When California legislators decide to build a public project like a highway, a dam, prison or bridge, it can either use a General Obligation (GO) Bond or it can use Revenue Bonds. GO bonds, as discussed with Prop 51, are paid back out of the General Fund, which is financed mostly through income taxes. A GO bond project requires a public vote, usually by way of a proposition.
A Revenue Bond is a debt that is paid back by the use of the project. So, for example, in the case of the high-speed rail, the plan would be to pay back the debt with revenues generated by the sales of tickets. But what if no one rides the rail? Who pays the bill? It could likely come out of the state general fund – that slush pot of money that is already over-distributed. Projects that are funded by Revenue Bonds currently do not require a vote.
A YES on 53 requires any revenue bond over $2 billion to go before the voters, first. A NO on 53 continues business as usual.
More information can be found at the state’s Legislative Analyst’s Office: