After the 1989 Loma Prieta earthquake, the state established a program to retrofit state highways and bridges for seismic safety. As a result, the California Department of Transportation (Caltrans) identified about 1,039 state highway bridges to be retrofitted as phase one of the Seismic Retrofit Program. Retrofit of all phase one bridges is currently under construction and is funded from state gas tax revenues.
Following the 1994 Northridge earthquake, Caltrans identified an additional
1,209 state highway bridges that need to be retrofitted in order to meet seismic safety
standards. These additional bridges comprise phase two of the Seismic
Program. Caltrans also identified seven state-owned toll bridges to be retrofitted for
earthquake safety. The estimated cost of retrofitting phase-two bridges plus the state-
owned toll bridges is about $2 billion.
This measure authorizes the state to sell $2 billion in general obligation bonds in order to reconstruct, replace, or retrofit state-owned toll bridges and highway bridges in phase two of the Seismic Retrofit Program. The measure provides that, of the $2 billion, $650 million shall be used only for the seismic retrofit of state- owned toll bridges. The measure also requires that expenditures for phase two seismic retrofit of state highway bridges, as well as for toll bridges, be funded exclusively from bond funds and not from other state funds, such as toll revenues or revenues from the state gas tax.
General obligation bonds are backed by the state, meaning that the state is required to pay the principal and interest costs on these bonds. General Fund revenues would be used to pay these costs. General Fund revenues come primarily from the state personal and corporate income taxes and sales taxes.
For these types of bonds, the state makes principal and interest payments from the state's General Fund, typically over a period of about 25 years. If the $2 billion in bonds were sold at an interest rate of 5.5 percent, the cost would be about $3.4 billion to pay off both the principal ($2 billion) and the interest ($1.4 billion). The average payment for principal and interest would be about $136 million per year.
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