California Lawmakers Rushing to Overhaul $11 Billion Water Bond

Jun 18, 2014 10:53 pm ET

June 19 (Bloomberg) -- California lawmakers are racing a deadline to overhaul an $11 billion bond program to upgrade aqueducts, reservoirs and pipelines, some almost a century old, under pressure from a third year of severe drought.

Polls show the water bond now on the November ballot, left over from the administration of Republican Arnold Schwarzenegger in 2009, would fail because of its size and politically-based provisions. Governor Jerry Brown, a Democrat, remains quiet on what he’s willing to support.

The bond would finance improvements in the system that provides drinking water for the most populous U.S. state and supplies its $44.7 billion-a-year agriculture industry. Brown declared a state of emergency in January and called for a voluntary 20 percent cut in water use. Farmers have idled hundreds of thousands of acres.

“We are in limbo right now” said Tim Quinn, the executive director of the Association of California Water Agencies. “The governor is the key player. Everyone is waiting for the governor.”

The Democratic-controlled legislature has until June 26 to substitute its own measure for the Schwarzenegger plan, though the deadline can be extended. Three variations, from $8 billion to $10.5 billion, are under consideration. Lawmakers are also weighing whether to add a school bond measure to the ballot.

Most Indebted

California, already the most indebted U.S. state, has $75 billion of bonds outstanding and the authority from voters to borrow another $26 billion, according to Treasurer Bill Lockyer.

Brown, a 76-year-old running for re-election in November, told lawmakers and water bond advocates that he would remain publicly silent on the topic until after the state’s budget was finalized. The legislature approved the $156 billion spending plan June 15 and it’s now on Brown’s desk, awaiting his signature to become law.

Passage of legislation to replace the 2009 bond will require approval by a two-thirds vote. That means some Republicans will be needed in the Senate to reach that super- majority.

Senator Lois Wolk, a Democrat from Davis and author of one the competing plans, boosted the size of her bill to $10.5 billion to include $3 billion for additional surface and groundwater storage that has been a longstanding demand by Republicans.

Program Array

The measure covers an array of programs: $500 million for drinking water treatment; $1 billion for groundwater treatment; $400 million for wastewater treatment; $900 million for habitat restoration; $400 million for levees; $1.9 billion for drought response and regional water-supply development; $500 million for stormwater reuse and capture, and $925 million for watershed restoration.

Still an issue in the negotiations, Wolk said, is how to allocate money for Brown’s $25 billion project to shore up the state’s ecologically sensitive Sacramento-San Joaquin River Delta. Brown wants to build two underground tunnels, each the size of a two-lane interstate highway, for $15 billion to push water from reservoirs and rivers in the north to thirsty farms and cities in the south.

Wolk’s plan would funnel funding requests for portions of that plan through the Sacramento-San Joaquin Delta Conservancy, a state agency made up of officials from five counties, as well as local nonprofits, special districts, and state and federal agencies. That additional scrutiny is opposed by Brown and large water agencies that support the tunnel project.

“We don’t need a north-south water war in this bond,” Wolk said in a telephone interview.

A $9 billion school bond measure passed out of the Assembly last month without any opposition. It was then amended in the Senate and the dollar amount removed while talks over its size continue. It would be the first statewide school bond measure in California since 2006. Brown, who has vowed frugality with state spending, hasn’t said whether he would allow it to move to the ballot.