BILL NUMBER: SB 42 INTRODUCED BILL TEXT INTRODUCED BY Senator Wolk DECEMBER 11, 2012 An act to repeal and add Division 26.7 (commencing with Section 79700) of the Water Code, and to repeal Section 2 of Chapter 3 of the Seventh Extraordinary Session of the Statutes of 2012, relating to a clean, secure water supply and Delta recovery program, by providing the funds necessary therefor through an election for the issuance and sale of bonds of the State of California and for the handling and disposition of those funds. LEGISLATIVE COUNSEL'S DIGEST SB 42, as introduced, Wolk. The California Clean, Secure Water Supply and Delta Recovery Act of 2014. (1) Existing law creates the Safe, Clean, and Reliable Drinking Water Supply Act of 2012, which, if approved by the voters, would authorize the issuance of bonds in the amount of $11,140,000,000 pursuant to the State General Obligation Bond Law to finance a safe drinking water and water supply reliability program. Existing law provides for the submission of the bond act to the voters at the November 4, 2014, statewide general election. This bill would repeal these provisions. (2) Under existing law, various measures have been approved by the voters to provide funds for water supply and protection facilities and programs. This bill would enact the California Clean, Secure Water Supply and Delta Recovery Act of 2014, which, if adopted by the voters, would authorize the issuance of bonds in an unspecified amount pursuant to the State General Obligation Bond Law to finance a clean, secure water supply and Sacramento-San Joaquin Delta recovery program. The bill would provide for the submission of the bond act to the voters at the November 4, 2014, statewide general election. Vote: 2/3. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Division 26.7 (commencing with Section 79700) of the Water Code is repealed. SEC. 2. Division 26.7 (commencing with Section 79700) is added to the Water Code, to read: DIVISION 26.7. The California Clean, Secure Water Supply and Delta Recovery Act of 2014 CHAPTER 1. GENERAL PROVISIONS 79700. This division shall be known and may be cited as the California Clean, Secure Water Supply and Delta Recovery Act of 2014. 79702. The Legislature finds and declares all of the following: (a) Clean and secure water supplies are critical to sustaining California's communities, strengthening businesses, and preserving our state's strong agricultural heritage. (b) The Delta's agricultural heritage, water supply infrastructure, and ecological resources are vital to California's economy. (c) Immediate action is necessary to reverse the severe ecosystem decline of the Delta and to safeguard the communities, economy, and vital infrastructure of the Delta. (d) The security of critical state resources within the Delta relies upon the strength and integrity of the levee system. (e) Adequate flood protection is essential to protecting California's communities. (f) Frequent drought, polluted groundwater aquifers, aging water supply infrastructure, rising water treatment costs, inadequate flood protection, a changing climate, and watershed degradation, among other challenges, threaten California's ability to sustain and protect its communities, its businesses, and its farms. (g) Improved local, regional, and statewide water resource management ensures California communities are able to efficiently respond to drought and climate change. (h) Funds provided by this division shall not be expended for the design, construction, operation, or maintenance of Delta conveyance projects. These costs are the responsibility of the water agencies that benefit from those facilities. (i) Ecosystem restoration funds provided by this division shall not be expended for environmental mitigation measures except as part of the environmental mitigation costs associated with projects funded by this division. 79704. The proceeds of bonds issued and sold pursuant to this division shall be deposited in the Clean, Secure Water Supply and Delta Recovery Program Fund, which is hereby created. 79706. As used in this division, the following terms have the following meanings: (a) "Committee" means the Finance Committee created pursuant to Section 79774. (b) "Fund" means the Clean, Secure Water Supply and Delta Recovery Program Fund created pursuant to Section 79704. (c) "Delta" means the Sacramento-San Joaquin Delta. CHAPTER 2. DELTA SECURITY AND RECOVERY 79710. (a) This chapter provides state funding for public benefit projects that assist in recovering and safeguarding the Delta's resources including agriculture, water quality, water supply, recreation, fish, and wildlife. (b) The sum of ____ dollars ($____) shall be available, upon appropriation by the Legislature, to the Sacramento-San Joaquin Delta Conservancy for grants and direct expenditures to help ensure economic sustainability, Delta levee integrity, water quality improvements, local water supply reliability, protection of critical infrastructure, and terrestrial and aquatic ecosystem restoration within the Delta and the Suisun Marsh. (c) For purposes of implementing this chapter, the Sacramento-San Joaquin Delta Conservancy shall take into consideration the economic sustainability plan developed by the Delta Protection Commission pursuant to Section 29759 of the Public Resources Code and the Delta Plan developed by the Delta Stewardship Council pursuant to Section 85300. CHAPTER 3. REGIONAL WATER SUPPLY SECURITY 79720. The sum of ____ dollars ($____) shall be available, upon appropriation by the Legislature, for projects that help achieve local and regional water management objectives, including, but not limited to, improved drinking water supplies, water quality, water treatment, municipal and agricultural water efficiency, reduced reliance on the Delta, climate change resiliency, and watershed ecosystem stewardship. Projects shall implement adopted integrated regional water management plans in accordance with Part 2.2 (commencing with Section 10530) of Division 6. 79722. From the funds described in Section 79720, at least ____ dollars ($____) shall be available for water recycling and advanced treatment technology projects that improve regional water quality or regional water supply. 79724. From the funds described in Section 79720, at least ____ dollars ($____) shall be available for groundwater management projects that prevent or reduce the contamination of groundwater that serves as a source of drinking water. CHAPTER 4. CLEAN DRINKING WATER 79730. The sum of ____ dollars ($____) shall be available, upon appropriation by the Legislature, for projects that help ensure access to clean, safe, and affordable drinking water for California's communities. Eligible expenditures include, but are not limited to, projects that address the critical and immediate needs of disadvantaged, rural, or small communities and projects that leverage state and federal drinking water quality and wastewater treatment funds. CHAPTER 5. PROTECTION OF RIVERS, LAKES, AND WATERSHEDS 79740. The sum of ____ dollars ($____) shall be available, upon appropriation by the Legislature, to the Wildlife Conservation Board for projects that protect and restore natural hydrologic and ecological systems in watersheds that serve as sources of drinking water. 79742. Prior to the expenditure of funds appropriated pursuant to Section 79740, the Wildlife Conservation Board, in coordination with state conservancies and the Natural Resources Agency, shall develop an expenditure plan to guide the expenditure of funds. The expenditure plan shall recognize and address regional and statewide watershed protection and restoration priorities. Projects funded by this chapter shall be selected through a competitive process. CHAPTER 6. STATEWIDE WATER SUPPLY IMPROVEMENTS 79750. The sum of ____ dollars ($____) shall be available, upon appropriation by the Legislature, for public benefits associated with water storage and delivery projects that advance adopted state water policies. Priority shall be given to the construction, rehabilitation, or expansion of facilities that enable reduced reliance on Delta exports during ecologically sensitive periods, as well as projects that reoperate existing facilities to maximize water supply or ecosystem benefits. Public benefits eligible for funding under this section are limited to ecosystem restoration, water quality improvements, and flood protection. Projects funded by this chapter shall be selected through a competitive process. CHAPTER 7. FLOOD PROTECTION 79760. The sum of ____ dollars ($____) shall be available, upon appropriation by the Legislature, to the Department of Water Resources for projects that support integrated flood management in the Sacramento and San Joaquin Valleys, in accordance with the Central Valley Flood Protection Plan described in Section 9612. CHAPTER 8. FISCAL PROVISIONS 79770. Bonds in the total amount of ____ dollars ($____), or so much thereof as is necessary, not including the amount of any refunding bonds, or so much thereof as is necessary, may be issued and sold to provide a fund to be used for carrying out the purposes expressed in this division and to reimburse the General Obligation Bond Expense Revolving Fund pursuant to Section 16724.5 of the Government Code. The bonds, when sold, shall be and constitute a valid and binding obligation of the State of California, and the full faith and credit of the State of California is hereby pledged for the punctual payment of both principal of, and interest on, the bonds as the principal and interest become due and payable. 79772. The bonds authorized by this chapter shall be prepared, executed, issued, sold, paid, and redeemed as provided in the State General Obligation Bond Law (Chapter 4 (commencing with Section 16720) of Part 3 of Division 4 of Title 2 of the Government Code), and all of the provisions of that law apply to the bonds and to this division and are hereby incorporated in this division as though set forth in full in this division, except Section 16727 of the Government Code shall not apply to the extent that it is inconsistent with any other provision of this division. 79774. (a) Solely for the purpose of authorizing the issuance and sale pursuant to the State General Obligation Bond Law (Chapter 4 (commencing with Section 16720) of Part 3 of Division 4 of Title 2 of the Government Code) of the bonds authorized by this division, the California Clean, Secure Water Supply and Delta Recovery Finance Committee is hereby created. For purposes of this division, the California Clean, Secure Water Supply and Delta Recovery Finance Committee is "the committee" as that term is used in the State General Obligation Bond Law. The committee consists of the Director of Finance, the Treasurer, the Controller, the Director of Water Resources, and the Secretary of the Natural Resources Agency, or their designated representatives. The Treasurer shall serve as chairperson of the committee. A majority of the committee may act for the committee. (b) For purposes of the State General Obligation Bond Law, the Department of Water Resources is designated the "board." 79776. The committee shall determine whether or not it is necessary or desirable to issue bonds authorized pursuant to this division in order to carry out the actions specified in this division and, if so, the amount of bonds to be issued and sold. Successive issues of bonds may be authorized and sold to carry out those actions progressively, and it is not necessary that all of the bonds authorized to be issued be sold at any one time. 79778. There shall be collected each year and in the same manner and at the same time as other state revenue is collected, in addition to the ordinary revenues of the state, a sum in an amount required to pay the principal of, and interest on, the bonds each year. It is the duty of all officers charged by law with any duty in regard to the collection of the revenue to do and perform each and every act that is necessary to collect that additional sum. 79780. Notwithstanding Section 13340 of the Government Code, there is hereby appropriated from the General Fund in the State Treasury, for the purposes of this division, an amount that will equal the total of the following: (a) The sum annually necessary to pay the principal of, and interest on, bonds issued and sold pursuant to this division, as the principal and interest become due and payable. (b) The sum necessary to carry out Section 79782, appropriated without regard to fiscal years. 79782. For the purposes of carrying out this division, the Director of Finance may authorize the withdrawal from the General Fund of an amount not to exceed the amount of the unsold bonds that have been authorized by the committee to be sold for the purpose of carrying out this division. Any amounts withdrawn shall be deposited in the fund. Any money made available under this section shall be returned to the General Fund from proceeds received from the sale of bonds for the purpose of carrying out this division. 79784. All money deposited in the fund that is derived from premium and accrued interest on bonds sold shall be reserved in the fund and shall be available for transfer to the General Fund as a credit to expenditures for bond interest. 79786. Pursuant to Chapter 4 (commencing with Section 16720) of Part 3 of Division 4 of Title 2 of the Government Code, the cost of bond issuance shall be paid out of the bond proceeds. These costs shall be shared proportionally by each program funded through this bond act. 79788. The Department of Water Resources may request the Pooled Money Investment Board to make a loan from the Pooled Money Investment Account, including other authorized forms of interim financing that include, but are not limited to, commercial paper, in accordance with Section 16312 of the Government Code, for purposes of carrying out this division. The amount of the request shall not exceed the amount of the unsold bonds that the committee, by resolution, has authorized to be sold for the purpose of carrying out this division. The Department of Water Resources shall execute any documents required by the Pooled Money Investment Board to obtain and repay the loan. Any amounts loaned shall be deposited in the fund to be allocated by the board in accordance with this division. 79790. The bonds may be refunded in accordance with Article 6 (commencing with Section 16780) of Chapter 4 of Part 3 of Division 4 of Title 2 of the Government Code, which is a part of the State General Obligation Bond Law. Approval by the voters of the state for the issuance of the bonds described in this division includes the approval of the issuance of any bonds issued to refund any bonds originally issued under this division or any previously issued refunding bonds. 79792. Notwithstanding any other provision of this division, or of the State General Obligation Bond Law, if the Treasurer sells bonds pursuant to this division that include a bond counsel opinion to the effect that the interest on the bonds is excluded from gross income for federal tax purposes, subject to designated conditions, the Treasurer may maintain separate accounts for the investment of bond proceeds and for the investment of earnings on those proceeds. The Treasurer may use or direct the use of those proceeds or earnings to pay any rebate, penalty, or other payment required under federal law or take any other action with respect to the investment and use of those bond proceeds required or desirable under federal law to maintain the tax exempt status of those bonds and to obtain any other advantage under federal law on behalf of the funds of this state. 79794. The Legislature hereby finds and declares that, inasmuch as the proceeds from the sale of bonds authorized by this division are not "proceeds of taxes" as that term is used in Article XIII B of the California Constitution, the disbursement of these proceeds is not subject to the limitations imposed by that article. SEC. 3. Section 2 of Chapter 3 of the Seventh Extraordinary Session of the Statutes of 2009, as amended by Section 1 of Chapter 74 of the Statutes of 2012, is repealed. SEC. 4. Section 2 of this act shall be submitted to the voters at the November 4, 2014, statewide general election in accordance with provisions of the Government Code and the Elections Code governing the submission of a statewide measure to the voters. SEC. 5. Section 2 of this act shall take effect upon the approval by the voters of the California Clean, Secure Water Supply and Delta Recovery Act of 2014, as set forth in that section at the November 4, 2014, statewide general election.