BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1247 (Gaines) - Watermaster service areas: cost of
administration
Amended: April 24, 2012 Policy Vote: NRW 6-1
Urgency: Yes Mandate: No
Hearing Date: May 24, 2012 Consultant: Marie Liu
SUSPENSE FILE.
Bill Summary: This bill would authorize the state to pay for up
to 50 percent of watermaster services with the remainder to be
paid by water rights holders until January 1, 2014.
Fiscal Impact: One-time cost pressures of up to $1.64 million,
starting in 2012-13 through 2013-14, from the General Fund to
share the costs of the Watermaster Service Program.
Background: The Watermaster Service Program was established to
ensure water is allocated according to established water rights,
as determined by court adjudication. This program applies to a
number of streams in Northern California and several groundwater
basins in Southern California. In areas where there is a
court-appointed watermaster (instead of the Department of Water
Resources (DWR) serving as the watermaster), the water rights
holders and adjudicated parties pay for 100% of the watermaster
services.
Prior to 2004, the costs of the watermaster program were
statutorily set to be shared evenly between water rights holders
and the state, with the state costs paid by the General Fund. As
part of the 2004-05 budget, the statutes were changed to make
the watermaster program funded 100% by water rights holders.
Despite the statutory change, the watermaster program continued
to receive sufficient General Fund support to avoid fee
increases for the water rights holders. Furthermore, prior to
2004, billing rates had nearly remained constant for 12 to 20
years, so in effect water users were paying significantly less
than half the program costs despite the statutory change in
2004. Budget actions taken last year ensured that indeed 100% of
the program costs are funded by the water rights holders
starting with the current fiscal year.
SB 1247 (Gaines)
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According to data from DWR, as a result of the shift to a 100%
user fees supported program, water rights holders have seen an
average fee increase this year of 354% (ranging from 107-825%).
The two areas with the most substantial increases (Shasta- 825%
and Scott 690%) have substantially higher increases because
these two areas had additionally received federal funding (which
has since expired), further reducing water rights holders
previous cost share of the program. In other words, the water
rights holders in these two areas are seeing particularly high
increases as their fees are replacing both former state and
federal funding.
Proposed Law: This bill would authorize the state to pay for up
to 50 percent of watermaster services with the remainder to be
paid by the water rights holders until January 1, 2014.
Staff Comments: In 2011-12, the Watermaster Service Program is
estimated by DWR to cost $2.18 million. This bill would
authorize half of these costs to be paid by the state instead of
water rights holders, putting a cost pressure on the General
Fund of up to $1.09 million annually or approximately $1.64
million for 18 months (the total potential operative duration of
this bill as this bill is an urgency measure that expires in
2014).
While the fee increases experienced by water rights holders in
2011-12 are substantial, the increases are the result of years
of taxpayers subsidizing the program through the General Fund.
The author and sponsor of the bill contended in policy committee
that this bill is meant to be a stop-gap measure (thus the
sunset date of 2014) as several areas are exploring forming
special districts so that they can pay for a court appointed
watermaster, which may cost less than DWR serving as the
watermaster. It is unclear whether it is desirable for the state
to provide further General Fund support for the Watermaster
Service Program since the Legislature has been sending a clear
signal for eight years that this program should be completely be
funded by user fees. Also, staff notes that the program costs
were shifted to water users under the "beneficiary-pays"
principle - the water users are the clear beneficiaries of the
watermaster program as fees are based on the volume of the
diversion.
SB 1247 (Gaines)
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