BILL ANALYSIS Ó
AB 1471
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1471 (Rendon, Atkins, and Gomez)
As Amended August 13, 2014
2/3 vote. Urgency
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|ASSEMBLY: | |(May 23, 2014) |SENATE: | | |
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(vote not relevant) (vote not available)
Original Committee Reference: BUDGET
SUMMARY : Repeals the $11.14 billion bond for water-related
projects and programs that was drafted in 2009 (2009 Water Bond)
and replaces it with the Water Quality, Supply, and
Infrastructure Improvement Act of 2014 (2014 Water Bond), which
provides $7.545 billion in bond funding for water-related
projects and programs including $7.12 billion in new bond
funding and a reversion of $425 million in existing bond
funding.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Repeal the 2009 Water Bond, which is currently on the ballot
for November 4, 2014.
2)Allocate $7.545 billion in new bond funding by authorizing
$7.12 billion in new bond funding and reverting $425 million
in unspent bond funds from the following Acts to this Act:
$105 million from the Safe Drinking Water, Security, Clean
Drinking Water, Coastal and Beach Protection Act of 2002
(Proposition 84); $95 million from the Water Security, Clean
Drinking Water, Coastal and Beach Protection Act of 2002
(Proposition 50); $100 million from the Disaster Preparedness
and Flood Protection Bond Act of 2006 (Proposition 1E);
reverting $13.5 million from the Water Conservation and Water
Quality Bond Law of 1986 (Proposition 44); $25.5 million from
the Safe, Clean, Reliable Water Supply Act of 1996
(Proposition 204); and, $86 million from the Costa-Machado
Water Act of 2000 (Proposition 13).
3)Allocate the funds by chapter for the following purposes (in
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billions):
$ 0.520 Chapter 5 Clean Drinking Water
$ 1.495 Chapter 6 Protecting Rivers, Lakes, Streams, Coastal
Waters & Watersheds
$ 0.810 Chapter 7 Regional Water Security, Climate, &
Drought Preparedness
$ 2.700 Chapter 8 Statewide Water System Operational
Improvement (Storage)
$ 0.725 Chapter 9 Water Recycling
$ 0.900 Chapter 10Groundwater Sustainability
$ 0.395 Chapter 11 Flood Management
4)Retain the administrative and other provisions from the 2009
Water Bond that relate to water storage including, but not
limited to:
a) Continuously appropriating water storage funding to the
California Water Commission (CWC), a governor-appointed
body, and requiring the CWC to select projects through a
competitive public process;
b) Empowering the CWC to fund the public benefits of
storage projects related to ecosystem and water quality
improvements, flood control, emergency response, and
recreation; and,
c) Prohibiting expending bond funds on environmental
mitigation, except environmental mitigation associated with
providing public benefits.
EXISTING LAW :
1)Enacts the 2009 Water Bond which, if approved by the voters on
November 4, 2014, authorizes $11.14 billion in bonds for the
following purposes (in billions):
$ 0.455 Chapter 5Drought Relief
$ 1.400 Chapter 6Water Supply Reliability
$ 2.250 Chapter 7Delta Sustainability
$ 3.000 Chapter 8Statewide Water System
Operational Improvement (Storage)
$ 1.785 Chapter 9Conservation and Watershed
Protection
$ 1.000 Chapter 10Groundwater Protection and Water
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Quality
$11.140 TOTAL
2)Creates a nine-member CWC within the Department of Water
Resources (DWR) with each member appointed by the Governor,
subject to confirmation by the Senate, and serving four-year
staggered terms.
AS PASSED BY THE ASSEMBLY , this bill required a tax on the
distribution of fireworks and specified the moneys in the fund
be used for public safety efforts and proper handling and
management of dangerous fireworks.
FISCAL EFFECT : Unknown. The state pays principal and interest
during the repayment period and cost will depend on factors such
as the actual interest rate paid, the timing of the bond sales
(bonds are often sold over a number of years), and the time
period over which the bonds are repaid. Fiscal analyses of
recent bond measures assumes a 5% flat interest rate with a
30-year repayment period, yielding about $65 million annually in
principal and interest costs to the state for each $1 billion
borrowed. Under that formula, annual General Fund principal and
interest payments would equate to about $490 million. In
addition, there is a one-time General Fund costs to the
Secretary of State for preparation of a statewide ballot
pamphlet. That cost was previously estimated at around
$200,000.
COMMENTS : This bill would repeal the 2009 Water Bond and place
a new revised 2014 Water Bond on the ballot that is structured
to reduce its overall size and General Fund impact as well as
address many pressing policy issues that have emerged since the
2009 Water Bond was negotiated.
For a full history on the 2009 Water Bond, which has been
delayed twice and unless repealed or moved is currently slated
for the November 2014 general election, please see the Assembly
Water, Parks and Wildlife Committee's April 29, 2013 analysis of
AB 1331 (Rendon) of the current legislative session.
Bond Dollars Represent Tradeoffs. The types of bonds that would
be sold under both the 2009 Water Bond and 2014 Water Bond are
general obligation bonds (G.O. bonds). G.O. bonds are secured
on the full faith and credit of the State of California. A bond
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act represents authority for the state to go into the
marketplace and sell bonds, which are in essence a loan between
the State and the bond holder which must be repaid from the
General Fund with interest. The Public Policy Institute of
California in its March 2014 report, Paying for Water in
California, estimates that the current debt service on
water-related G.O. bonds is around $700 million per year and
"approaching the level of recent bond spending." The
Legislative Analyst's Office, in a February 26, 2013 Overview of
State Infrastructure Bonds concluded that the State's average
annual cost for paying off the $11.14 billion 2009 Water Bond
currently on the ballot would be an additional $565 million per
year of General Fund debt service over the 40-year repayment
period.
Currently, over 90% of General Fund dollars are spent on k-16
education, health and human services, and corrections programs.
In addition, most of the taxes the State collects and spends are
transferred to local governments. This "local assistance" is
used to pay for schools and for state health and welfare
programs (such as CalWORKS, In-Home Supportive Services, and
Medi-Cal) that are administered at the local level.
Support for a Water Bond on the Rise, Critical Funding Gaps
Identified. An April 17, 2014 release of a public poll by the
non-partisan Public Policy Institute of California (PPIC)
advises that support for a water bond is on the rise but the
greatest support is for a slimmed down version of a bond. The
PPIC notes that "Californians today are also more likely than
they were a year ago to favor an $11.1 billion bond for state
water projects. As the legislature continues to discuss the
measure - now on the November ballot - 60% of adults (up 16%
from last year) and 50% of likely voters (up 8% from last year)
say they would vote yes. Today, when those who oppose the bond
are asked how they would vote if the amount were lower, support
rises (69% adults, 59% likely voters). A slim majority of
adults (52%) and 44% of likely voters say it is very important
that voters pass the bond."
In a separate report the PPIC found that state faces critical
funding gaps in five key areas of water management. These areas
include safe drinking water in small, disadvantaged communities;
flood protection; management of stormwater and other polluted
runoff; aquatic ecosystem management; and integrated water
management.
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Major Issues with Differing Approaches in the Bond Proposals.
There have been many different water bond proposals in the
Legislature this session including, but not limited to AB 1331,
AB 2686 (Perea), and SB 848 (Wolk). Those bills varied in terms
of the amounts of overall bond funding being proposed and have
ranged from a low of about $5.8 billion to over $10 billion,
including a recent proposal from Governor Brown's Administration
of $6 billion. The existence of so many different bond
proposals, including in both houses of the Legislature and under
the Administration, has allowed for a robust and exhaustive
discussion of current relevant funding issues for water-related
projects and programs. As a result, it is widely acknowledged
that any successful bond proposal will need to maintain a broad
appeal with respect to the core issues being funded while
minimizing areas of contention that could fuel opposition.
The areas of broad agreement in all of the bond proposals
include the need for: adequate funds to help provide
communities with safe drinking water; continued investments in
Integrated Regional Water Management; expanded opportunities for
local water supply reliability through increased agricultural
and urban conservation, stormwater capture, water recycling and
groundwater sustainability; and, additional investment in Delta
levees. Unlike the other bond bills, this bill also recognizes
and funds additional investments in statewide flood management.
Besides the overall size of any bond, the major areas of policy
disagreement have been: 1) the level of funding that will be
directed towards water storage and whether it should be
continuously appropriated; and, 2) the level of funding that
should be applied to projects and programs in the Sacramento-San
Joaquin Delta (Delta) and how any Delta funding relates, or does
not relate, to the Bay Delta Conservation Plan (BDCP) process.
Water Storage and Continuous Appropriation. With California
currently experiencing a continuing drought, many stakeholders
have identified increased water storage as a key strategy to
combatting future water uncertainties. Under many of the
current bond proposals both surface water and groundwater
storage projects would be eligible for funding. However, new
water storage projects can be very costly, particularly surface
storage projects. This has caused proponents of those projects
to seek to have money for storage continuously appropriated to
the CWC.
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A continuous appropriation means bond funds are not subject to
the legislative budget process and go directly to the entity
identified to receive them. Proponents of continuous
appropriation for storage state this is necessary in order to
provide a level of certainty commensurate with the likely high
level of local investment. However, opponents of large
allocations to surface storage feel those allocations could come
at the expense of investments in water quality and local water
supply reliability, such as increased water use efficiency and
water recycling. Opponents of continuous appropriations also
maintain that the Legislature's role in the budget is an
appropriate check on the Administration and by extension the
CWC, who are all gubernatorial appointees.
This bill allocates $2.7 billion to both surface water and
groundwater projects and continuously appropriates that funding
to the CWC utilizing eligibility provisions almost identical to
those in the 2009 Water Bond.
Delta Neutrality. This 2014 Water Bond tries to be neutral with
regard to the BDCP. The BDCP is a joint effort by Governor
Brown's Administration and several water agencies that receive
export water supplies from the State Water Project (SWP) and
Federal Central Valley Project (CVP) to obtain 50-year
endangered species act permits for SWP/CVP Delta facilities
through a State Natural Community Conservation Plan and Federal
Habitat Conservation Plan.
The BDCP is a controversial project. Supporters maintain that
the current proposed project will restore the Sacramento-San
Joaquin Delta ecosystem and secure California water supplies
through the construction of three new water intakes on the
Sacramento River, two 40-foot diameter water conveyance tunnels
30 miles long, over 150,000 aces of habitat restoration, and
"other stressors" actions (such as reducing non-native invasive
species). Opponents of the current proposed project, which
includes some environmental groups as well as many organizations
and entities located within the Delta, believe it will decrease
water supply and water quality in the Delta, disrupt their
communities, and impact economic sustainability by removing
agricultural land from production. In addition, they oppose the
use of public bond money for water purchases that would directly
benefit water exporters. A similar program was previously
implemented under a provision of the now defunct CALFED
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Bay-Delta Program called the Environmental Water Account (EWA).
This bill maintains Delta neutrality in three ways. First, it
is the only water bond proposal that does not include a specific
"Delta Sustainability" chapter. Instead it funds all statewide
ecosystem projects together in Chapter 6, Protecting Rivers,
Lakes, Streams, Coastal Waters, and Watersheds. Second, it
gives specific policy guidance regarding Delta projects in its
general provisions. Third, it requires public processes and
provides specific parameters for instream flow purchases.
In Chapter 6, this bill makes $1.495 billion available for
competitive grants for multibenefit ecosystem and watershed
protection and restoration projects in accordance with statewide
priorities. This bill ensures a statewide distribution of funds
by dividing $327.5 million among all of the statewide
conservancies, including the Delta Conservancy, which is
governed by board that includes both local and state
representation. The general provisions of this bill give
further guidance to the Delta Conservancy, directing it to
achieve its conservation objectives on public lands or through
voluntary projects on private lands. The general provisions
also direct the Delta Conservancy to coordinate and consult with
the city or county in which a grant is proposed to be expended.
This bill also provides $87.5 million to the Department of Fish
and Wildlife (DFW) to benefit the Delta but requires DFW to
consult with Delta cities and counties, as well as work with
willing partners in those projects.
This bill tries to balance the need for some instream flow
purchases to benefit at-risk native fish while avoiding the
pitfalls of the former EWA program, which purchased most of its
water as short-term transfers handled internally by DWR in a
non-public process. In contrast this bill allocates $200
million to the Wildlife Conservation Board (WCB), an entity that
makes its decisions through a publicly-noticed process. Those
purchases are also governed by general provisions in this bill
addressing both permanent dedications of environmental flows and
long-term transfers of not less than 20 years. Both types of
purchases must be considered and approved by the State Water
Resources Control Board though its public hearing process. This
bill also prioritizes permanent dedications of instream flows
and requires that all flows purchased for the environment with
bond funds must provide fishery or ecosystem benefits that are
in addition to, and not instead of, existing environmental
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mitigation measures or compliance obligations.
Chapter 6 of this bill also provides funding opportunities for
projects outside of the Delta. In addition to the monies
allocated to the conservancies and WCB, there is $100 million
for urban creeks, $20 million to the Secretary of Resources for
urban watersheds, and $285 million to the Department of Fish and
Wildlife for projects outside the Delta. Finally, there is $475
million to the Secretary of Resources to comply with the State's
existing settlement obligations, including but not limited to:
the Quantification Settlement Agreement, including Salton Sea
restoration; the San Joaquin River Settlement Agreement; the
Tahoe Regional Planning Compact; and, the State share for
Central Valley Project Improvement Act refuge and wildlife
habitat area water supplies.
This bill was substantially amended in the Senate and the
Assembly-approved provisions of this bill were deleted.
However, the language of this bill is identical to SB 866 (Wolk)
of the current legislative session. SB 866 also previously
concerned a tax on the distribution of fireworks but was
substantially amended in the Assembly to delete the
Senate-approved provisions and insert identical Water Bond
provisions.
Analysis Prepared by : Tina Cannon Leahy / W., P. & W. / (916)
319-2096 FN:
0004683