Your guide to Proposition 4: California climate bond

The Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024 would have the state borrow $10 billion to pay for climate and environmental projects — including some that were axed from the budget because of an unprecedented deficit.

California taxpayers would pay the bond back with interest. The bond will cost taxpayers $400 million a year for the next 40 years, or $16 billion, according to the nonpartisan Legislative Analyst’s Office in Sacramento.

According to the 49-page proposal, $3.8 billion would be allocated to water projects, including those that provide for safe drinking water, recycle wastewater, store groundwater and control flooding. An additional $1.5 billion would be spent on wildfire protection, and $1.2 billion would go toward protecting the coast from sea level rise.

Other money would be used to create parks, protect wildlife and habitats, fight air pollution, address extreme heat events and fund sustainable agriculture.

The language requires that at least 40% of the money go to projects that aid disadvantaged communities, defined as those where the median household income is less than 80% of the area average.

Hundreds of millions of dollars from the bond would benefit private industry. For example, it would provide $850 million to clean energy projects, including proposed offshore wind farms.

Dozens of environmental groups, labor unions, social justice organizations, water agencies, renewable energy companies and the water recycling industry have been lobbying for the proposal.

The Howard Jarvis Taxpayers Assn. estimates that by issuing bonds to pay for the environmental projects, their cost could more than double because of the added interest expense. The association said it would be more fiscally responsible to fund the projects without taking on debt.

“These bonds will be paid by people decades from now that didn’t even get to vote for their authorization,” the association wrote.

Republican state Sen. Brian Jones has detailed how a portion of the proposed spending has nothing to do with climate. For example, millions of dollars would go to pay for pop-up tents, restrooms and handwashing stations at Farmer’s Markets.

Top contributors in support of the measure are conservation and land trust organizations including The Nature Conservancy with $2 million and The Trust for Public Land with $1 million. Philanthropist Kat Taylor has given $1.7 million to a committee supporting this measure as well as Proposition 4. Her contribution is included in both.

The Times has not identified any opposing committees.

The push for the measure intensified after Gov. Gavin Newsom proposed spending $54 billion on climate efforts in 2022 but then cut that funding amid a massive budget shortfall.

Every year, $400 million of the state’s general fund will be used to repay the debt. The general fund is the same account the state uses to pay for most services, including healthcare, schools and prisons.

The new debt will raise the state’s debt-service ratio, which is the percentage of the general fund that is needed to pay for all of its outstanding bonds. A large jump in the debt-service ratio could harm the state’s credit rating, which now falls in the middle of the pack among the 50 states. Texas and Florida are among the better-rated states, while Illinois and New Jersey are among those with lower ratings.

Governments often take out long-term debt to pay for infrastructure projects that are expensive to build but will last for decades. Much of the planned climate bond spending would be on infrastructure, but some would go to operate programs that could long be over by the time the bonds are paid off. For instance, a portion will go toward the training of workers. And up to 7% of the money, or $700 million, can go to administration costs.