The measure proposes that the state borrow $1 billion by selling general obligation bonds (backed by the full faith and credit of the state) for local sewer projects. Of the bond proceeds, 90 percent would go into the existing State Water Pollution Control Revolving Fund (also known as the "state revolving fund," or SRF). Most of this would be used to subsidize local sewer treatment projects, and for projects to separate sanitary and stormwater sewers. At least two percent of available SRF funds would be allocated annually for projects as required to reduce nonpoint-source water pollution. The remaining 10 percent of the bond proceeds would go to a new Strategic Water Quality Initiatives Fund to subsidize local projects reducing the amount of groundwater or storm water entering sewer systems, or, to upgrade or replace failing (private) on-site septic systems. All subsidies would be through low interest loans to local units of government.

The bills authorizing the programs funded by the proposal (House Bills 5892 and 5893) also change the criteria used for prioritizing loans from the SRF to the advantage of projects that upgrade or replace failing (private) on-site septic systems, or build facilities that accept and treat septage collected from them. It also requires that all local SRF loan applications show that feasible alternatives offering "volume reduction opportunities" had been evaluated in developing the project plan. Not more than 10 percent of the state bonds could be sold in any one year, and initial payments could not begin until Oct. 1, 2003.

The nonpartisan House Legislative Analysis Section reports that the $1 billion bond issue might double the amount of outstanding general obligation bonds pledging the full faith and credit of the state. The nonpartisan Senate Fiscal Agency estimates that, assuming 20-year bonds issued over a 10-year period at a constant interest rate of 5%, annual debt service paid from the state general fund would be approximately $8 million in the first year, increasing by $8 million a year for each of ten years, when it would be $80.2 million, where it would remain for 11 years, then decrease gradually until the bonds were paid off in 30 years. Total interest costs would be $605 million, bringing the total cost of the bonds to $1.605 billion. This amounts to $160 for every man, woman and child now in the state over the life of the bonds.