Bond Issues: Yes on 46

Proposition 13 stopped sharp increases in California property-tax rates in 1978. It also stopped the sale of the least-expensive type of bonds that raise money for public-works projects, including police stations and sewage systems.

Proposition 46 on the Tuesday ballot would permit local governments that could muster the approval of two-thirds of their voters to sell general-obligation bonds at a saving of millions of dollars a year. Because the one thing that Proposition 13 did not stop was California’s growth and the need for public works, we urge a Yes vote on Proposition 46.

General-obligation bonds carry lower interest rates than, say, revenue bonds do because general-obligation bonds pledge a community’s tax base to repayment, while paying off revenue bonds depends on the income of special districts or the nonprofit corporations that issue them. A recent study by Paine Webber Inc. estimates that interest over the life of a $10-million general-obligation bond issue would be $3.2 million less than on a revenue bond issue.

Safeguards against erosion of the protections that property owners enjoy under Proposition 13 are built into the proposal. We think that a majority of voters should be able to impose higher taxes on themselves to pay for public services, but Proposition 46 would require two-thirds of a community’s voters to agree to pledge tax increases to the payment of general-obligation bonds. Proceeds of the bond issues could be used only for land and improvements, not for operating expenses.

As a money-saving device for a growing state, Proposition 46 deserves a Yes vote.