March 11, 2001
The state carries out various programs to conserve natural and cultural resources, protect the environment, and provide recreational opportunities for the public. The state also provides grants and loans to local public agencies and nonprofit associations for similar purposes.
Some of the funding for such programs has come from general obligation bond funds. General obligation bonds are backed by the state, meaning that the state is required to pay the principal and interest costs on these bonds. General Fund revenues would be used to pay these costs. These revenues come primarily from the state personal and corporate income taxes and sales tax.
Since 1980, voters have approved about $7.6 billion of general obligation bonds to provide funding for these state and local programs as follows:
· Bonds to Improve Water Quality and Supply. About $3.8 billion in bonds have been approved for various water-related purposes, including improving the safety of drinking water, flood control, water quality, and the reliability of the water supply.
· Bonds for Natural Resource Conservation and Recreational Opportunities. About $3.8 billion in bonds have been approved to purchase, protect, and improve recreational areas (such as parks and beaches), cultural areas (such as historic buildings and museums), and natural areas (such as wilderness and open-space areas, trails, wildlife habitat, and the coast).
It is estimated that all but about $1.2 billion of the bonds authorized by these previous bond acts will have been spent or committed to specific projects as of June 2002.
In addition, the state also carries out programs that provide grants to public agencies and private organizations for projects that reduce air pollution. These programs have been funded from various funds, including the General Fund.
This measure allows the state to sell $2.6 billion of general obligation bonds to conserve natural resources (land, air, and water), to acquire and improve state and local parks, and to preserve historical and cultural resources.
Figure 1 summarizes the purposes for which the bond money would be used. The bond money would be available for expenditure by various state agencies and for grants to local public agencies and nonprofit associations.
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Figure 1 California Clean Water, Clean Air, Uses of Bond Funds |
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(In Millions) |
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Amount |
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Land, Air, and Water Conservation |
$1,275.0 |
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$445.0 |
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300.0 |
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300.0 |
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75.0 |
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75.0 |
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50.0 |
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20.0 |
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10.0 |
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Parks and Recreation |
$1,057.5 |
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$460.0 |
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372.5 |
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225.0 |
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Historical and Cultural Resources Preservation |
$267.5 |
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$267.5 |
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Total |
$2,600.0 |
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Bond Costs. For these bonds, the state would make principal and interest payments from the state’s General Fund over a period of about 25 years. If the bonds were sold at an interest rate of 5 percent (the current rate for this type of bond), the cost would be about $4.3 billion to pay off both the principal ($2.6 billion) and interest ($1.7 billion). The average payment would be about $172 million per year.
Operational Costs. The state and local governments that buy or improve property with these bond funds will incur additional costs to operate or manage these properties. These costs may be offset partly by revenues from those properties, such as state park entrance fees. The net additional costs (statewide) could be in the tens of millions of dollars annually.