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California Proposition 81, Bonds for Domestic Water Improvement Projects (1988)

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California Proposition 81 was on the November 8, 1988 statewide ballot in California as a legislatively-referred bond act, where it was approved.

Proposition 81 authorized a bond issue of $75 million to provide funds for improvement of domestic water systems.

Election results

Proposition 81
Approveda Yes 6,621,966 71.66%

Text of measure


The ballot title was:

California Safe Drinking Water Bond Law of 1988.


The official summary said:

"This act provides for a bond issue of seventy-five million dollars ($75,000,000) to provide funds for improvement of domestic water systems to meet minimum drinking water standards."

Fiscal impact

See also: Fiscal impact statement

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

  • Net Cost of Paying Off the Bonds. The bonds authorized by this measure probably would be paid off over a period of about 35 years, and would be a responsibility of the state's General Fund. The total cost of the bonds would be about $200 million, consisting of $75 million for principal and $125 million for interest.
However, because the loans would be repaid (with a subsidized rate of interest), the net state cost would be about $110 million, or an average of about $3 million per year. (The net state cost would consist of $60 million for the bonds used for grants and about $50 million for the interest rate subsidy on the loans, plus ongoing administrative and legal expenses.)
This estimate assumes that all of the bonds would be sold at an average interest rate of 7.5 percent, and that both the bonds and the loans would be paid off over the same 35-year period in effect under the current Safe Drinking Water Program.
  • Borrowing Costs for Other Bonds. By increasing the amount which the state borrows, this measure may cause the state and local governments to pay more under other bond programs. These costs cannot be estimated.
  • State Revenues. The people who buy these bonds are not required to pay state income tax on the interest they earn. 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 81 on the ballot via Assembly Bill 1439 (Statutes of 1988, Ch. 45), as amended by Assembly Bill 1720 (Statutes of 1988, Ch. 297).

Votes in legislature to refer to ballot
Chamber Ayes Noes
Assembly 70 3
Senate 33 0

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