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Jon Coupal- Columnist

Jon Coupal is an attorney and president of the Howard Jarvis Taxpayers Association -- California's largest taxpayer organization with offices in Los Angeles and Sacramento. [go to website] [go to Coupal index]

Don't Be Fooled Again
The residue of Prop 39
[Jon Coupal] 2/12/04

"Fool me once, shame on you, fool me twice, shame on me," goes the adage. Taxpayers would do well to keep this in mind as the second wave of Proposition 39 bonds begins to roll over homeowners.

As many now paying higher property taxes will recall, Proposition 39 passed in 2000. A handful of wealthy promoters spent millions of dollars on television advertising touting the measure's "accountability" provisions. These were an illusion.

What Proposition 39 actually did was make it easier, much easier, to pass school bonds that only property owners must repay. Only 55% of voters, instead of the traditional two-thirds, are required to approve bonds that must be repaid exclusively by property owners.

It has been less than four years since Proposition 39 passed and in that time, $20 billion in new local school bonds have been heaped onto the backs of taxpayers. And this does not include the interest that nearly doubles the cost of these bonds. Prior to Proposition 39, 63% of school bonds were passing. Now, virtually all pass regardless of merit.

In some areas property taxes are skyrocketing. Although Proposition 13 continues to limit increases in the basic tax on property, repayment for voter approved debt is extra. And there is no limit on the extra.

Already, the Los Angeles Community College District has passed its second Proposition 39 bond, and this March Los Angeles voters will be confronted by the second Los Angeles Unified School District Bond in 16 months and the third school bond in seven years. Combined, these bonds mean taxpayers will be repaying nearly $10 billion in bonds for a school district that has become a national poster child for mismanagement.

More typical, however, is the Chualar Union Elementary School District in Monterey County. This district has placed a $1 million Prop. 39 bond measure on the March 2004 ballot. This same district previously passed a $1.9 million Prop. 39 bond measure during the November 2001 election.

As the following ballot question reveals, the district has experienced increased construction costs -- what the rest of us call cost overruns -- so the district is pursuing another Prop. 39 bond measure to pay for its mismanagement:

"To compensate for the increase in construction costs since 2001, shall the Chualar Union School District be authorized to construct and modernize school facilities and classrooms, complete asbestos abatement, modernize HVAC systems, upgrade restrooms and sewers, replace plumbing systems, upgrade electrical systems to accommodate access to computers and modern technology, and construct a multipurpose room, by issuing $1,000,000 of bonds subject to accountability measures and at an interest rate below the legal limit?"

The first thing that should be noted is that the words "tax increase" are nowhere to be found. This is because the ballot question is written by school district officials.

This ballot question is also another example of how the "accountability" provisions of Proposition 39 are a joke.

Proposition 39 promoters promised that the spending of bond proceeds would be audited. Audits were already required by existing law.

Proposition 39 promoters said that voters would be told in advance what the money would be used for. But there is no requirement for a detailed description, so a district can issue a statement saying that funds will be used to construct a new high school, and the statement complies with the law.

Proposition 39 promoters stressed that there would be an oversight committee appointed to review all spending. In practice because the committees are appointed by the same school district officials who place the bonds on the ballot, the committees have proved to be rubber stamps for the school districts' actions.

Finally, Proposition 39 promoters spoke of the limits that would be placed on how much property taxes could be increased for each bond. But since there is no limit on how many bonds can be passed, the limits are, like the other accountability provision, meaningless.

So now the Chualar Union School District experiences cost overruns and their "solution" is another easy-to-pass Proposition 39 bond measure.

The so-called "accountability" provisions did nothing to prevent the problem, and did nothing to address the problem. The tax caps only apply to a single election, so the district is legally able to return to taxpayers for another tax increase to pay for the cost overruns.

For the second bond, the "accountability" provisions will only serve to ensure that bond proceeds will be used to cover the cost overruns associated with the first, and not for any useful educational purpose.

Since Proposition 39 provides no penalties for mismanagement of bond monies, it is taxpayers, not school officials, who are to be punished.

copyright 2004 Howard Jarvis Taxpayers association

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