Spent Wednesday night watching the action on the State Senate floor on the new California water bond (thanks to Maven for the link).  With Governor Brown signing the bill later that night, there is a new bond on the ballot replacing the $11.14 billion bond passed in 2009.  The “fear of failure” led the Legislature to delay putting the large bond on the 2010 and 2012 ballots.  What’s the new bond?  Will the trimmed down version pass muster with voters?  What did we learn about water politics and leadership in California?

What’s the New Bond?

There are two numbers: $7.545 billion and $7.12 billion.  The “$7.5 billion number” is new bond funding by authorizing the “$7.12 billion number” in new bond funding and reverting $425 million in unspent bond funds from bonds voters approved from one to three decades ago.

Sources of Reverted Unspent Bond Funds

The legislature distributed authorized funding over seven categories (see table).  Water storage received the largest allocation ($2.7 billion).  Flood management received the least ($395 million).

Fund Allocations

The legislature retained key administrative provisions for water storage projects from the earlier bond, including:

• Continuously appropriating funding to the California Water Commission that will select projects through a competitive public process;
• Allowing the commission to fund the public benefits of storage projects (ecosystem and water quality improvements, flood control, emergency response and recreation); and
• Prohibiting expending bond funds on environmental mitigation not associated with providing public benefits

The first point means that funding for storage projects selected by the commission do not need subsequent appropriations by the legislature.  The other two points are consistent with an economic principle that the general fund pays for public benefits.  Water users pay the cost of their water supply.

Will the Trimmed Bond Pass Muster with Voters?

Let’s start with the electoral prospects of a 2014 water bond by bond size based on an analysis of voting on water bonds and California’s debt burden (see table):

Hydrowonk’s take on the table is that the new bond ($7.545 billion in authorizations and $7.12 billion in new bond funding) has a 4/1 to 5/1 odds against passage.  The legislature’s movement to a smaller bond has increased the odds of passage but, based on historical experience, securing voter approval may be an uphill battle.

The water community is betting that today’s drought will sway voters to support the bond despite the high and growing state debt burden in California.  The Legislative Counsel noted that an April poll by the Public Policy Institute of California advises that support for a water bond is on the rise but the greatest support was for a slimmed down version of the $11.14 billion bond.

California needs two resources to cut the risk of water shortages: more storage and water available for storage.  Concerning the former, the $2.7 billion for water storage can jump-start  new surface water storage projects, such as Sites or Temperance Flats.  But, will there be enough water available in “surplus years” to make the storage projects viable?  The putrid allocation for the State Water Project is historically unprecedented.  There is more than Mother Nature at work.  Environmental regulations of the state and federal projects are creating lower and lower yields.  In this environment, where will the water come from for water storage?

So, voters can start the process in November (pass the bond) but we will not know the effect of the bond until water storage projects are undertaken.  Hydrowonk has no idea today whether any of the contemplated storage projects are viable.  Studies to date use Department of Water Resources’ hydrologic data.  The State Project allocation this year instructs that the analysis of water availability must go back to the drawing board.

Will the $2.7 billion allocation for water storage
become another example of unexpended bond funds?

Time will tell.

What did we learn about water politics and leadership in California? 

The California water industry has a healthy tradition of seeking federal and state funding.  Taxpayer dollars keep water rates low.  The federal well is dry.  How much more can be extracted from state taxpayers?  Stay tuned for the voter decision.

What strikes Hydrowonk is how long water politics tried “to cling to their state funds and OPM.”  Just a few weeks ago, the legislature was considering a variety of bills, many of which represented a small reduction in the 2009 bond.  What transformed the situation?

Leadership.  Governor Brown rocked the boat with his letter to voters indicating that he would not support a water bond that was a close cousin to the 2009 bond.  He staked out a position that the water bond should be $6 billion.  He said he would campaign against the 2009 bond if it remained on the ballot.  This set the framework for the legislature to “get real” and slim down the water bond.

The Senate Floor discussion Wednesday night was a remarkable event to behold.  Ok, there was the traditional “local interests”, such as pointing out that the bond would provide funds for restoration of the Los Angeles River for kayaking.  What was remarkable that Democrats and Republicans worked together to find common ground.

This is not the first time in California water that gubernatorial leadership proved critical.  In the early 2000’s, Governor Davis understood the critical importance of resolving disputes on the Colorado River including facilitation of the historic long-term water conservation and transfer agreement between the Imperial Irrigation District and the San Diego County Water Authority.  Much like the water bond negotiations, a myriad of interests (fighting water districts, environmental groups, federal and state agencies) were spinning wheels.  Governor Davis drafted former Assembly Speaker Robert Hertzberg and later Richard Katz to “herd the Colorado River cats” and close on the historic Quantification Settlement Agreement and related agreements.  In California’s “water world”, gubernatorial attention seems to be a needed catalyst.

As California’s water woes worsen, it is time for the water agencies to become more proactive and realize that they must make significant investments to provide California with a water supply for its economy.  Timidity must give way to action.

In Hydrowonk’s opinion, many can learn from the courage and foresight of the San Diego County Water Authority.  In the 1990s, when many thought that Southern California had 1.3 million AF of Colorado River water “forever”, San Diego understood the changing dynamics on the Colorado River with Arizona passing banking legislation and increasing its use of its 2.8 million AF Colorado River entitlement.  San Diego took the step of entering into an agreement with the Imperial Irrigation District.  Ridiculed by the water establishment for paying too much at the time, San Diego stood its course and closed its transaction.  The critics should eat crow.

Undeterred, San Diego has now stepped up on seawater desalination at Carlsbad.  Again, naysayers criticized the high price.  Again, won’t San Diego be substantially better off with an extra 56,000 AF of desalinated seawater?

So, while leadership at the top has proven critical, what the water industry needs is more proactive leadership throughout the state.  Make the case for substantial investments in water and figure out how to get things done.  The more water agencies are spending time developing and financing new projects and not lobbying in Sacramento, the brighter the water future for the Golden State.  Why can’t more water agencies be like San Diego?