LAO Full Text Search Form LAO Publication Mailing List Links to Other Sites Return to LAO Home Return to LAO Home

November, 2006

Proposition 84

Water Quality, Safety and Supply. Flood Control. Natural Resource Protection. Park Improvements. Bonds. Initiative Statute.



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:

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.


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” 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.

Figure 1

Proposition 84
Uses of Bond Funds


(In Millions)

Water Quality


·Integrated regional water management.


·Safe drinking water.


·Delta and agriculture water quality.


Protection of Rivers, Lakes, and Streams


·Regional conservancies.


·Other projects—public access, river parkways, urban stream
restoration, California Conservation Corps.


·Delta and coastal fisheries restoration.


·Restoration of the San Joaquin River.


·Restoration projects related to the Colorado River.


·Stormwater pollution prevention.


Flood Control


·State flood control projects—evaluation, system improvements, flood corridor program.


·Flood control projects in the Delta.


·Local flood control subventions (outside the Central Valley flood control system).


·Floodplain mapping and assistance for local land use planning.


Sustainable Communities and Climate Change Reduction


·Local and regional parks.


·Urban water and energy conservation projects.


·Incentives for conservation in local planning.


Protection of Beaches, Bays, and Coastal Waters


·Protection of various coastal areas and watersheds.


·Clean Beaches Program.


·California Ocean Protection Trust Fund—marine resources,
sustainable fisheries, and marine wildlife conservation.


Parks and Natural Education Facilities


·State park system—acquisition, development, and restoration.


·Nature education and research facilities.


Forest and Wildlife Conservation


·Wildlife habitat protection.


·Forest conservation.


·Protection of ranches, farms, and oak woodlands.


Statewide Water Planning


·Planning for future water needs, water conveyance systems, and flood control projects.




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.

Return to Propositions

Return to Legislative Analyst's Office Home Page