McGeorge School of Law

Proposition 40

Proposition 40:
The California Clean Water, Clean Air, and Safe Neighborhood Parks, and Coastal Protection Act of 2002

By Robia S. Chang

Copyright © 2001 by University of the McGeorge School of Law

JD, McGeorge School of Law, University of the Pacific
to be conferred May 2002
B.A., Philosophy, University of California at Davis, 1996

Table of Contents

I. Executive Summary
II. The Law
III. Drafting Issues
IV. Constitutional Issues
V. Public Policy Considerations
VI. Conclusion

I. Executive Summary

Proposition 40, the California Clean Water, Clean Air, and Safe Neighborhood Parks, and Coastal Protection Act of 2002, would allow California to continue its investment in state and urban parks, the purchase of wild lands and the preservation of historical and cultural resources under The California Clean Water, Clean Air, and Safe Neighborhood Parks, and Coastal Protection Act of 2002. The Act, if adopted would authorize the sale and issuance of $2.6 billion in state bonds for the purpose of financing a program for the acquisition, development, restoration, protection, rehabilitation, stabilization, reconstruction, preservation and interpretation of park, coastal, agricultural land, air and historical resources.

Proposition 40 follows the passage of Proposition 12, which established the Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection Bond Act of 2000. Proposition 12 was enacted in response to California's continued air pollution problem found by the Legislature to: harm the health of the state's residents, cost the economy billions of dollars in related health care costs, reduce agricultural productivity, damage infrastructure and "otherwise decrease the quality of life in our state." (Cal. Public Resources Code Sec. 5096.303(a)).

The goals of the 2001 Bond Act are to provide funding to preserve California's coast and protect the lands that provide California with clean water and air. Proposition 40 would provide every city and county with funds on a per capita basis, to make parks safer with the goals of promoting tourism to the state, providing safe playgrounds for kids, preserving coastal lands and improving air quality. Additional funds would also be available as competitive grants.

Although the state currently faces a budget deficit, the $2.6 billion general obligation bond would have no immediate effect on general spending. The money would be appropriated by the Legislature and repaid over the next 25 years. Aside from the actual bond costs, operational costs associated with maintaining and managing the newly acquired properties would be incurred by state and local governments. While these costs may be in the tens of millions of dollars annually, they may be offset partly by revenues derived from those properties, such as entrance fees.

II. The Law

A. Existing Law

1. Background

Proposition 40 is part of a continued response to the rapidly growing population in California and the need to repair damaged natural resources that had been largely under-funded until the passage of Proposition 12 in 2000. The last parks bond issued prior to 2000 was a $776 million initiative measure passed in 1988. (League of Women Voters of California Education Fund, Nonpartisan Pros & Cons of Proposition 12 (last accessed Nov. 17, 2001)). Between 1988-2000, California's natural and historical resources were neglected. California is projected to add the population of five cities the size of Los Angeles over the next four decades and by 2032, California's population will double to 65 million. (Californians for Population Stabilization, Population News (last accessed Nov. 17, 2001)). With the current growth rate, it is necessary to protect the resources we have and provide safer neighborhood parks for children and seniors in the future. At the same time, many wild lands along the coast and in mountainous areas need the protection of public ownership to avoid becoming housing tracts and strip malls as a result of urban sprawl.

2. Proposition 12

Prior to the passage of Proposition 12, the Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection Bond Act of 2000, thirteen years had passed since the issuance of the last bond to protect the coastline, forests and mountains. In March 2000, Proposition 12 passed with 63.3% of voters in favor. This measure provided for a bond issue of $2.1 billion in funds to restore parks and recreational facilities, preserve open space and farmland and protect the watersheds, wetlands, and coastal areas that keep water clean. (Legislative Analyst's Office, Proposition 12 (last accessed Nov. 6, 2001)). First priority was given to projects in fast-growing urban centers: the urban conservation corps, recreation for at-risk youth, open space preservation in burgeoning suburbs and protection of wildlife areas in sprawling counties. (Id.)

3. Proposition 13

Proposition 13, the Safe Drinking Water Bond Act providing $1.9 billion for safe drinking water, flood protection and water quality programs also passed in March 2000. This Act aimed to solve California's water problems by aiding six types of programs: drinking water facilities, flood protection, watershed protection, pollution control and water recycling, water conservation and water supply reliability. (Legislative Analyst's Office, Proposition 13 (last accessed Nov. 6, 2001)). Although Proposition 12 and 13 were distinct propositions, they were complementary and part of their success was attributable to their combined campaign efforts including a merged multi-million dollar advertising program.

B. Changes Proposed by Proposition 40

Proposition 40 would add Chapter 1.696 to Division 5 of the Public Resources Code. (Cal. Assembly 1602, 2001-2002 Reg. Sess. (Feb. 23, 2001)). Chapter 1.692 is the Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection Act of 2000 (Villaraigosa-Keeley Act). Combined with Proposition 12, Proposition 40 would provide the most significant funding package ever approved in America to address park and open space needs.

1. Articles of Proposition 40

a. Article 1. General Provisions

Article 1 states the findings and declarations of the Legislature. It states that maintaining a high quality of life for California's growing population requires continuing investment in parks, recreation facilities, and in the protection of the state's natural and historical resources. The Article also defines various terms used throughout the bill. (Id. at 2).

b. Article 2. The California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Act of 2002

Originally introduced in February 2001 as the California Oak Conservation Act of 2001, Proposition 40 originally required the Department of Forestry and Fire protection to administer forest resource management programs under the Act. In its sixth Amendment, the Senate amended it to address the preservation of park, coastal, agricultural land, air and historical resources rather than the more narrow focus of oak tree conservation. (Id. at 3-4).

The proceeds of the bonds are to be deposited in the California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Fund and would be appropriated by the Legislature in accordance with the following schedule:

1. $225 million for acquisition and development of the state park system;

2. $832.5 million for local assistance programs for the acquisition and development of neighborhood, community, and regional parks and recreation areas;

3. $1.275 billion for land, air, and water conservation programs, including acquisition for those purposes; and

4. $267.5 million for the acquisition, restoration, preservation, and interpretation of historical and cultural resources

c. Article 3. State Parks

$225 million would be available for the acquisition and development of the state park system. First priority for funding would be for development projects to complete and expand visitor facilities and for restoration projects. No more than 50% of the total bond funds allocated may be used for acquisition. (Id. at 4).

d. Article 4. Local Assistance Programs-$832.5 million

1. $350 million would be spent by the State Department of Parks and Recreation on the basis of population, for grants to public agencies and nonprofit organizations and for the acquisition and development of neighborhood, community, and regional parks and recreational lands and facilities in urban and rural areas. (Id.)

$200 million would be spent according to the Robert-Z'berg-Harris Open Space and Recreation Act (created by Proposition 12) for urban parks and recreational facilities. (Id.)

2. $22.5 million would be appropriated on a per capita basis, of which $12.5
million would go to a city with an urban population greater than 3,500,000. $260 million of the funds allocated to under-served communities shall be expended on a competitive grant basis. Priority is assigned to projects that come with matching grants. (Id.).

a. $10 million for the development of Central Park in Rancho Cucamonga

b. $5 million for the allocation to the City of Los Angeles for park and recreation or community facilities at or adjacent to the Hansen Dam recreation area

c. $5 million for the allocation to the City of Los Angeles for the Sepulveda Basin recreational parkland

In determining which projects are to receive grants, the Director of the Department of Parks and Recreation would be required to prepare and adopt criteria and procedures for evaluating applications for grants. Priority would be assigned to projects that include a commitment for a matching contribution and the grant recipient is expected to complete all funded projects within eight years of the effective date of the appropriation.

e. Article 5. Land, Air and Water Conservation

$1.275 billion would be available for the acquisition and development of land, air, and water resources. (Id. at 8).

a. $300 million continuously appropriated to the Wildlife Conservation Board. These funds may also be used to prepare management plans for the acquired property.

b. $445 million are allocated to conservancies in accordance with the following:

i. $200 million to the State Coastal Conservancy

ii. $40 million to the California Tahoe Conservancy

iii. $40 million to the Santa Monica Mountains Conservancy

iv. $20 million to the Coachella Valley Mountains Conservancy

v. $25 million to the San Joaquin River Conservancy

vi. $40 million to the San Gabriel and Lower Los Angeles Rivers and Mountains Conservancy

vii. $40 million to the Baldwin Hills Conservancy

viii. $40 million to the San Francisco Bay Area Conservancy Program

c. $375 million available for grants to public agencies and nonprofit organizations for acquisition, restoration, and protection of air and water resources including river parkways, urban streams, beaches, coastal waters, rivers, lakes, and streams .

f. Article 5. Historical and Cultural Resources Preservation

$2.675 million would be available for appropriation by the Legislature for the acquisition, development, preservation, and interpretation of buildings, structures, sites, places, and artifacts that preserve and demonstrate culturally significant aspects of California's history and for grants for those purposes. Eligible projects include those that preserve and demonstrate culturally significant aspects of life during various periods of California history, including architecture, economic activities, art, recreation, and transportation; unique identifiable ethnic and other communities that have added significant elements to California's culture; industrial, commercial, and military history; and important paleontologic, oceanographic and geologic sites and specimens.(Id. at 10).

g. Article 6. Fiscal Provisions

Proposition 40 would allow the state to sell $2.6 billion of general obligation bonds. The Secretary of the Resources Agency would be required to provide for an annual independent audit of expenditures from the Act. (Id. at 10).

In sum, the proceeds of the bonds issued and sold pursuant to the act would be deposited in the California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Fund and made available for appropriation by the Legislature. The allocation of funds available under the Act are limited to a specific percentage of revenue:

32% $832.5 million for local assistance programs
8.7% $225 million for state park projects, of which no more than 50% may be used for acquisition
7.7% $200 million for coastal protection
11.5% $300 million for clean beaches, watershed protection and water quality
11.5% $300 million for wildlife habitat protection
3% $ 75 million to protect agricultural lands
3% $ 75 million for river parkways
9.4% $245 million to protect other sensitive lands
10.3% $267.5 million to protect historical and cultural resources
1.9% $ 50 million to improve air quality
.8% $ 20 million for conservation corps programs that put young adults to work repairing parks and for resource conservation projects
.4% $ 10 million for tree planting projects

III. Drafting Issues

There do not appear to be any significant drafting issues. However, as the result of a technical error, "Article 5" appears twice in the text of the bill, creating potential confusion. The first Article 5 is subtitled "Land, Air, and Water Conservation" and the second Article 5 is subtitled Historical and Cultural Resources Preservation". The chaptered version contains this error.

IV. Constitutional Issues
A. General Obligation Proceeds Fund

Section 1.5 allows the Legislature to create and establish a "General Obligation Bond Proceeds Fund" in the State Treasury.(Cal. Const. art. XVI §§1, 1.5) A bond is a form of borrowing by state governments to pay for projects. (League of Women Voters of California, FAQs on Bonds, [last accessed Nov. 5, 2001]). The Legislature may use bonds as opposed to direct spending of state funds when a project would be too costly to pay for at once. (Id.) Essentially, investors loan the money to the government and it is paid back with five to seven percent interest. (Id.) When the state wants to borrow money through a general obligation bond, the majority of the voters must approve the action after approval by a two-thirds vote of both houses of the legislature with the signature of the governor. (Id.) The principal and interest are paid back from the General Fund which is comprised of money from fees and taxes. (Id.) According to the California State Budget Summary, for 2001-02, 56.1% of the General Fund Revenues and Transfers came from personal income tax, 29.2% from sales tax, and 7.9% from Bank and Corporation Taxes. Other sources include insurance tax, estate tax, and other smaller sources. Repayment of the debt takes precedence over any other expenditure.

As more bonds are sold, debt increases, but as California's General Fund revenue increases, the debt ratio remains largely unaffected. However, with interest rates between five to seven percent, the amount repaid is much more than the amount borrowed and significantly increases the actual cost of the government programs. For example, the $2.1 billion bond from Proposition 12 will cost approximately $3.6 billion to pay off at an interest rate of five and one-half percent.

B. Urgency Statutes

Urgency statutes go into effect immediately upon their enactment. Such statutes are those "necessary for immediate preservation of the public peace, health or safety." Cal. Const., art. IV, § 8 (d). The Legislature traditionally takes a liberal view of the equally broad categories of "public peace, health, or safety," and has found a wide range of statutes to be "urgent" within the meaning of the constitutional provision. Rossi v. Brown 9 Cal. 4th 688 (1995). Section 8(d) does require that a statement of facts constituting the necessity be set forth in one section of the bill.

The urgency clause in Proposition 40 was added in a September 14, 2001, Senate Amendment. Section 5 of the bill states that the facts constituting the necessity are: "In order that the California Clean Water, Clean Air, Safe Neighborhood Parks and Coastal Protection Act of 2002, set forth in Section 1 of this Act, may be submitted for voter approval at the earliest feasible time, it is necessary that this act take effect immediately." It can be inferred from the title of the Act that the Proposition promotes public peace, health and safety by providing clean water, safe recreational facilities and clean air. With an extremely broad view, this statement of facts may be considered sufficient to meet constitutional requirements.

C. Single Subject Rule

The Constitution provides that "An initiative measure embracing more than one subject may not be submitted to the electors or have any effect." Cal. Const. art. II, § 8(d). The California Supreme Court has interpreted the Constitution's single subject rule broadly, holding that as long as provisions of an initiative are "reasonably related to a common theme or purpose", the measure does not violate to single-subject rule. Legislature v. Eu 54 Cal.3d 492 (1991). In Legislature, the court concluded that Proposition 140, the Political Reform Act of 1990, did not violate the single subject rule because the three separate reforms of the proposition were all aimed at the general goal of incumbency reform. (Id.) The court explained that the inquiry was not whether each section will be functionally effective, but whether the sections were reasonably germane to the single subject of incumbency reform. (Id. at 514).

The provisions of Proposition 40 do not appear to violate the single subject rule. The goal of the Proposition is to preserve the state's natural resources, and all of its provisions are related to that aim. However, though the Act encompasses various areas of natural resource acquisition, restoration and preservation, it may be argued that the preservation of historical and cultural resources do not fall within the same subject. In fact, historical and cultural resource preservation is not included in the title and its relation to natural resource conservation is less apparent. On the other hand, historical and cultural resources are reasonably germane to providing recreational facilities and more likely than not, there is no violation of the single-subject rule.

V. Public Policy Considerations

A. Proponents

Proponents of Proposition 40 view it as a continued investment in California's natural resources and recreational parks. Since 80% of the funds authorized by Proposition 12 are spent or have been committed to specific projects, Proposition 40 would allow the continuation of furthering the goals of Proposition 12 and expand its scope to preserving and restoring historical resources.

Since the passage of Proposition 12, the authorized funds have been put to their intended use. In August 2001, the Henry W. Coe State Park in Santa Clara County was expanded by 2,770 acres when land once planned for suburban development was purchased from the Nature Conservancy for $1 million provided by Proposition 12. SFGate, San Francisco Chronicle, Santa Clara: Park bond money pays for huge purchase, (Aug. 22, 2001). In Southern California, state officials purchased 1,659 acres of open space connecting the state beach with Topanga State Park which will allow hikers to walk from San Fernando Valley to the Pacific Ocean. Kenneth R. Weiss, Deal Will Create Valley-to-Sea Park Corridor; Outdoors: The state will buy coastal land to extend its Topanga acreage to the Pacific, L.A. Times B4 (Aug. 31, 2001). $38 million of the $43 million purchase came from Proposition 12. (Id.) Because so much is needed, even with the current budget surplus, there is not enough to finance statewide capital projects.

From an environmental standpoint, proponents argue Proposition 40 would ultimately help reduce air pollution and improve air quality. It would keep waters free of pollution and protect the coast, bays, beaches and rivers from toxic waste. As the population grows, it would help reduce crime by creating safer recreational areas, keeping kids out of trouble and providing safe places for California's senior population. Economically, it is argued that tourists would visit the parks and natural areas bringing more money to state and local businesses. The farm economy, which relies on healthy rivers and streams, would also benefit.

Proponents argue three safeguards would ensure that funds are spent efficiently and effectively: annual independent audits, public hearings and citizen reviews.

B. Opponents

Currently, there are no opponents to Proposition 40. Assuming there will be opponents, they will likely be the same group that opposed Proposition 12. Opponents of Proposition 12 challenged its legitimacy and were concerned mainly with three issues. Ray Haynes, Argument Against Proposition 12 available at (accessed Oct. 8, 2001). First, opponents argued that only a small portion of the funds were specifically dedicated to local park facilities and most residents would not see the benefits of the bond measures. (Id.) They argued that safe neighborhood parks were not actually a priority but a way to get more votes for a measure that would provide money to special interest spending projects such as the local projects of the San Francisco Bay Area Conservancy Program. (Id.) The funds would also go towards the purchase of vast areas of remote land that would be inaccessible to residents and neglected by the government, leading to large areas of land prone to fires. (Id.)

Second, opponents argued that in fact, there was no real need for the measure. (Id.) Again pointing to the portion of the proposition that allowed the acquisition of property, opponents argued that more than half of the land in California is already owned by the government. (Id.) If the Legislature determined that projects were sufficiently important to fund, they would have provided funding with the state's surplus funds. (Id.)

Third, opponents believed the fiscal impact of the bond made the measure undesirable. California State Senate Republican Caucus, No on Proposition 12 (last accessed Nov. 6, 2001). According to figures released by the Secretary of State's office, it costs $1.78 to repay every $1.00 spent through Proposition 12. In order to repay the bonds, opponents were concerned that taxes would have to be increased. In addition, with the acquisition of large areas of land, local and state governments would incur large maintenance costs. Again, additional taxes could be imposed to maintain the newly acquired properties.

VI. Conclusion

Proposition 40 would provide $2.6 billion in bonds for the continued efforts to preserve and maintain California's parks, coasts, and historical resources. The main concern with this bill is its fiscal impact. The impact of this bond on the state's current bond debt would be significant, but if revenues were increasing at the same time, there would be less concern. However, in light of predicted future losses in revenue, the additional debt may eventually lead to increased taxes. With such a large sum to be repaid over the next quarter of a decade, voters may be tying the hands of the Legislature in handling future budgets.