By strongly approving the largest state bond measure in the nation's history, California voters gave new Gov. Arnold Schwarzenegger a big political victory and provided the government of the most populous state breathing room to resolve its dire fiscal mess.

But the state will now flood the market with what promises to be the biggest municipal-bond deal ever. That has the potential to hurt the price of municipal bonds across the country at a time when strapped state and local governments are tapping debt markets themselves.

Moreover, while investors reacted positively to the passage of the bond referendum in Tuesday's state primary, the new bonds alone won't solve California's fiscal problems. The bulk of the money will be used to cover shortfalls in its current fiscal year, which ends June 30. Though some will go toward the fiscal year beginning July 1, officials estimate the state still needs to close a $12 billion budget gap.

The state also has a huge number of bonds to sell in a short period of time, a difficult task. If the California bond issue were considered as one deal, it would become the biggest municipal-bond transaction, eclipsing last June's $10 billion sale of bonds by the state of Illinois.

The size of the $15 billion offering "will test market capacity," said Phil Angelides, California's treasurer, who had opposed the bond measure. It also raised concerns in some quarters about California's growing debt burden. The state already has about $30 billion in general-obligation bonds outstanding, and voters on Tuesday approved a separate $12.3 billion bond measure to improve schools.

Voters passed the $15 billion issuance, known as Proposition 57, by a 63%-to-37% margin. A companion measure, Proposition 58, strengthening the requirement on state lawmakers to balance future budgets, won 71% approval. Both measures had to pass for either to take effect.

California bonds rallied Wednesday in reaction to the vote, with their yields declining roughly 0.05 percentage point, compared with other top-grade tax-exempt bonds, traders said. The yield on California bonds maturing in 2029, for example, declined to about 4.88% from 4.90% Tuesday, while other muni-bond yields generally rose, according to traders. Bond prices move inversely to yields; when yields fall, prices rise.

Rating agencies reacted positively as well, despite concerns about the state's fiscal problems. Standard & Poor's Corp. placed state bonds on its positive CreditWatch, suggesting that it was considering raising the state's near-junk bond rating. S&P officials noted that the bonds make it less likely the state will run out of cash before June 30, a distinct possibility had the bond proposal been defeated. Moody's Investors Service Inc. raised its outlook on California bonds to stable from negative. California bonds are the lowest-rated state bonds in the country.

But Wall Street will have plenty of work on its hands. At $15 billion, the deal is considered too big to do all at once, so the state plans to break it up into pieces. Mr. Angelides said the state would begin with an estimated minimum $6 billion offering that he hopes to sell in June. The exact duration of the bonds hasn't been worked out yet, but a spokesman for Mr. Angelides said the range probably would be between nine and 14 years.

"It's smarter to do it over several sales instead of all at once," said Craig Brandon, a bond analyst for Eaton Vance Corp., a Boston investment manager that owns California bonds. Mr. Brandon argued that the state likely will use the first tranche of bonds to help pay off existing short-term debt by early June, then try to sell the remainder of the bonds over the next few months.

Gov. Schwarzenegger, who had forcefully pushed both propositions, immediately turned his attention to selling the bonds, proclaiming at a victory rally in Santa Monica: "Wall Street, come on back to California and do business with us." Mr. Schwarzenegger took office after a recall effort five months ago, driven in good part by mounting frustration over the state's fiscal problems.

The $15 billion in state debt is the equivalent of about two weeks' worth of total municipal bond issuance in the nation, according to Thomson Financial, a Wall Street data-tracking firm. On average, that amount usually would be spread over roughly 600 separate deals, according to the firm.

The issuance is so big it could draw attention away from other states and cities trying to raise debt, said Jamie Iselin, a manager at Weiss, Peck & Greer Investments. To sell it and the separate $12.3 billion in education bonds, investment banks likely will have to attract investors from other states, where the bonds have less tax advantage. Buyers outside California wouldn't have to pay federal taxes on the bonds' income but could pay a state tax, while California residents wouldn't have to pay either. Still, "This will push other deals to the side," or at least make them costlier to get done immediately, said Mr. Iselin.

Dan Vandivort, a senior managing director at Weiss, Peck & Greer, said the state still has to answer the question: "How do they balance the budget?" S&P analyst David Hitchcock said future ratings on California debt would depend on the state's ability to reduce its so-called structural deficit. Gov. Schwarzenegger has proposed closing the gap with spending cuts and deferrals, but many of his proposals have drawn sharp criticism from lawmakers in the Democrat-controlled legislature. Many Democrats favor tax increases to cover a portion of the gap, but the governor has pledged not to raise taxes. Any budget needs a two-thirds vote in both houses of the California Legislature, always a difficult task.

Another risk for the deal is that California starts cranking up its bond sales just as U.S. interest rates start to rise. Generally, municipal bonds, like most others, move in the same direction as the U.S. bond market. If the Federal Reserve raises interest rates or long-term U.S. Treasury yields rise, it will become more expensive for cities, states, or corporations to raise their own debt.

California and other states have benefited from low U.S. interest rates. But some fear that Treasury bond yields will start rising. In the last week they've moved higher, to 4.06% from 3.97%, on comments by Federal Reserve Chairman Alan Greenspan that interest rates would have to rise at some point.

Political observers said approval of the bonds had strengthened Gov. Schwarzenegger's hand in dealing with the legislature. As recently as a month ago, public-opinion polls showed the bond package trailing. But the governor, spent much of the past two weeks barnstorming across the state to rally support.