DALLAS - Arkansas voters will be asked on Nov. 4 to approve $300 million of general obligation bonds to finance the Arkansas Natural Resource Commission's low-interest loan and grant program for local water projects across the state.

Proceeds from the bonds would be loaned to local governments for drinking water and wastewater projects, with the debt service covered by the payments on the loans. The bond proceeds are also used as local matches for federal grant money for water, sewer, and pollution control projects.

No more than $60 million of the debt could be issued in any two-year period unless the Legislature specifically allows the sale, and no more than $100 million of the proceeds can be dedicated to irrigation projects.

The technical term for the ballot item is Referred Question 1. It is also known as the Arkansas Water Bond Act.

The additional authorization will enable the Natural Resource Commission to continue its low-interest loan program that has been financed with $260.4 million of GO bonds approved by voters in 1998.

Arkansas GOs are rated Aa2 by Moody's Investors Service and AA by Standard & Poor's. Fitch Ratings does not provide an unenhanced rating for the credit.

The commission has $130 million of unissued debt remaining from the 1998 authorization, according to general counsel Edward Swaim.

"The new authorization would be concurrent with the existing one," he said. "The 1998 authorization does not expire, so the new one can overlap it."

Gov. Mike Beebe said at a recent news conference that he supports the water project bonds, and urged Arkansans to vote in favor.

The governor stressed that debt service on the bonds is paid by loan repayments from local municipalities and utility districts and obtained through user rates. The bonds are not supported by a tax, he said.

"As long as they understand that this is not a tax, I think it stands a reasonably good chance of passing," Beebe said. "It has been my experience that Arkansas voters, when they are unsure about something, have a greater opportunity to vote no.

"This is not a tax. This is not a tax. It is not a tax," he emphasized. "It is not a tax increase. It is not a tax."

Voters rejected a request for water bonds in 1996 before approving a revised proposal in 1998. There was some opposition to that request, but the current proposal has been endorsed by the Arkansas Municipal League, the Arkansas Farm Bureau, the Arkansas Rural Water Association, and the Arkansas Association of Conservation Districts.

The water bond question is the only one of the three debt programs approved by the Legislature in 2007 to make it onto the 2008 general election ballot.

Lawmakers last year approved a plan to seek a statewide vote on up to $575 million of federal highway grant anticipation revenue vehicles to be issued by the Arkansas Highway Commission. No date was set for the election, but if approved by voters the bonds have to be issued no later than Dec. 31, 2013.

Also approved in 2007 was a proposal for a vote on up to $750 million of GOs for building projects that would be issued for the Arkansas Public School Academic Facilities and Transportation Commission. The governor must include the school GO bond question on a general election ballot or call a special bond election no later than June 30, 2011.

Beebe spokesman Matt DeCample said the highway bonds were not put onto the 2008 ballot because the state cannot issue more Garvees until additional capacity becomes available in 2010. The school bond question was delayed because the state allocated half of its nearly $1 billion surplus in 2007 to school facilities, he said.

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