BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 295
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          Date of Hearing:   April 30, 2013

                   ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
                                Anthony Rendon, Chair
                     AB 295 (Salas) - As Amended:  April 23, 2013
           
          SUBJECT  :   Water Bond: Study Bill

           SUMMARY  :   Requires the State Water Resources Control Board  
          (SWRCB) and the Drinking Water and Environmental Management  
          Division of the Department of Public Health (Division) to  
          initiate and complete a comprehensive study of the need for  
          state funding for projects necessary to ensure that all  
          Californians have access to safe drinking water and to provide a  
          report to the Legislature by July 1, 2014 that identifies and  
          prioritizes projects.  Specifically,  this bill  :  

          1)Finds and declares that there is an $11.14 billion bond  
            measure (Water Bond) on the November 2014 ballot to fund  
            projects related to water supply reliability, water quality,  
            Sacramento-San Joaquin Delta (Delta) sustainability, watershed  
            conservation and protection, and water recycling.

          2)Further finds that many Californians lack access to clean,  
            safe, and affordable drinking water and that in some areas  
            economic conditions prevent the community from generating  
            sufficient funding to correct water system deficiencies or  
            source water quality.

          3)States it is in the public interest to pass a general  
            obligation bond that includes funding to help address needed  
            safe drinking water improvements, including the critical and  
            immediate needs of disadvantaged, rural, or small communities  
            and that, in order to determine the amount of state funding  
            necessary, the Legislature requires additional information.

          4)Requires the SWRCB and the Division to initiate and complete a  
            comprehensive study relating to the need for state funding  
            projects necessary to ensure that all Californians have access  
            to safe drinking water and to report those findings to the  
            Legislature by July 1, 2014.  

           EXISTING LAW  :

          1)Authorizes the issuance of $11.14 billion in general  








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            obligation bonds if the Water Bond is approved by the voters  
            in the November 4, 2014 statewide general election. 

            Organizes the Water Bond as follows:
                                          Chapter 1Short Title
                         Chapter 2                Findings and  
                         Declarations
                         Chapter 3                Definitions
                         Chapter 4                General Provisions
            $     455,000,000        Chapter 5Drought Relief
            $  1,400,000,000         Chapter 6Water Supply Reliability
            $  2,250,000,000         Chapter 7Delta Sustainability
            $  3,000,000,000         Chapter 8Statewide Water System  
            Operational Improvement
            $  1,785,000,000         Chapter 9Conservation and Watershed  
            Protection
            $  1,000,000,000         Chapter 10Groundwater Protection and  
            Water Quality
            $  1,250,000,000         Chapter 11     Water Recycling  
            Program
                           Chapter 12               Fiscal Provisions       
                   
             $11,140,000,000TOTAL

          2)Creates the California Water Commission (CWC), a nine-member  
            body of gubernatorial appointees who are confirmed by the  
            Senate.  

          3)Extends the terms of the current members of the CWC to May 14,  
            2014.

          4)Specifies that the $3 billion in general obligation bonds  
            allocated under Chapter 8 of the Water Bond shall not be  
            subject to Legislative appropriation but is, instead, a  
            continuous appropriation to the CWC to pay for the public  
            benefits of water storage projects.

          5)Authorizes the CWC to quantify the public benefits of water  
            storage projects under specified criteria, including that such  
            projects must improve the Delta ecosystem or tributaries to  
            the Delta.
            
           FISCAL EFFECT  :   Unknown

           COMMENTS  :   In 2009, former Governor Schwarzenegger convened the  








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          Legislature in extraordinary session to take up issues related  
          to protecting and restoring the Delta ecosystem and improving  
          water reliability and management, including addressing water  
          conveyance, storage, conservation and groundwater and  
          considering a general obligation bond.  Subsequently, an  
          historic five-bill package of water legislation was passed and  
          signed, including SB 2 (Cogdill), Chapter 3, Statutes of the  
          2009-10 Seventh Extraordinary Session (SB 2 X7).

          SB 2 X7 called for a water bond to be submitted to the voters on  
          the November 2010 ballot.  If approved by the voters, the Water  
          Bond would have authorized the issuance of bonds in the amount  
          of $11.14 billion for a wide range of projects and purposes  
          including water conservation and efficiency, groundwater  
          protection and cleanup, integrated regional water management,  
          ecosystem and watershed protection and restoration, water  
          recycling, and water storage.  

          However, by early 2010, supporters of the 2010 Water Bond  
          recognized that a sluggish economy and a dire budget shortfall  
          meant that delaying the bond vote could increase its chances of  
          success.  Subsequently, AB 1265 (Caballero) was signed into law  
          and moved the 2010 Water Bond to the 2012 general election.  AB  
          1265 both changed the timing of the Water Bond vote and deleted  
          a provision allowing for-profit entities to be members of joint  
          powers authorities for bond-funded surface water storage  
          projects.  

           California Water Commission: Appointments and Terms
           Prior to the passage of SB 2 X7, which placed the Water Bond on  
          the 2010 ballot, the CWC was a dormant body in the  
          Schwarzenegger administration.  However, with the passage of SB  
          2 X7, the former Governor made nine new appointments to the CWC  
          who, if the Water Bond passed, would then be tasked with  
          quantifying the public benefits of water storage projects and  
          making the initial allocations of general obligation bonds for  
          those benefits.  

          However, when AB 1265 was approved in 2010 and moved the Water  
          Bond to the 2012 general election, related legislation, AB 1260  
          (Fuller), was also approved.  AB 1260 extended the terms of the  
          CWC members appointed by then Governor Schwarzenegger to May 14,  
          2014, if confirmed by the Senate.  This meant that even after  
          Schwarzenegger left office on January 3, 2011, his appointees,  
          if confirmed by the Senate, would still make the public benefits  








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          determination for surface storage projects and control the  
          allocation of $3 billion in general obligation bond funds to  
          those benefits.  After Governor Jerry Brown assumed office in  
          2011, he requested the Senate not set the confirmation hearings  
          for the final two Schwarzenegger appointees.  And when those  
          appointments lapsed, he did not fill them.  As a result, the CWC  
          is currently seven members appointed by former Governor  
          Schwarzenegger.  

           Water Bond Delay to 2014
           In 2012, polling revealed that an incomplete economic recovery  
          meant the Water Bond was still unlikely to pass.  In response,  
          AB 1422 (Perea) moved the Water Bond to the November 4, 2014  
          statewide general election but otherwise left the text  
          unchanged, including the title.  As a consequence, it is still  
          called the "Safe, Clean, and Reliable Drinking Water Supply Act  
          of 2012."

           Senate Water Bond Oversight Hearings
           In 2013, discussions have already begun regarding whether the  
          Water Bond needs to be reduced.  On February 26, 2013 the Senate  
          Natural Resources and Water Committee held a joint oversight  
          hearing with the Senate Governance and Finance Committee  
          entitled "Overview of California's Debt Condition: Priming the  
          Pump for a Water Bond" (joint hearing).  The stated purpose of  
          the joint hearing was to "inform members about the state's debt  
          condition, its capacity to incur additional debt for water and  
          other competing infrastructure needs, and issues regarding using  
          debt finance to improve the state's water quality, supply, and  
          infrastructure."  Background documents for the joint hearing  
          referenced the Governor's proposed 2013-14 Budget, which  
          acknowledges that since 2000 voters have authorized $100 billion  
          in new, general obligation bonds and the state has issued more  
          than $28 billion since 2009.

          At the joint hearing, the State Treasurer's Office presented its  
          Debt Affordability Report, which measures the State's debt  
          burden relative to is general fund revenue, personal income, and  
          per capita.  The Treasurer's Office projected that the state  
          will spend 8.9% of general fund revenue on debt service in  
          2012-13 ($8.6 billion of debt service versus $95.9 billion in  
          revenue).  Additional testimony was provided by the Legislative  
          Analyst's Office (LAO) and captured in another report for the  
          joint hearing entitled, Overview of State Infrastructure Bonds.   
          In that report the LAO estimates that if the Water Bond was  








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          approved in its current form of $11.14 billion, and the bonds  
          were sold over a ten-year period at 5% interest, then "the  
          state's average annual cost for paying off the water bonds would  
          be $565 million over a 40-year repayment period."  Because of  
          the pressure this would cause to the State's general fund, the  
          LAO asserts that "looking forward to the next decade of state  
          infrastructure investment, the largest single issue for the  
          Legislature to determine is the level of state spending to  
          dedicate to this purpose. For any given level of state revenues,  
          each dollar spent on infrastructure (or infrastructure debt  
          service) decreases funds that could be spent on other programs."

          On March 12, 2013 the Senate Natural Resources and Water  
          Committee held a second bond-related oversight hearing entitled:  
          What's Changed Since the Legislature Passed the Safe, Clean, and  
          Reliable Drinking Water Supply Act of 2010?  The purpose of that  
          hearing was to explore what modifications, if any, should be  
          made to the Water Bond in light of circumstances which may have  
          changed since it was originally approved by the Legislature in  
          2009.  One of the changes highlighted in that hearing was AB 685  
          (Eng), which was passed in 2012 and made it the "established  
          policy of the state that every human being has the right to  
          safe, clean, affordable, and accessible water adequate for human  
          consumption, cooking, and sanitary purposes."  Other changes  
          included: the end of the 2007-2009 drought; the status of such  
          large Delta planning processes as the Delta Stewardship  
          Council's Delta Plan, the Bay Delta Conservation Plan, and a new  
          effort known as the "Coalition To Support Delta Projects"; and,  
          the successful efforts by some local water districts to increase  
          their surface storage without the support of general obligation  
          bonds.

           Related Water Bond Legislation
           Four other Water Bond-related bills have been referred to  
          Legislative policy committees, besides this one.  AB 142 (Perea)  
          and AB 1331 (Assembly Water, Parks and Wildlife Committee) both  
          call for additional studies in order to inform continuing water  
          bond discussions.  In the Senate SB 40 (Pavley) declares it is  
          the intent of the Legislature to reduce and potentially refocus  
          the Water Bond and also updates its title and related internal  
          references to the Safe, Clean, and Reliable Drinking Water  
          Supply Act of 2014.  SB 42 (Wolk) repeals the existing Water  
          Bond and enacts the California Clean, Secure Water Supply and  
          Delta Recovery Act of 2014, which, if adopted by the voters,  
          would authorize the issuance of general obligation bonds in an  








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          unspecified amount to finance projects that: increase Delta  
          economic sustainability and security; improve access to clean  
          drinking water; increased regional water supplies; protect  
          rivers, lakes, and watersheds; improve water storage and  
          delivery; and, support integrated flood management.  Notably, SB  
          42 makes all bond funds, if approved by the voters, subject to  
          Legislative appropriation.  It does not contain the continuous  
          appropriation language found in the current Water Bond with  
          regard to water storage projects.

           Supporting arguments  :  The author states that several reports  
          came out this year from the SWRCB indicating that many  
          groundwater basins in his community are heavily laden with  
          nitrates, selenium and other harmful elements and that these  
          ground water basins are located in disadvantaged, rural, or  
          small communities that would be adversely burdened with the high  
          cost of upgrading their water infrastructure.  The author adds  
          that since California is one of the largest economies in the  
          world, the inability to provide and deliver clean water is  
          unfathomable and calls on a comprehensive study to determine the  
          need for state funding for improvements to disadvantaged  
          communities and others.  

           Committee Amendments  :  The author is requesting the committee  
          amend AB 295 into an Assembly Water, Parks and Wildlife  
          Committee bill to help ensure that disadvantaged communities  
          will have access to clean, reliable, safe drinking water.   
          Assemblymember Perea, the author of AB 142, is also requesting  
          his bill be amended to a Committee bill.  If those amendments  
          are approved by the Committee, then this bill, together with AB  
          142 and AB 1331, will move forward as a three-bill package of  
          Committee bills that all call for additional information to  
          inform future water bond discussions.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file.

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Tina Cannon Leahy / W., P. & W. / (916)  








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          319-2096