California Proposition 27, Bonds for Hazardous Substance Cleanup (1984)
Proposition 27 provided $100 million to provide funds for hazardous substance cleanup.
The fiscal estimate provided by the California Legislative Analyst's Office said:
1. Cost of Paying Off the Bonds
Although this measure would allow bonds to be issued for a maximum term of 30 years, the Treasurer advises that the $100 million in bonds authorized by the measure probably would be paid off over a period of up to 20 years. The principal portion of these repayments would average $5 million per year. In addition, the state would have to pay interest on the borrowed funds. We estimate that if the bonds were sold at an interest rate of 10 percent, the annual cost of these interest payments would average approximately $5.25 million.
These payments would be supported by the state's General Fund if the other funding sources identified in the measure collectively do not yield sufficient amounts. If the General Fund is required to make these payments, it would be repaid with interest. Consequently, assuming that the state's ability to collect Hazardous Substance Account taxes is not significantly impaired in the future, we estimate that there would be no net cost to the General Fund if this measure is approved by the voters.
2. Other Fiscal Effects
Increased Borrowing Costs. Generally, an increase in the amount borrowed by the state tends to raise the interest rate on borrowed funds. Consequently, the state and local governments could incur higher costs under other bond programs as a result of this measure. The size of any such costs cannot be estimated.
Revenue Loss. The interest paid by the state on these bonds would be exempt from the state personal income tax. Therefore, to the extent that the bonds are purchased by California taxpayers in lieu of taxable investments, the state would collect less income tax revenue. It is not possible to estimate what this revenue loss would be.
Provisions of Chapter 376, Statutes of 1984. Provisions of this measure would result in an increase in tax revenue to the Hazardous Substance Account amounting to $5 million annually until at least 1991.
The exemption of specified wastes from fees, as provided for by the measure, would result in a loss of revenue to the Hazardous Waste Control Account, which supports the state's regulatory program. We estimate that this revenue loss would exceed $1 million annually.
The measure also would result in increased expenditures from the Hazardous Substance Account, the Hazardous Waste Control Account, and/or the General Fund in order to pay the expenses of (a) the Attorney General in seeking recoveries from responsible parties, (b) the Department of Health Services, the State Water Resources Control Board, and the regional water quality control boards in preparing, reviewing, and approving remedial action plans for all Superfund sites on the state priority list, and (c) the arbitration panel to apportion cleanup costs. We estimate that these costs would exceed $1 million annually.
Path to the ballot
The California State Legislature voted to put Proposition 27 on the ballot via Senate Bill 1465 (Statutes of 1984, Ch. 376).