CIRS Blog about Rural California
In less than two weeks, Californians will vote on a water bond (Proposition 1), which would allow the state to assume $7.5 billion of debt in order to fund major water projects throughout California. The 2014 water bond represents significant compromise by the state legislature. Assembly Bill 1471—The Water Quality, Supply, and Infrastructure Improvement Act of 2014—was overwhelmingly approved in August, passing by a vote of 77 to 2 in the State Assembly and unanimously in the Senate. The legislatively-referred Proposition 1 is almost a third less expensive than the two previous water bond acts which were removed from the ballot in 2010 and 2012.
The 2014 water bond will not fund short-term projects related to the current drought; rather, it creates a funding mechanism for long-term, generally large-scale water projects that are deemed to be publicly beneficial in one or more ways.
WHAT IS A WATER BOND?
A bond is simply a form of debt: governments can sell them to private investors and pay them back with interest (assumed to be 5%). Water bonds have been the main vehicle to fund major water infrastructure in California for decades. The 2014 Water Bond reauthorizes $425 million in unissued bonds, and authorizes $7.12 billion in new general obligation bonds, all to fund water-related programs and projects throughout the state. According to the Senate Appropriations Committee, the 2014 water bond will require annual debt service payments of $491 million for 30 years for a total of $14.724 billion.
WHAT WILL THE WATER BOND FUND?
The seven categories of projects and programs, from most expensive to least expensive, are:
- Statewide Water System Operational Improvement and Drought Preparedness [$2.7 billion, continuously appropriated]
- Protecting Rivers, Lakes, Streams, Coastal Waters, and Watersheds [$1.495 billion]
- Groundwater Sustainability [$900 million]
- Regional Water Security, Climate and Drought Preparedness [$810 million]
- Water Recycling [$725 million]
- Clean, Safe, and Reliable Drinking Water [$520 million]
- Flood Management [$395 million]
There are several subcategories within each of these seven funding “buckets.” Although the language of the water bond is unspecific about connections to existing proposals like the Bay Delta Conservation Plan (BDCP) or individual dams and reservoirs, the proposed funding amounts reflect official cost estimates for existing proposals. Perhaps most notably, these proposals include raising the Shasta Dam and building two more: Temperance Flat on the Upper San Joaquin, and Sites Reservoir north of the Sacramento-San Joaquin Delta in Colusa County. Approximately one third of the money authorized by Prop 1 will go toward increased water storage. The environmental organizations that have endorsed Prop 1 regularly point out that the water storage funds will not necessarily be used for new dams, as the most efficient and beneficial proposals (perhaps including increased groundwater storage rather than new dams) should prevail in the competitive funding process.
The BDCP has long been tied to potential funding from voter-approved water bonds. Although Governor Brown insists that the water bond is “BDCP neutral” and points out that Prop 1 specifically prevents the funding of the highly controversial “twin tunnels.” the BDCP proposal relies on funding from the 2014 water bond, and assumes even more funding from a future water bond. A November 2013 BDCP document estimating costs and funding sources states that [t]he BDCP is expected to secure a large portion of the funds allocated to Delta sustainability, as well as smaller portions of funds allocated to conservation and watershed protection. […] For the purposes of the funding program and assuming the water bond passes, the BDCP is expected to receive the conservative estimate of [$1.514 billion]. […] BDCP assumes passage of a second water bond to fully fund the state portion of the Plan. The total BDCP funding assumed for the subsequent water bond is $2.25 billion. The timing of any subsequent bond is unknown […].
WHAT IF THE WATER BOND FAILS?
Without new state funding, a wide range of water-related projects will be delayed, revised, and/or canceled. Federal funding, particularly for local water quality and infrastructure improvement in California, is already limited and is unlikely to increase in the near term given the current atmosphere in the U.S. Congress. The state could still sell previously approved bonds, but there is little doubt that less money will be available for major water projects during the coming years if Proposition 1 is voted down.
California’s specific programs and funds for drought-related assistance will continue regardless of the outcome of the water bond. Additionally, local governments and water districts may continue to fund and implement water projects independently.
WHO SUPPORTS AND OPPOSES THE WATER BOND?
The California Democratic Party, Republican Party, Governor Jerry Brown, U.S. Senators Dianne Feinstein and Barbara Boxer, and U.S. Representative Mark Levine have all endorsed Prop 1. Various water authorities and organizations support the measure as well; including the Association of California Water Agencies, League of California Cities, California State Association of Counties, California Chamber of Commerce, Western Growers, California Farm Bureau, Nature Conservancy, American Rivers, and the Natural Resources Defense Council. The San Francisco Chronicle, San Diego Union-Tribune, Palm Springs Desert Sun, and Modesto Bee have all published editorials voicing strong support for the 2014 water bond. Supporters of Proposition 1 emphasize that the long-term benefits of large water projects will outweigh the costs to taxpayers and any potential harm to ecosystems. Read more at http://www.yesonprops1and2.com.
Opponents to Proposition 1 include Restore the Delta, The Center for Biological Diversity, Pacific Coast Federation of Fishermen’s Associations, San Francisco Baykeeper, Food and Water Watch, Coastal Environmental Rights Foundation, and a long list of other environmental and ecological organizations and wildlife conservation groups. These groups emphasize that dams are environmentally harmful and the current water bond is writhe with thinly-veiled connections to existing dam proposals and the BDCP. Read more at http://www.noonprop1.org.
A recent poll by the Public Policy Institute of California found that Prop. 1 has the support of 58% of likely voters. The California Water Foundation launched a public education campaign on October 15 to increase access to information about Proposition 1. The Water Bond Education Project website can be accessed at www.waterforthelonghaul.com.
California’s drought has moved far beyond “severe,” and is making national and international headlines because of its far-reaching impacts. Most areas of the state are officially in “extreme” drought, with key coastal regions and agricultural areas in the Central Valley experiencing “exceptional” drought conditions. Political leaders scrambled to pass legislative relief packages as it became clear that the state would have another unusually dry winter. State and local officials have asked residents to reduce water use in homes and businesses. Meanwhile, major state and federal water projects have completely shut off water deliveries to already parched urban areas and agricultural agencies due to inadequate supply.