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)
AB 295
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