The California Constitution guarantees voters the right to approve or disapprove any new debt that would exceed revenue available to pay it. In fact, two-thirds voter approval is required. This has been the law since 1879.
However, some cities have sought authority to issue bonds, without voter approval, in order to pre-pay unfunded pension liability. The city of San Jose, for example, seeks authority to issue a whopping $3.5 billion in pension obligation bonds, or POBs.
The cities of Oxnard and Escondido also contend that they may issue POBs without voter approval.
The Howard Jarvis Taxpayers Association is standing up for voter approval of bond debt. Almost a dozen cities have backed down after HJTA’s attorneys challenged their plans, but pending cases in San Jose, Oxnard and Escondido are ongoing.
Although rulings in the lower courts have been troubling, HJTA is pursuing every available appeal.
Pension obligation bonds can be risky for taxpayers. If the proceeds are invested unwisely, taxpayers can be on the hook to pay back the bond proceeds and still be on the hook for the pension obligations.
The Howard Jarvis Taxpayers Foundation funds HJTA’s legal and educational efforts. Donations may be tax deductible; consult your tax preparer.
ABOVE: HJTA Director of Legal Affairs Laura Dougherty battled for taxpayers during oral arguments in the Escondido pension obligation bonds case.