BILL NUMBER: SB 571 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Wolk
(Coauthor: Assembly Member Huber)
FEBRUARY 17, 2011
An act to amend Section 10546 of, and to add Sections 167 and 168
to, the Water Code, relating to the California Water Commission.
LEGISLATIVE COUNSEL'S DIGEST
SB 571, as introduced, Wolk. California Water Commission: master
plan for financing and developing water resources: state-funded
projects and programs.
Existing law establishes the California Water Commission in the
Department of Water Resources and requires the commission to conduct
an annual review of the progress and operation of the State Water
Project and to carry out various other related functions.
This bill would require the commission on or before January 1,
2013, to develop a master plan for financing and developing water
resources in the state, including specified assessments and
recommendations. The bill would require the commission to update the
master plan every 5 years. The bill would require the commission to
annually review and audit the award of state funds for water
resources projects and programs; to develop, consistent with the
master plan, a prioritized list of projects and programs relating to
water supply, water quality, water conservation, water use
efficiency, ecosystem and watershed restoration, and integrated
regional water management planning and implementation, for purposes
of awarding state financial assistance for those projects and
programs; and to establish guidelines for the award of state
financial assistance allocated for integrated regional water
management plans, as specified. The bill would also declare
legislative intent that the commission be given authority to allocate
specified state funds for water resources projects and programs.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Numerous agency reports from the Office of the Treasurer, the
Little Hoover Commission, the State Auditor, and the Legislative
Analyst's Office have expressed concern with the level of reliance on
bond funds for water- and resource-related state expenditures, and
the lack of oversight and prioritization of funding allocations
associated with the current method of managing resource-related bond
funds. These reports call for a new water and resource financing
governance strategy, one that includes greater transparency, a
broader use of available funding mechanisms, and a stronger focus on
prioritization and strategic investments.
(b) The Treasurer has warned that continued reliance on general
obligation bonds to finance the state's infrastructure, including
water, will consume 10 percent or more of the state's General Fund by
the middle of the next decade, unless the budget improves. The
Treasurer estimated that debt service costs will be at historically
high levels through the coming decade and beyond.
(c) The Treasurer has further found that bond spending freezes in
2008 and 2009, in response to the budget crisis, halted 5,000
infrastructure jobs, affected thousands of jobs for workers, billions
of dollars in revenue for private businesses, and imperiled many
community-based and nonprofit organizations.
(d) The office of the Treasurer has also noted that the state has
virtually eliminated pay-as-you-go capital allocations and used the
savings to finance operating expenses. This practice can lead to
underinvestment or disinvestment in infrastructure. To avoid this
practice, the Treasurer recommended that the Legislature and the
Governor actively, consistently, and prudently make capital finance
decisions an ongoing part of the budget process.
(e) Current reliance on general obligation bonds, coupled with
continued and growing budget gaps, requires the Legislature to weigh
the need for water infrastructure against the need to provide vital
public services during a period of greatly reduced revenues.
(f) The Little Hoover Commission recently reported that general
obligation bond debt accounted for 52 percent of the budget in the
Governor's proposed General Fund Expenditures for all Resources and
Environmental Protection in the 2010-11 fiscal year.
(g) In its report, "Managing for Change," the Little Hoover
Commission expressed concern about the state's use of bond borrowing
to fund ongoing operational expenses related to water management. The
commission further stated that the state's role of managing and
planning for California's future water use is not a one-time
investment, but part of the ongoing business of government and, as
such, requires a sustainable funding source, either through fee
revenue, General Fund support, or special fund support.
(h) The Little Hoover Commission further recommended that the
Legislature be more assertive in oversight of bond expenditures and
be more strategic in how it prioritizes and finances infrastructure
investments.
(i) Addressing these concerns will better enable California to
meet its water supply, water quality, and water management needs
during difficult financial times.
SEC. 2. Section 167 is added to the Water Code, to read:
167. On or before January 1, 2013, the California Water
Commission shall develop, and shall update by January 1 every five
years thereafter, a master plan for financing and developing water
resources in the state. The master plan shall include all of the
following:
(a) An assessment of the state's capital outlay and ongoing
maintenance needs for water resources through 2050. In making this
assessment, the commission may use the most recent update of the
California Water Plan, if the commission determines that it is
sufficient to meet the requirements of this subdivision.
(b) Recommended guidelines for the Legislature and the Governor to
set and maintain investment priorities. The guidelines should allow
policymakers to adapt priorities to changing circumstances, when
necessary, without abandoning overall planning objectives.
(c) A determination of state, federal, and local public funds
likely to be available through 2050, and the size of any funding
shortfall that may remain.
(d) Recommendations to the Legislature regarding a financing
framework that, on an ongoing basis, fully integrates water resources
needs, including capital investments, and ongoing operational
expenses with the state budget process. The financing framework
should include a recommended mix of state funding sources to pay for
water infrastructure financing and ongoing operational needs,
including General Fund, revenue bonds, and user fees.
(e) An evaluation of the feasibility and applicability of
alternative financing sources to meet the state's water resources
needs and reduce reliance on General Fund expenditures. Alternatives
to be evaluated shall include, but shall not be limited to, all of
the following:
(1) Private financing.
(2) User fees.
(3) Revenue bonds.
(4) Fee-backed general obligation bonds.
(5) Revolving loan programs.
(f) An evaluation of the feasibility of meeting water resources
needs through alternatives to capital outlay. Examples of these
alternatives may include, but are not limited to, savings through
life cycle financing and reducing the need for new infrastructure
through greater efficiency.
(g) Establishment of a means to measure the rate of return on
water resources projects and mechanisms to finance the most
cost-effective projects and the highest priority projects.
(h) A timetable for capital outlay and ongoing expenditures.
SEC. 3. Section 168 is added to the Water Code, to read:
168. (a) It is the intent of the Legislature that the California
Water Commission should be given authority to allocate state general
obligation bond revenues and other state funds for water resources
projects and programs consistent with the master plan developed
pursuant to Section 167 and the prioritized list developed pursuant
to subdivision (c).
(b) The California Water Commission shall annually review and
audit the expenditure of revenues from resource-related general
obligation bonds that are appropriated for financing and developing
water resources projects and programs in the state, to ensure that
the intent and purposes of the applicable bond acts are met by the
agencies responsible for the allocation of state general obligation
bond revenues.
(c) Consistent with the master plan developed pursuant to Section
167, the California Water Commission shall develop a prioritized list
of projects and programs that improve water supply, water quality,
water conservation, water use efficiency, ecosystem and watershed
restoration, and integrated regional water management planning and
implementation. The commission shall award any state funds that are
appropriated to the commission for state financial assistance for any
of those purposes, including funds allocated pursuant to a general
obligation bond act or any other law, based on that prioritized list.
(d) To the extent consistent with any applicable general
obligation bond act or any other law appropriating state funds, for
the purposes described in this section, the commission shall ensure
that projects and programs funded by state general obligation bond
revenues and other state funds have developed strategic plans for
spending those state funds, that the projects and programs are ranked
by priority, and that performance measures and publicly available
progress reports are provided for the projects and programs.
SEC. 4. Section 10546 of the Water Code is amended to read:
10546. (a) An integrated regional water
management plan prepared pursuant to this part shall be eligible for
funding pursuant to Section 75026 of the Public Resources Code, and
for any funding authorized on or after January 1, 2009, that is
allocated specifically for implementation of integrated regional
water management.
(b) The California Water Commission shall establish guidelines,
including minimum qualifications and competitive criteria, for the
award of state financial assistance for integrated regional water
management plans prepared pursuant to this part.