BILL ANALYSIS �
AB 2043
Page 1
Date of Hearing: May 21, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2043 (Bigelow) - As Amended: May 19, 2014
Policy Committee: Water, Parks and
Wildlife Vote: 11-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill repeals the $11.4 billion General Obligation (GO)
water bond scheduled to appear on the November 2014 ballot and
replaces it with an $8.035 GO water bond.
FISCAL EFFECT
1)Annual GF principal and interest payments of approximately
$522 million.
The state pays principal and interest during the repayment
period. 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.
Assuming a 5% flat interest rate with a 30-year repayment
period, the state would pay about $65 million annually in
principal and interest costs for each $1 billion borrowed.
2)One-time GF costs to the Secretary of State of about $200,000
for preparation of a statewide ballot pamphlet.
To the extent this bond continues to be less than the existing
$11.14 billion bond, there will be smaller annual principal and
interest repayment costs. The statewide ballot costs remain the
same.
COMMENTS
1)Purpose. This bill reduces and updates the provisions in the
AB 2043
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water bond scheduled for the November 2014 ballot to better
meet the current needs of the state. Specifically, this bond
provides the following funding by chapter:
CHAPTER 5. Drought Relief, $495 million:
a) $ 75 million Small Community Wastewater projects
b) $200 million Drought Relief Projects
c) $120 million Safe Drinking Water projects
d) $100 local water supply projects
CHAPTER 6. Water Supply Reliability, $1.19 billion:
a) $840 million Specific geographic regions
b) $350 million Regional water supply and conveyance
CHAPTER 7. Delta Sustainability, $1.5 billion
CHAPTER 8. Statewide Water System Improvements (Water
Storage), $3 billion
CHAPTER 9. Groundwater Protection and Water Quality, $800
million
CHAPTER 10. Water Recycling Conservation and Efficiency, $1.05
billion.
1)Background. In 2009, the Legislature convened an
extraordinary session to address numerous water, supply,
reliability, and environmental restoration issues. Issues
included 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 placed an $11.14 billion water bond on the November
2010 ballot. 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, 2010) was signed into law
AB 2043
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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.
In 2012, polling suggested an incomplete economic recovery
meant the water bond was still unlikely to pass. In response,
AB 1422 (Perea, 2012) moved the water bond to the November 4,
2014 statewide general election but otherwise left the text
unchanged.
2)Other Water Bond Proposals. Numerous replacement water bonds
have been considered during this legislative session including
the following:
a) AB 1331 (Rendon) repeals the existing bond and places an
$8 billion bond on the November 2014 ballot. AB 1331 is
currently pending in the Senate Governance and Finance
Committee.
b) AB 2686 (Perea) repeals the existing bond and places a
$10.6 billion bond on the November 2014 ballot. AB 2686 is
currently before this committee for consideration.
c) SB 848 (Wolk) repeals the existing bond and places a
$6.825 billion bond on the November 2014 ballot. SB 848 is
pending in the Senate Appropriations Committee.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081