An update on the 2014 water bond

Earlier this month, the Metropolitan Water District’s Communications and Legislation Committee was updated on the status of the 2014 water bond.

Metropolitan’s Legislative Advocate Kathy Cole began her presentation by pointing out that trillions of dollars will be needed over the next 20 years to modernize, repair and expand the nation’s water and wastewater infrastructure, and traditional funding mechanisms, such as federal loans and grants and state revolving funds, while still available at the moment, have suffered debilitating blows from federal and state budget cuts.

The 2014 water bond was authorized as part of the comprehensive Delta Reform Act.  It was one of five measures in the package and was critical for securing enough political support to pass the package of bills.  “It is worth noting however that the four policy bills … were not statutorily linked to the passage of the water bond, so that policy has been moving forward, irrespective of the bond being delayed now for a second time,” said Ms. Cole.

With only 44 members that voted on that water bond in 2009 remaining in the legislature today, there is a large contingent in the legislature that was not here in 2009 to negotiate that deal.  During a December press conference, Senator Steinberg commented that the water bond must be reduced well below $10 billion to convince voters to pass it in 2014, and he indicated that he feels the Democrats are willing and ready to use their super majority power to reduce the size of the bond, if necessary, she said.

Back in 2009, poor economic conditions were one of the motivations to put off the bond, but currently, things are looking up, she noted.  The state’s economic recovery is promising, particularly in light of the budget reductions and additional temporary tax revenues that the voters approved in Prop 30 just last November.  “The legislative analyst believes we are likely at the end of a decade of acute state budget challenges, and they are assuming a steady economic growth and restraint in augmenting current program funding levels, build a strong possibility multibillion operating surpluses in a few years … provided that they don’t go on a spending spree in the next few years,” she said.

As of June 30, 2012, voter approved general obligation bonds that are outstanding totaled about $73 billion, with water infrastructure bonds comprising about $13.72 billion of that total.   General obligation bonds that have been authorized but are unissued totaled $33 billion, with a little under $6 billion left for water infrastructure related projects.  There are some bond funds remaining from Prop 50, 84 and 1E, and there is some limited funding available from Prop 13.

Since 1970, the voters have authorized over $23.4 billion in water-related general obligation bonds, mainly for water quality and drinking water programs.  “About 84% of that total amount has been authorized since 2000, so voters have been pretty generous on the water bonds the last 10+ years,” Ms. Cole noted. The single largest water bond in California history was Prop 84 for $5.4 billion which passed in 2006.

Ms. Cole then presented the details of the 2014 Water Bond:

$455 million for drought relief: In 2009, drought was foremost in everyone’s mind, she noted, so the bond included a program for local and regional projects.  It also provided critical funds for the safe drinking water act revolving fund, designated funding for emergency water storage in San Diego County and provided funding for water quality improvements for the city of Maywood and for the New River.

Water supply reliability $1.4 billion:  This was to fund local and regional projects through Integrated Regional Water Management Programs, such as water recycling and efficiency, local conveyance and storage, desalination, and watershed & habitat projects with targeted funding of at least 10% to disadvantaged communities and $10 million to Sierra Nevada Research Institute.

Delta sustainability $2.25 billion: This would fund the public share of costs related to Delta sustainability options, and included $1.5 billion for the ecosystem, and $750 million for Delta counties and cities.  There was also targeted funding of $50 million for wastewater treatment facilities upstream of the Delta and up to $250 million to mitigate loss of productive ag land.

Statewide Water System Operational Improvement $3 billion: This would provide funds for surface and groundwater storage.  These funds would be continuously appropriated, and would fund the public benefits portion only.  There is  “very clear  language on what those public benefits are,” she said, noting that the California Water Commission has been working to refine the definition.

Conservation and Watershed Protection $1.785 billion: This would fund multiple state agency and state/regional conservancy watershed, restoration, and public education projects, and targets $100 million for Salton Sea Restoration.

Water Recycling and Water Conservation $1.25 billion: This includes $1 billion for water recycling and advanced technology projects, including seawater desalination.  There is at least $50 million for projects to restore reliability in areas with widespread groundwater contamination, and $250 million for efficiency and conservation.

Groundwater Protection and Water Quality $1 billion: This would fund projects to reduce or prevent groundwater contamination, with $100 million earmarked for projects in disadvantaged communities, and special consideration given for projects on a DTSC or federal priorities list.

Generally speaking, we know that the current bond will be opposed, if not revised, by some in the environmental community who will oppose any bond that includes any funding for new onstream surface storage, and Delta farmers and associated business groups may likely oppose any bond if it’s perceived as facilitating any aspect of the Bay Delta Conservation Plan,” Ms. Cole said.  “So in a nutshell, we anticipate that dams and Delta improvements will be the most important and most challenging aspect of the bond to resolve during renegotiations.”

There have already been 3 bills introduced so far this year, and there will likely be more, said Ms. Cole.  SB36 by Senator Rubio and SB40 by Senator Pavley are definitely placeholder bills with no detail and very short on specifics, she said.

The third, SB42 by Senator Wolk, contains specific program areas but does not call out specific dollar amounts, she said.  “It’s a complete redo of the bond. Throws the 2014 bond out and starts over,” she said.  SB42 provides funding for six program priorities, which are all subject to appropriation by the legislature.  There are programs for Delta security and recovery; regional water supply reliability; clean, safe and affordable drinking water for disadvantaged communities; funding for the wildlife conservation board for watershed projects; and competitive funding for public benefits associated with water storage and delivery projects that advance state policy, as well as funding for projects that support integrated flood management in Sacramento and San Joaquin valleys in accordance with the Central Valley Flood Protection Plan.

Unlike 2009, there’s likely to be competition with other infrastructure needs, Ms. Cole said, noting that this year already a bill has been introduced to provide funding for construction and modernization of education facilities, and there is talk about a need for transportation funding.

  • Ms. Cole’s presentation contained many more fiscal details than presented here.  For the entire presentation, you can view the video by clicking here.  The presentation is agenda item 7C and begins at 28:26, and lasts for about 18 minutes.
  • There are more details in the power point presentation as well.  To view the power point presentation, click here.
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