Voters are being asked: “Shall the state constitution be amended to lower the vote threshold from two-thirds (66.67%) to 55% for local bond measures to fund housing projects and public infrastructure?”

‍

For voters, a "yes" vote on Prop 5 means you support amending the state constitution to allow certain local bonds to be approved with a 55% vote of the local electorate. A "no" vote means you do not support amending the state constitution, and you prefer that such bonds continue to require the approval of two-thirds of voters.

‍

So, Is There a Plan B to Proposition 5?

No. If it doesn’t pass, the voter approval threshold for affordable housing and public infrastructure bonds will remain at two-thirds. However, the measure could reappear on a future ballot.

‍

It’s all up to the voters of California. Don’t forget to vote on Nov. 5.

‍Sources: Ballotpedia, California Voter Guide, FOX40, The Sonoma Index-Tribune