BILL ANALYSIS �
AB 2686
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Date of Hearing: April 29, 2014
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Anthony Rendon, Chair
AB 2686 (Perea) - As Amended: April 22, 2014
SUBJECT : Water bond: storage
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 a water bond of an unspecified amount but
at least $9.25 billion. Specifically, this bill :
1)Repeals the 2009 Water Bond, which is currently on the ballot
for November 4, 2014.
2)Divides the over $9.25 billion bond by chapters into funding
for the following purposes (in billions):
$ 1.000 Chapter 5 water quality
$ 1.500 Chapter 6 watershed conservation and protection
$ 1.500 Chapter 7 regional water supply reliability
$ 2.250 Chapter 8 Delta sustainability
$ 3.000 Chapter 9 water storage, continuously appropriated
$ ____ Chapter 10water recycling
$ ____ Chapter 11groundwater sustainability
3)Retains the administrative and other provisions from the 2009
Water Bond that relate to 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 :
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1)Enacts the 2009 Water Bond which, if approved by the voters on
November 4, 2014, authorizes $11.14 billion in general
obligation bonds for the following purposes (in billions):
$ 0.455 Chapter 5drought relief
$ 1.400 Chapter 6regional water supply reliability
$ 2.250 Chapter 7Delta sustainability
$ 3.000 Chapter 8water storage, continuously
appropriated
$ 1.785 Chapter 9watershed conservation and
protection
$ 1.000 Chapter 10water quality and groundwater
protection
$11.140 TOTAL
2)Creates a nine-member CWC within the Department of Water
Resources with each member appointed by the Governor, subject
to confirmation by the Senate, and serving four-year staggered
terms.
3)Terminates 7 of the 9 CWC members' terms on May 14, 2014.
FISCAL EFFECT : Unknown
COMMENTS : For a full history on the 2009 Water Bond that has
been carried over and, unless repealed or moved, is currently
slated for the November 2014 general election, please see this
Committee's April 29, 2013 analysis of AB 1331 (Rendon).
There are currently seven substantive water bond proposals in
the Legislature and the differences between and among them and
the bond currently on the ballot range from subtle to
significant. But there are some key issue areas in common. All
of the current bond proposals in the Legislature would make
surface storage projects eligible for some level of funding for
the "public benefits" of those projects. They differ in whether
that funding would be continuously appropriated to the CWC or
whether the Legislature would appropriate the money to the CWC.
Most would also provide funding for groundwater storage and
water quality improvements, including groundwater remediation.
Many would provide funding to address sustainability of the
Sacramento-San Joaquin Delta (Delta) and to implement Integrated
Regional Water Management (IRWM) Plan projects and programs.
Some would also provide separate chapters of funding for
watershed protection projects, water recycling and conservation,
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and groundwater sustainability.
This bill is among the largest of the current legislative bond
proposals and provides an unspecified amount of funding, but
likely over $9.25 billion as it has placeholders for additional
funding dedicated to water recycling and groundwater
sustainability. This bill also includes placeholders that do
not specify how $1 billion in funding for protecting rivers,
lakes, streams, coastal waters and watersheds will be divided
among regions.
The author has also included language authorizing $500 million
for the Natural Resources Agency to support projects that comply
with the terms of any interstate or multiparty settlement
agreement. The criteria for such agreements is broad: they can
be of statewide significance, restore habitat, protect
endangered or threatened species, enhance the reliability of
water supplies on a regional or interregional basis, or provide
significant regional or statewide economic benefit. The author
does not specify whether current agreements are being
referenced, and if so which ones, such as those affecting the
Klamath River or Salton Sea, or whether the author is allowing
the Natural Resources Agency to enter into prospective
agreements that would then be covered by this funding, such as
the Bay Delta Conservation Plan (BDCP) referenced below.
Bond dollars represent tradeoffs
General obligation bonds (G.O. bonds) are secured on the full
faith and credit of the State of California. A bond 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 State 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 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
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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 percent of adults (up 16% from last year)
and 50 percent 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 percent 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.
Other bond proposals currently in the Legislature
To date, AB 1331 (Rendon) has been the primary Assembly water
bond vehicle and subject to multiple Capitol hearings and nine
field hearings in various parts of the State. AB 1331, the
Clean, Safe and Reliable Drinking Water Act of 2014, repeals the
existing bond and places an $8 billion measure on the November
4, 2014 ballot. AB 1331 includes $1 billion for water quality;
$1.5 billion for protecting rivers and watersheds; $2 billion
for IRWM; $1 billion for Delta sustainability; and, $2.5 billion
for storage projects, which Senate amendments made subject to
appropriation by the Legislature. AB 1331 is currently in the
Senate Environmental Quality Committee.
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Currently, the primary Senate water bond vehicle is SB 848, the
Safe Drinking Water, Water Quality, and Water Supply Act of
2014. SB 848 repeals the existing bond and placed a $6.825
billion measure on the November 2014 ballot. SB 848 includes
$900 million for water quality; $2 billion for IRWM; $1.2
billion for Delta sustainability; $1.7 billion for watershed and
ecosystem improvements; $1.025 billion for water storage,
subject to appropriation by the Legislature.
In addition to this bill, AB 1331 and SB 848, there are six
other substantive water bond proposals: AB 1445 (Logue) is a
$5.8 billion proposal that dedicates $4.8 billion to water
storage projects and $1 billion to water quality. AB 2043
(Bigelow) is a $7.953 billion proposal modeled on the 2009 bond
that funds water storage at $3 billion, eliminates $1.785
billion for conservation and watershed protection, and reduces
the various other chapters of the 2009 bond by anywhere from
15-33%. AB 2554 (Rendon) is a $8.5 billion bond measure that
contains the same language as AB 1331, also by Rendon, prior to
its April 8, 2014 amendments in the Senate Natural Resources and
Water Committee, except that AB 2554 increases the water storage
chapter to $3 billion, continuously appropriated.
In the Senate, SB 927 (Canella) reduces the 2009 Water Bond to
$9.217 by eliminating the entire $1.785 billion chapter for
conservation and watershed protection and deleting several other
specific allocations in other chapters. SB 1250 (Hueso) is a
$9.45 billion proposal that, in addition to including funding
for Delta sustainability and water storage at the levels found
in the 2009 includes $500 million for groundwater sustainability
and $500 million for water recycling. SB 1370 (Galgiani) is a
$6.26 billion general obligation bond for the exclusive purpose
of funding four surface storage projects: Sites Reservoir in the
Sacramento Valley; Temperance Flat Reservoir in the San Joaquin
Valley; an expansion of San Luis Reservoir, jointly owned by the
CVP and SWP; and, raising Shasta Dam which, as it would affect
the free-flowing condition of the McCloud River, is an action
that State law currently prohibits any State agency from
funding.
Major Issues with Differing Approaches in the Bond Proposals
All of the water bonds vary in terms of the amounts of overall
bond funding being proposed and range from $5.8 billion to $9.45
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billion. It is likely 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. Besides the overall size of any bond, two major
policy areas are: 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 Delta sustainability and how any Delta funding
relates, or does not relate, to the 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
some of the 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.
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 $3 billion to both surface water and
groundwater projects and continuously appropriates that funding
to the CWC. $3 billion continuously appropriated is identical to
the approach taken in the 2009 Water Bond. Recent amendments to
the water storage section have removed seismic retrofitting of
existing storage projects from funding eligibility.
BDCP and Delta Sustainability
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The BDCP is a joint effort by the 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 supporters of the
BDCP state it will restore the Sacramento-San Joaquin Delta
ecosystem and secure California water supplies. They are
proposing new infrastructure in the Delta including three new
water intakes on the Sacramento River and two 40' diameter water
conveyance tunnels 30 miles long as well as over 150,000 aces of
habitat restoration and "other stressors" actions (such as
reducing non-native invasive species). Currently, the draft
documents identify the water agencies that would benefit from
new export infrastructure as the funders for the new intakes and
tunnels. The documents do not identify any specific approved
funding for the majority of the rest of the plan including
habitat restoration, oversight, monitoring, and scientific
research but anticipate some level of bond funding.
Many organizations and entities located within the Delta oppose
the BDCP because they 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. However, many of those same entities
acknowledge some level of investment is needed in Delta economic
and environmental sustainability, including habitat improvement
and conservation projects. For those groups the size of any
bond funding for Delta sustainability and the identification of
who will ultimately control the allocation of those funds is an
issue. Delta groups and some environmental groups have also
opposed 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 Bay-Delta Program that was called the Environmental Water
Account (EWA).
This bill would allocate $2.25 billion for grants and direct
expenditures in the Delta to improve the sustainability of the
Delta. $2.25 billion for Delta sustainability is the same
amount as the 2009 Water Bond, although the eligibility language
differs. This bond does not indicate what state agency or entity
is eligible for receipt of any portion of those funds or divide
the funds among priorities for the Delta.
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The author has amended this bill to remove language prohibiting
the use of bond funds for environmental compliance obligations.
The author has also removed language limiting water purchases to
permanent dedications of instream flow that are in addition to
those already required by law. Instead, this bill allows
long-term water transfer or purchase of water rights to be bond
funded. Current law states "a long-term transfer shall be any
period in excess of one year." So, this bill may allow for a
bond-funded program of temporary water purchases that meet the
environmental compliance obligations of water exporters or
others, similar to the EWA program referenced above.
Supporting arguments : Supporters state that the "need for a
comprehensive water bond has never been more urgent" because
"California is in a severe drought." Supporters state that a
"2014 water bond is critically needed to uphold the state's
commitment to the coequal goals of providing a more reliable
water supply for California and protecting, restoring and
enhancing the Delta ecosystem." Supporters state that this bill
"includes water quality as a significant priority and recognizes
the need for funding for disadvantaged communities that do not
have safe drinking water." Supporter advise that "this includes
appropriate levels of funding for Delta sustainability, storage,
and critical local projects such as water conservation and water
recycling" and "includes needed funding for watershed protection
and a distinct chapter for groundwater cleanup funding" while
not including "earmarks for specific projects." Other
supporters advise that "California's water infrastructure and
the water environment on which it depends have deteriorated
while rainfall and snow levels have not increased." They advise
that they support this bill because "safeguarding supplies of
clean and safe drinking water for California's homes,
businesses, and farms is an essential responsibility of
government and critical to protecting our state's quality of
life and economy."
Opposing arguments : Opponents state that this bill "provides
twice as much funding for new water storage projects as for
water use efficiency, water recycling, and other regional water
supply projects." Opponents also state that although this bond
"includes funding for watershed restoration and safe drinking
water projects, it also includes several problematic provisions,
including provisions relating to the public acquisition of water
for environmental purposes that appear linked to controversial
proposals in the Bay Delta Conservation Plan." Other opponents
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state that they are "interested in replacing the bond currently
on the November ballot with a much smaller, focused measure that
balances the state's many competing water needs and protects our
fragile General Fund." Opponents add that "a successful bond
will fund projects that increase local water reliability,
protect and restore watersheds needed for or impacted by
extraction, and encourage the efficient use and reuse of water
for both urban and agricultural uses." Opponents are concerned
that this bill and others "do not make balanced investments, but
disproportionately fund storage projects over local water supply
and other needed water investments" and that allowing continuous
appropriations in the storage part of the bond "sets up
potential conflicts with other needed bond investments."
REGISTERED SUPPORT / OPPOSITION :
Support
American Pistachio Growers
Angiola Water District
Association of California Egg Farmers
Association of California Water Agencies
Browns Valley Irrigation District
California Bean Shippers Association
California Building Industry Association
California Chamber of Commerce
California Citrus Mutual
California Cotton Ginners Association
California Cotton Growers Association
California Grain and Feed Association
California Latino Water Coalition
California Pear Growers Association
California Rice Industry Association
California Seed Association
California State Council of Laborers
California Water Association
City of Corona
City of Firebaugh
City of Fowler
Cucamonga Valley Water District
Desert Water Agency
Elsinore Valley Municipal Water District
Fresno Area Chamber of Commerce
Friant Water Authority
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Glenn-Colusa Irrigation District
Indian Wells Valley Water District
Kings County Board of Supervisors
Metropolitan Water District (if amended)
Monte Vista Water District
Mojave Water Agency
Northern California Water Association
Rialto Road Water District
San Diego County Water Authority (if amended)
Scotts Valley Water District
South Tahoe Public Utility District
Southwest California Legislative Council
State Building & Construction Trades Council of California
The Tehama Colusa Canal Authority
Valley Center Municipal Water District
WateReuse
Western Agricultural Processors Association
Western Growers Association
Western Municipal Water District
Westlands Water District
Wilbur Reclamation District #825
Numerous individuals
Opposition
Clean Water Action
Natural Resources Defense Council
Planning and Conservation League
Sierra Club California
Analysis Prepared by : Tina Cannon Leahy / W., P. & W. / (916)
319-2096