BILL ANALYSIS Ó
AB 1331
Page 1
Date of Hearing: April 30, 2013
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Anthony Rendon, Chair
AB 1331 (Committee on Water, Parks and Wildlife) - As Amended:
April 23, 2013
SUBJECT : Water Bond: Study Bill
SUMMARY : Requires the Delta Stewardship Council (Council),
after adoption of its long-term management plan for the
Sacramento-San Joaquin Delta (Delta Plan), to initiate and
complete a comprehensive study of the state funding necessary to
implement the Delta Plan and report those finding to the
Legislature by July 1, 2014. Specifically, this bill :
1)Finds and declares that there is an $11.14 billion bond
measure on the November 2014 ballot to fund projects related
to water supply reliability, water quality, Sacramento-San
Joaquin Delta sustainability, watershed conservation and
protection, and water recycling.
2)Finds that the watershed and aquatic ecosystems of California
are unique and irreplaceable environmental and economic
resources, including the Delta, the largest estuary on the
west coast, and that investments in the State's watersheds can
provide regional and statewide benefits for cities, farms,
industries, and wildlife including protecting water quality
and sustainability, improving flood control and providing
habitat and recreation.
3)Further finds that it is in the public interest to pass a
general obligation bond that includes, but is not limited to,
grants and loans to state and local agencies to help fund
needed improvements to Delta sustainability, healthy
watersheds, and aquatic ecosystems and that in order to
balance and prioritize the appropriate amount of state funding
necessary to accomplish these improvements, the Legislature
requires additional information.
4)Requires the Council, after adoption of the Delta Plan, to
initiate and complete a comprehensive study of the financial
needs for state funding for implementation of the Delta Plan
and report those findings to the Legislature by July 1, 2014.
AB 1331
Page 2
EXISTING LAW:
1)Authorizes the issuance of $11.14 billion in general
obligation bonds if the Water Bond is approved by the voters
in the November 4, 2014 statewide general election.
2)Organizes the Water Bond as follows:
Chapter 1 Short 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
3)Creates the California Water Commission (CWC), a nine-member
body of gubernatorial appointees who are confirmed by the
Senate.
4)Extends the terms of the current members of the CWC to May 14,
2014.
5)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.
6)Authorizes the CWC to quantify the public benefits of water
storage projects under specified criteria, including that such
projects must improve the Sacramento-San Joaquin Delta
AB 1331
Page 3
ecosystem or tributaries to the Delta.
FISCAL EFFECT : Unknown
COMMENTS : In 2009, former Governor Schwarzenegger convened the
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 the Water Bond to be placed on the November
2010 ballot. If approved by the voters, the Water Bond would
have authorized the issuance of $11.14 billion in general
obligation bonds 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, in 2010, supporters of the Water Bond recognized that a
sluggish economy coupled with the state's need to focus on its
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 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
AB 1331
Page 4
(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
determination for surface storage projects and control the
allocation of $3 billion in general obligation bonds towards
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. As a result, the Water Bond is still titled 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
AB 1331
Page 5
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
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 295 (Salas) 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)
AB 1331
Page 6
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 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.
Committee Amendments : Both Assemblymember Perea, the author of
AB 142, and Assemblymember Salas, the author of AB 295 are
requesting that their water bond study bills be amended to
Assembly Water, Parks and Wildlife Committee bills. If those
amendments are approved by the Committee, then AB 142, AB 295
and this bill 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)
319-2096