A $10 billion climate bond will go before voters in November

California voters will decide in November whether they want the state to borrow $10 billion to pay for climate and environmental projects — including some that have been cut from the budget because of the unprecedented deficit.

At 28 page bill to place the Safe Drinking Water, Fire Prevention, Drought Preparedness, and Clean Air Act of 2024 on the ballot approved by the Senate and Assembly on Wednesday.

This is the last day lawmakers have to approve a climate guarantee proposal to take the measure to a November 5 vote.

Senate President Pro Tem Mike McGuire (D-Healdsburg) served as governor Wednesday because Gov. Gavin Newsom is in Washington. McGuire is a supporter of the proposed climate bond and is expected to sign it into law Wednesday night.

“Ensuring that our communities have the resources to protect themselves from wildfires, droughts and floods is critical to the long-term success of the Golden State,” McGuire said in a press release Friday.

The bill’s language has been discussed in secret for the past several months but was not made public until 9:57 p.m. on Saturday.

California taxpayers will repay the bonds with interest. Assembly analysts estimate that the $10 billion bond will cost the state $650 million a year for the next 30 years or more than $19 billion.

Scott Kaufman, legislative director at the Howard Jarvis Taxpayers Assn., said the cost could be higher if the interest rate on the bond becomes higher than the 5% rate analysts are using.

“This bond will be paid for by people decades from now who could not vote to authorize it,” Kaufman wrote to the bill’s authors in a letter opposing the measure.

Earlier this year, Sacramento legislators had proposals to place tens of billions of dollars in bonds on the November vote for efforts as varied as stopping fentanyl overdoses and building affordable housing.

But that plan was scrapped in March when a $6.4 billion bond measure introduced by Newsom to help the homeless and mentally ill was scrapped. 50.18% of the vote, barely enough to win approval.

At new survey by the Public Policy Institute of California, 64% of likely voters said it was a “bad time” for the state to issue bonds to pay for state projects and programs.

Dozens of environmental groups, renewable energy companies, labor unions, water agencies and social justice advocates have been lobbying state lawmakers to put the climate bond on the ballot.

Lobbying intensified after Newsom proposed spending $54 billion on climate efforts in 2022 but then reduce that funding to close the new massive budget deficit.

According to the bill, $3.8 billion will be allocated for water projects, including those that provide safe drinking water, recycle wastewater, store groundwater and control floods.

An additional $1.5 billion will be spent on fire protection, while $1.2 billion will be used to protect the coast from sea level rise.

The rest of the money will be used to create parks, protect wildlife and habitats and deal with extreme heat events.

The language requires that at least 40% of the money go to projects that benefit disadvantaged communities, defined as populations whose average household income is less than 80% of the regional average or less than 80% of the national average.

Some legislators have withdrawn their support from the guarantee, saying that the provision has recently been watered down in order to give more money to the financially disadvantaged.

Jasmeet Bains (D-Delano) said before the Assembly vote that the definition of vulnerable population has been diluted. “It’s fundamentally unfair,” she said.

Hundreds of millions of dollars from the bonds will benefit private industry. For example, it will provide $850 million for clean energy projects, including proposed offshore wind farms. The planned wind project is have benefited of subsidies in President Biden’s Inflation Reduction Act.

Governments often take out long-term debt to pay for infrastructure projects that are expensive to build but will last for decades. But some of the planned climate bond spending will leave the program open for long after the bonds are paid off. For example, part will go to “workforce development” or worker training.

And up to 7% of the money or $ 700 million can go to administrative costs.

“We are already seeing the devastating effects of climate change – more extreme heat waves, catastrophic fires and floods, coastal erosion, and severe droughts,” said Senator Ben Allen (D-Santa Monica) in a press release. “Every part of our country is affected, and if we don’t act now, the cost of dealing with the impact will be enormous.”