Sen. Kelly Seyarto’s SB 986 Promises Greater Bond Measure Transparency

A bill to require a ballot label for state and local bond measures to include an estimate of the amount of interest that will be due on that bond was introduced in the Senate on Thursday.

According to Senate Bill 986, authored by Senator Kelly Seyarto (R-Murrieta), the bill will require, for state bond measures and for local measures to approve the issuance of bonds that will be secured by an ad valorem tax, the ballot label to include a summary of the measure’s fiscal impact in a specified form. Currently, this information is often combined into an annual payment estimate, which combines both principal and interest, blurring how much exactly is being spent on the measure’s objectives and how much the costs actually are.

Seyarto said on Thursday that he wrote the bill to give greater government transparency and to be up front to the voters of what the real cost of a bond would be. The Senator argued that SB 986 would treat bond interest knowledge similar to how banks give loan agreement information showing the terms and interest ahead of time for people to review and make a decision on.

“When asking voters if we can borrow money on their behalf, they should be armed with sufficient information to make an educated decision,” said Senator Seyarto on Thursday. “That includes being transparent and upfront about the cost of borrowing and what those voters will be paying back, even if it is over an extended period of time. Nobody would enter into a loan agreement without knowing the terms and interest, and the same information should be made clearly available for voters.”

While the bill has not yet received significant support or opposition in Sacramento as of Thursday, elections experts told the Globe on Thursday that the bill will likely prove popular with voters.

“A lot of bond measures nowadays are simplified to ‘our schools need money’ or ‘we need more money for emergency services’ or something like that, without giving too much more on it,” Stan Varney, an elections consultant who specializes on local bond measure opposition, told the Globe. “They want to borrow a lot of money for more spending. And voters generally have a good grasp of what is and isn’t needed. But in these times of needing to be more careful on spending, people want to know what the total cost will be.”

“And here’s the thing. There have been elections in recent years where a bond proposal goes forward. People may know that the local school district is in need of more money, but because they weren’t being up front about the total cost, voters went against it, thinking they were hiding something. And school districts, local governments wanting more for parks and things like that, they do it all the time to make it look like the bond won’t be that much. But as anyone who has had a home loan, auto loan, or just some sort of loan can tell you, the interest can kill you.”

“This bill is a good example of fiscal responsibility and transparency. Voters can see if a bond measure has reasonable interest or if the people who crafted it screwed up and got one with interest worse than a payday loan. This is a bill voters both want and need. I can see some people coming out against it, saying it will make bond measures harder to pass if they are more expensive in the end. But this is something voters need to know about, and not many lawmakers want to be known as the one who said no to more government transparency.”