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California Proposition 44, Bonds for Water Conservation (1986)

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California Proposition 44, or the Water Conservation And Water Quality Bond Law Of 1986, was on the June 3, 1986 statewide primary ballot in California as a legislatively-referred bond act, where it was approved.
  • Yes: 3,204,793 (74.1%) Approveda
  • No: 1,120,499 (25.9%)

Proposition 44 authorized a bond issue of $150 million to provide funds for water conservation, groundwater recharge, and drainage water management.

Spending details

Proposition 44 funds were to be spent as follows:

1. Water Conservation and Groundwater Recharge: $75 Million. Proposition 44 provided $75 million for loans to public agencies for "studies and construction of water conservation and groundwater recharge projects." $3.75 million of this went to the California Department of Water Resources as a management fee.

2. Agricultural Drainage Water Projects: $75 Million. Proposition 44 provided $75 million for loans to public agencies for "studies and construction of treatment, storage, and disposal facilities for agricultural drainage water." $3.75 million of this went to the California State Water Resources Control Board for management.

Fiscal impact

The fiscal estimate provided by the California Legislative Analyst's Office said:

Paying Off the Bonds. The state would make principal and interest payments over a period of up to 20 years from the state's General Fund. The average payment would be about $13.4 million each year if the bonds were sold at an interest rate of 7.5 percent.

If all the loans were repaid on time, the net state cost would average $3.5 million per year for 20 years, bringing total state costs to $70 million. These costs would consist of: (1) the state's administrative expenses (which would not be reimbursed by the borrower) and (2) interest on the bonds that is not covered by payments from local agencies because these agencies are charged a lower interest rate.

Borrowing Costs for Other Bonds. By increasing the amount which the state borrows, this measure may cause the state and local agencies to pay more under other bond programs. These costs cannot be estimated.

Lower State Revenues. The people who buy these bonds are not required to pay state income tax on the interest they carn. Therefore, if California taxpayers buy these bonds instead of making other taxable investments, the state would collect less taxes. This loss of revenue cannot be estimated.

Path to the ballot

The California State Legislature voted to put Proposition 44 on the ballot via Assembly Bill 1982 (Statutes of 1986, Ch. 6), in accordance with Article XVI of the California Constitution.

External links