California General Election - Official Voter Information Guide
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Title and Summary Analysis Arguments and Rebuttals Text of Proposed Law

PROPOSITION

84

WATER QUALITY, SAFETY AND SUPPLY.
FLOOD CONTROL. NATURAL RESOURCE PROTECTION. PARK IMPROVEMENTS. BONDS. INITIATIVE STATUTE.

ANALYSIS BY THE LEGISLATIVE ANALYST

BACKGROUND

State Spending on Resources Programs. The state operates a variety of programs to conserve natural resources, protect the environment, provide flood control, and offer recreational opportunities for the public. The state also operates a program to plan for future water supplies, flood control, and other water-related requirements of a growing population. In addition to direct state expenditures, the state also provides grants and loans to local governments and nonprofit organizations for similar purposes. These programs support a variety of specific purposes, including:

  • Natural Resource Conservation. The state has provided funds to purchase, protect, and improve natural areas—including wilderness and open-space areas; wildlife habitat; coastal wetlands; forests; and rivers, lakes, streams, and their watersheds.
  • Safe Drinking Water. The state has made loans and grants to public water systems for facility improvements to meet state and federal safe drinking water standards.
  • Flood Control. The state has funded the construction and repair of flood control projects in the state Central Valley flood control system. The state has also provided financial assistance to local agencies for local flood control projects in the Sacramento-San Joaquin River Delta and in other areas outside the Central Valley.
  • Other Water Quality and Water Supply Projects. The state has made available funds for various other projects throughout the state that improve water quality and/or the reliability of water supplies. For example, the state has provided loans and grants to local agencies for the construction and implementation of wastewater treatment, water conservation, and water pollution reduction projects.
  • State and Local Parks. The state operates the state park system and has provided funds to local governments for the acquisition, maintenance, and operation of local and regional parks.
  • Funding for Resources Programs. Funding for these various programs has traditionally come from General Fund revenues, federal funds, and general obligation bonds. Since 1996, voters have authorized approximately $11 billion in general obligation bonds for various resources purposes. Of this amount, approximately $1.4 billion is projected to remain available for new projects as of June 30, 2006, primarily for water-related purposes. Legislation enacted earlier this year provides $500 million from the General Fund for emergency levee repairs and other flood control-related expenditures.

PROPOSAL

This initiative allows the state to sell $5.4 billion in general obligation bonds for safe drinking water, water quality, and water supply; flood control; natural resource protection; and park improvements. (See “An Overview of State Bond Debt” on page 96 for basic information on state general obligation bonds.) Figure 1 summarizes the purposes for which the bond money would be available for expenditure by various state agencies and for loans and grants, primarily to local agencies and nonprofit organizations. In order to spend most of these bond funds, the measure requires the Legislature to appropriate them in the annual budget act or other legislation.

FISCAL EFFECTS

Bond Costs. The cost of these bonds would depend on interest rates in effect at the time they are sold and the time period over which they are repaid. The state would likely make principal and interest payments from the state’s General Fund over a period of about 30 years. If the bonds were sold at an average interest rate of 5 percent, the cost would be about $10.5 billion to pay off both the principal ($5.4 billion) and interest ($5.1 billion). The average payment would be about $350 million per year.

Property Tax-Related Impacts. The initiative provides funds for land acquisition by governments and nonprofit organizations for various purposes. Under state law, property owned by government entities and by nonprofit organizations (under specified conditions) is exempt from property taxation. To the extent that this initiative results in property being exempted from taxation due to acquisitions by governments and nonprofit organizations, local governments would receive reduced property tax revenues. We estimate these reduced property tax revenues would be several million dollars annually.

Operational Costs. State and local governments may incur additional costs to operate or maintain the properties or projects, such as new park facilities, that are purchased or developed with these bond funds. The amount of these potential additional costs is unknown, but could be tens of millions of dollars per year.

FIGURE 1
Proposition 84: Uses of Bond Funds
Amount
(In Millions)

Water Quality

$1,525
  • Integrated regional water management.
1,000
  • Safe drinking water.
380
  • Delta and agriculture water quality.
145
Protection of Rivers, Lakes, and Streams $928
  • Regional conservancies.
279
  • Other projects—public access, river parkways, urban stream restoration, California Conservation Corps.
189
  • Delta and coastal fisheries restoration.
180
  • Restoration of the San Joaquin River.
100
  • Restoration projects related to the Colorado River.
90
  • Stormwater polution prevention.
90
Flood Control $800
  • State flood control projects—evaluation, system improvements, flood corridor program.
315
  • Flood control projects in the Delta.
275
  • Local flood control subventions (outside the Central Valley flood control system).
180
  • Floodplain mapping and assistance for local land use planning.
30
Sustainable Communities and Climate Change Reduction $580
  • Local and regional parks.
400
  • Urban water and energy conservation projects.
90
  • Incentives for conservation in local planning.
90
Protection of Beaches, Bays, and Coastal Waters $540
  • Protection of various coastal areas and watersheds.
360
  • Clean Beaches Program.
90
  • California Ocean Protection Trust Fund—marine resources, substainable fisheries, and marine wildlife conservation.
90
Parks and Natural Education Facilities $500
  • State park system—acquisition, development, and restoration.
400
  • Nature education and research facilities.
100
Forest and Wildlife Conservation $450
  • Wildlife habitat protection.
225
  • Forest conservation.
180
  • Protection of ranches, farms, and oak woodlands.
45
Statewide Water Planning $65
  • Planning for furture water needs, water conveyance systems, and flood control projects.
65
Total $5,388


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