Proposition 14

Major Provisions:

• Provides for a bond issue of $350 million for construction and renovation of public library facilities.
  
  
• Authorizes the California Library Construction Board to provide grants to any local government agency that provides public library services for the acquisition, construction, remodeling, or rehabilitation of library facilities, provided that the local agency contributes 35% in matching funds for the project.
  
  
• Provides that donated land can count toward the 35% local share.
  
  
• Provides that the state's 65% share cannot exceed $20 million per project.
  
  
• Establishes criteria and procedures for the allocation of the funds, and requires that grantmaking priority be given to libraries that have entered into cooperative agreements with school districts for the joint use of facilities and to library projects proximate to schools with inadequate educational technology.

Background:
In 1988, voters approved $75 million in state G.O. bonds under the California Library Construction and Renovation Bond Act to establish a grant fund for the acquisition, construction, remodeling, or rehabilitation of public library facilities. These funds have been fully expended. Cal-Tax supported the 1988 bond proposal.

Last year, a needs assessment conducted by the State Librarian showed that California's public libraries stand in need of more than $2 billion worth of construction, rehabilitation and modernization. These needs have been accentuated by shrinking local funding for libraries. Some federal funding previously available to California libraries sunsetted with the federal Library Services and Construction Act.

Policy Considerations:

• Does this proposal meet Cal-Tax's criteria for evaluating bond proposals, as outlined below?
  • The project to be financed is a capital facility or infrastructure project and the bond funding will pay for land acquisition and capital costs, not for maintenance, operations, non-construction salaries or wages, or ongoing costs.
  • Non-bond financing is not a reasonable option.
  • The project costs are appropriately shared by future taxpayers because the project will have a useful life at least as long as the term of the bonds and future taxpayers will benefit from the facility that is built with the bond proceeds.
  • It is not appropriate for bond funds to pay for equipment, computers, or similar items that will not be useful for at least as long as the debt is outstanding.
  • For state bonds, projects funded must be of state-level concern and importance. State bonds should not pay for local projects that do not have significant extra-territorial impact.
  • Interest rates for indebtedness are not abnormally high and the overall state debt level will not be excessive.
• This proposal generally appears to meet the criteria above, although some question may exist on whether libraries are a state-level concern. Given Cal-Tax's support for local school facilities built with state bond funds, and libraries' educational nature, this may not be a significant concern.
  
  
• Given fiscal constraints of the state, this measure needs to be evaluated in the context of other bonds on the March 2000 ballot. Some prioritization may need to be done.

Fiscal Impact:
According to the Legislative Analyst's Office (LAO), debt payments for this bond would be about $144 million a year for 25 years if the bonds were sold at 5.5 percent, which is the current rate for this type of bond.

It has been generally accepted in recent years that a prudent level of debt service for the state would be 5 percent or less of the state general fund. Although California reached the 5 percent level in recent years, the general fund has grown dramatically because of increased revenues brought in by the strong economy. LAO estimates that currently approved debt payments will be 4.1 percent of the general fund in 2000-01 and decline thereafter. If all the bonds on this ballot were approved, the debt ratio would remain roughly constant, rather than declining.

Support Arguments:

• Libraries are centers of lifelong learning and literacy for children and adults.
• As California's population has climbed, library use has skyrocketed, but libraries have been underfunded. Improvements and expansion are necessary to serve the public. Many communities do not have libraries near population growth areas. This funding will help build new libraries and renovate existing ones.
• A State Library study shows a need for 425 library projects over the next few years to meet current needs. This funding will help get closer to meeting that need.

Support arguments signed by:
State Senator Richard K. Rainey, chair, Senate Local Government Committee; State Senator Deirdre W. Alpert, chair, Senate Education Committee; Gail Dryden, president, League of Women Voters of California; Linda Crowe, president, California Library Association; Don Brown, president, California Organization of Police and Sheriffs; Lois Wellington, president, Congress of California Seniors.

Opposition Arguments:

• We shouldn't expand library facilities because existing libraries are not currently open enough hours. They are typically open when most people can't use them.
• Information technology may make library buildings obsolete within five years, but we'd be paying for the bonds for 30 years.
• The Legislature should have appropriated some of the budget surplus to pay for projects like these, instead of spending it all on dubious programs and then asking voters to approve debt for libraries.

Opposition arguments signed by:
Ray Haynes, California State Senator; Lewis K. Uhler, president, The National Tax Limitation Committee; Carl McGill, chairman, Black Chamber of Commerce of Los Angeles County.

Cal-Tax Position:
No recommendation. Libraries are important facilities, but it is not clear that they have extra-territorial impact that would justify a state bond issue.