This article is from Cal-Tax Digest, published
by the California Taxpayers' Association.
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 December 1998

Voters Reject Proposition 9; Pass School Bonds

In victories for the economy and future of California, voters on November 3 soundly rejected Proposition 9, the electric utility initiative, and gave overwhelming support to a record $9.2 billion school construction bond measure.

Cal-Tax had major roles in these successful campaigns as Larry McCarthy, Cal-Tax president, signed ballot arguments on both and served as co-chair of the school bonds measure.

"The overwhelming 'no' vote on Proposition 9 was a repudiation of a reckless initiative that would have done serious damage to the California economy." Mr. McCarthy said. "Voters have avoided unnecessary exposure of taxpayers for potential default of $6 billion in bonds. California can now continue its transition toward a competitive electric energy market."

Proposition 9 was opposed by more than 73 percent of the vote. It would have unraveled 1996 legislation dictating terms of industry deregulation by requiring electric utilities to finance "stranded costs" from shareholder funds. It promised a 20 percent rate reduction (twice as much as the legislation has delivered.) Every major daily newspaper in the state opposed the initiative, saying its promise of a larger rate reduction probably would not happen.

Passage of Proposition 1A, the school bond, is a major investment in California's future. This measure "represents a thoughtful and planned approach to building schools. It also says that voters agree that the state should have a greater financial responsibility for building public schools, which reduced the burden on property taxpayers," Mr. McCarthy said. "Proposition 1A will reduce the cost of building needed schools and rehabilitating older schools. This is critical to California's future."

Voters also agreed with Cal-Tax positions on several other propositions. Proposition 7, which would have provided tax incentives for those who develop machinery for cleaner air, was defeated. It was Cal-Tax's position that such tax policy is better written by the Legislature.

One week after the election, actor-director Rob Reiner claimed victory for his Proposition 10, the 50-cents-a-pack cigarette tax increase, and opponents conceded defeat. The measure was leading by more than 50,000 votes with most of the late absentee ballots counted. It had led by only 13,000 votes from 7.2 million cast in the initial post-election tally November 4. Cal-Tax opposed the initiative because it discriminates against a class of taxpayer.

Cal-Tax supported these successful measures: Proposition 1, which deals with taxation of contaminated property; Proposition 2, which protects transportation-dedicated funds from being used for other purposes, and Proposition 11, which allows local government sharing of sales tax revenues.

Cal-Tax also opposed Proposition 5, the Indian gambling initiative. It was approved.










The 'no' vote on Proposition 9 "was a repudiation of a reckless initiative that would have done serious damage to the California economy."