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Bond Bill FAQ
What is a Bond Bill?
What is the Environmental Bond Bill?
Why do we need an Environmental Bond Bill?
NEW - Additional background information available here
Where was the bond bill money spent in the past?
Why is the Environmental Bond so important?
What is the timing of the bond bill? Do we need to pass it soon?
Why do we need another bond bill in 2008?
How does it work?
How long will this Environmental Bond last?
When was the last Environmental Bond passed?
What else can I do to help pass the Environmental Bond?
What is a Bond Bill?
In addition to the annual state budget that funds "day-to-day" operations for state agencies, periodically, the Governor and Legislature seek passage of a "bond bill" that supports long-term capital investments. Such investments may be for buildings, roads, land and equipment that have a lifespan of over 20 years. Bond bills can be likened to a "line of credit" that allows the executive branch to borrow a maximum amount of money for certain purposes. The ultimate decision to issue bonds rests solely with the executive branch.
Bonds are the cornerstone of the Commonwealth's environmental programs. Capital budgets finance land acquisition deals, hazardous waste clean-ups, and other environmental projects. The expense and public importance of capital projects justifies amortizing the expenses over a period of time.
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What is the Environmental Bond Bill?
The Environmental Bond is the cornerstone of the Commonwealth's long-term investment in our environment. It provides capital funding to protect the state's land, air and water, and natural habitats, restoration of wetlands, parks and beaches, to reduce pollution, remove and repair dams, safeguard drinking water, and many other purposes.
The Environmental Bond provides steady, consistent, funding for necessary, major statewide programs. Without the Bond, many environmental programs will face major cuts that affect our communities, our economy, and the quality of our lives.
Each Bond expenditure must be spent for a specified purpose as approved annually by the Governor. Only after this annual approval process are bonds sold to pay for that purpose.
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Why do we need an environmental bond bill?
Massachusetts' working farms and forests, wildlife habitat, wetlands, beaches, and urban green spaces are disappearing at an alarming rate. According to Mass Audubon, every day more than 40 acres of woods, fields, or farms are converted to residential, commercial, or industrial uses in Massachusetts.1 This trend has continued through multiple administrations, economic ups and downs, and fluctuating real estate prices.
The Environmental Bond will help protect some of the most important natural resources from development and would protect many of the 178 species of animals and 264 species of plants that are endangered, threatened or of special concern (according to the state's Natural Heritage and Endangered Species Program)2
In addition, of the more than 3,000 dams in Massachusetts, approximately 350 are rated as High Hazard, approximately 748 are rated as Significant Hazard and the rest are rated as Low Hazard3. Bond funds would provide for the enforcement of laws requiring the repair and maintenance of these structures and assistance to keep them sound.
The Environmental Bond will provide the capital authorizations necessary for state environmental departments for the next five years. The opportunity to pass an Environmental Bond occurs only twice a decade! This Bond would replenish capital authorizations that have been completely expended, will be depleted in the near future, or are necessary to fulfill the future goals and objectives of state environmental departments.
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Where was the bond bill money spent in the past?
The 2002 Environmental Bond Bill (and subsequent "Patch Bonds" in 2004, 2006 & 2007) funded more than 76 different programs with important activities around the state. Some of them include:
| BioReserves- acquisition and management | 9,000,000 |
| Stewardship- monitoring and enforcement | 3,000,000 |
| Forest Vision- private forest landowner program | 10,000,000 |
| Self-Help (s.11, c.132A) | 31,250,000 |
| Urban Self-Help (c. 993, Acts of 1977) | 33,862,714 |
| State Urban Recreation Fund | 3,900,000 |
| Conservation Partnership Grant Program | 3,000,000 |
| Watershed Initiative (Wetlands Restoration) | 23,000,000 |
| Boat pumpout facilities- construction and improvements | 3,000,000 |
| Coastal resources monitoring, planning, coordination | 4,450,000 |
| Underwater Archaeology | 1,000,000 |
| Community Preservation- planning and analysis | 11,450,000 |
| GIS MassGIS | 10,800,000 |
| EOEA infrastructure and holdings | 1,500,000 |
| Natural Resources Damage Trust | 1,500,000 |
| Climate change planning; emissions reductions | 600,000 |
| Environmental education | 1,600,000 |
| Funds for emerald necklace muddy river restoration | 24,000,000 |
| Bike paths | 10,000,000 |
| State piers | 3,000,000 |
| DEM land acquisition | 44,675,000 |
| Forest and Parks System-capital improvements | 32,200,000 |
| Forestry Management | 1,400,000 |
| Equipment purchase and replacement | 5,000,000 |
| Environmental compliance | 4,000,000 |
| Dam inspection and repair | 14,057,000 |
| Lakes and ponds | 9,323,300 |
| Groundwater resource management | 2,000,000 |
| Matching grants- | 7,185,000 |
| Resource management planning | 2,000,000 |
| Parks college; resource management institute | 500,000 |
| Watershed Management Division infrastructure | 4,000,000 |
| MDC land acquisition/ Town Brook Basin, Quincy | 20,000,000 |
| MDC properties- improvements and replacements | 26,101,500 |
| Boston Harbor Beaches-restoration and renovation | 23,650,000 |
| Skating rinks, swimming pools, golf courses | 46,370,000 |
| Dam rehabilitation and reconstruction/Rolling stock | 19,780,000 |
| Sanitary structures- renovation and reconstruction | 4,000,000 |
| Environmental remediation and reuse | 6,000,000 |
| Master plan implementation- Charles, Mystic, Neponset | 15,000,000 |
| Beaver Brook Flood Mitigation Project | 8,550,000 |
| Bridges and Parkways | 17,000,000 |
| Comm. Zoological Corp, Franklin & Stone Zoos | 16,000,000 |
| DFWELE land acquisition | 25,000,000 |
| DFWELE infrastructure and holdings | 12,000,000 |
| New district facilities; Marine Fisheries Management Institute | 7,000,000 |
| Ecological restoration and management (NHESP) | 4,000,000 |
| Upland habitat management program | 4,000,000 |
| River Restore Program (Riverways) | 4,625,000 |
| Coastal and inland boat launchings | 8,500,000 |
| Coastal and inland public access sites | 16,000,000 |
| Water quality monitoring; TMDLs; (circuit riders) | 12,500,000 |
| Statewide air monitoring | 3,850,000 |
| Solid waste facilities- assessment, clean-up, closure | 7,500,000 |
| Information systems development | 5,000,000 |
| Hazardous waste clean-up | 34,480,000 |
| Senator William X. Wall experimental station | 5,000,000 |
| Aquifer Land Acquisition | 20,500,000 |
| APR program, Farm Viability Program | 62,680,000 |
| Agro-environmental technology | 700,000 |
| Agricultural Environmental Enhancement Program | 2,025,000 |
| Aquaculture development | 1,558,000 |
| Historic Preservation Grant Program | 4,000,000 |
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Why is the Environmental Bond so important?
The Environmental Bond has a direct effect on our local and state economies and our quality of life. Some items, like the Self-Help and Urban Self-Help programs (now named "Local Acquisition for Natural Diversity" or LAND and "Park Acquisition & Renovation for Communities" or PARC) serve as local aid to communities to protect resources and quality of life. Dam removal, drinking water supply, and wetland protection programs are critical to protecting our communities' safety and human health. Land protection programs are vital to the state's tourist economy – the third largest industry in our state.
Without the resources to continue and enhance these critical programs, the state and communities will suffer loss of income, risks to our health and safety, and the irrevocable loss of natural areas that protect rare and endangered species, natural communities, and the special places we all enjoy.
Passage of the Environmental Bond this year will not take money away from other programs. The Environmental Bond Bill allows the state to issue bonds specifically for these programs – an infusion of money separate from the state's operating budget which is based on tax revenue.
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What is the timing of the bond bill? Do we need to pass it soon?
Governor Deval Patrick filed the Environmental Bond Bill in December of 2007. The Legislature must pass the Environmental Bond by a two-thirds vote on or before July 31, 2008, the end of this Legislative session, or the bill cannot be considered until the 2009-2010 legislative session.
State environmental agencies have scheduled five-year capital spending plans. Legislative inaction on the Environmental Bond would disrupt the capital spending plans, and constrain agencies' abilities to respond to the environmental needs of the Commonwealth.
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Why do we need another bond bill in 2008?
The most recent Environmental Bond Bill was introduced by former Governor Jane Swift and unanimously approved by the Legislature in 2002. The Bill provided $707 million for a wide range of important investments, but this funding has largely been exhausted. That Bond was designed to fund these programs for five years – and those five years are now up. Without replenishment, most programs that invest in protecting our farms and forests, our rivers and beaches, our urban parks and our wildlife habitat will grind to a halt.
These programs are now left without sufficient funding to continue working effectively:
- Self-help and Urban Self-Help programs
- Coastal resources monitoring
- Community preservation planning and analysis
- Land acquisition programs
- Dam inspection, repair and removal
- Riverways program
- The Natural and Endangered Species Program
- Statewide air monitoring
- Solid waste facility assessment, cleanup and closure
- Massachusetts Geographic Information Systems (Mass GIS)
- Agricultural Preservation Restriction program
- Climate Change adaptation programs and policies
- Protection critical natural resources of statewide significance through land protection programs
- Clean up of hazardous waste sites
To continue protecting natural areas that stimulate the travel and tourism industry and protects our lands, monitor and protect water quality effectively, to continue the Self-Help and Urban Self-Help (now called the “PARC - Park Acquisition & Renovation for Communities” and “LAND - Local Acquisition for Natural Diversity”) local aid programs, to assist farmers and sustainable timber harvesting, and maintain quality of life for future generations, we must invest new funds through the Environmental Bond Bill.
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How does it work?
Once the Legislature approves a capital authorization through the Environmental Bond the state treasurer sells bonds on the public market, with the assistance of an underwriter (investment banking firm). This general obligation debt is backed by the Commonwealth. The state borrows money from investors and then repays the borrowed money, or principal, plus interest, over a period of years. Proceeds of bond sales go to the Commonwealth and can only be used to pay for the specific projects in the bond language. The interest payments (and principal repayments) are known as debt service, which is paid annually through the operating budget. Debt service on all Commonwealth bonds amounts to roughly ten percent of the overall state operating budget.
Bond holders are paid interest twice a year on the bonds until the bonds mature. How well general obligation bonds perform as investments depends on interest rates, maturity dates, and the credit quality of the Commonwealth. Bonds typically become more valuable when interest rates fall (interest rates today are relatively low) and less valuable when interest rates rise. A low credit rating means that the issuer must pay higher interest to offset the higher risk that principal and interest won't be repaid on time. The Commonwealth's credit rating is excellent, reducing the cost of borrowing.
Furthermore, while seeking the new borrowing authorization through the Environmental Bond, state environmental agencies will de-authorize (or terminate) previous capital borrowing that has not been used, reducing the state's authorized indebtedness for environmental programs. This de-authorization package helps improve the administrative efficiency of the capital programs, lowering the average age of specific bond accounts to less than five years old. Bond rating agencies view unfavorably bonds that are older than five years, as longer maturities and durations bring greater price volatility.
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How long will this Environmental Bond last?
Consistent with the Administration's five-year capital planning schedules, the Legislature generally provides capital authorizations for state agencies every five years, though bonds are passed annually to fund specific projects.
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When was the last Environmental Bond passed?
The last Environmental Bond Bill was passed in 2002.
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What else can I do to help pass the Environmental Bond?
In 2002 the Coalition included more than 150 organizations from around the state including land trusts, environmental advocacy groups, farm groups, watershed organizations, town boards of selectmen, hunting and fishing clubs, and many more.
To ensure swift passage of a strong Environmental Bond in 2008 we are building an even larger coalition that brings in many of the other groups that benefit from capital investments.
You can play a vital role in helping pass the Environmental Bond by:
- Joining the Coalition by filling out the endorsement form-organizations only (or contact Jeremy Marin at info@envirobond.org for the form)
- LOOK FOR ALERTS AND NOTICES from Jeremy Marin to let you know when we need your support for the following actions:
- Contact your state Representative and Senator to encourage their support of a strong Environmental Bond.
- Write a letter to the editor of your local and/or regional newspaper informing them of the need to pass a strong Environmental Bond this year.
- Urge your Board of Selectmen or City Council to draft a municipal resolution in support of the Environmental Bond.
- Pass this information to members of your local garden club, land trust, business group or others and ask them to join the coalition as well as the other items listed above.
1 "Losing Ground: At What Cost? Third Edition of the Losing Ground Series"; Massachusetts Audubon; http://www.massaudubon.org/PDF/advocacy/losingground/LosingGround_1.pdf; Page 3
2 MassWildlife, MA Division of Fisheries and Wildlife; http://www.mass.gov/dfwele/dfw/nhesp/species_info/species_home.htm
3 "Massachusetts River Restore Program: Dam Removal"; Commonwealth of Massachusetts Riverways Program. http://www.mass.gov/dfwele/river/pdf/factsheet_riverrestore_final.pdf
4 The Economic Impact of Travel on Massachusetts Counties 2006, A Study Prepared for the Massachusetts Office of Travel and Tourism by the Research Department of the Travel Industry Association, September 2007
5 Ibid.