BILL ANALYSIS �
AB 2686
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Date of Hearing: May 21, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2686 (Perea) - As Amended: May 1, 2014
Policy Committee: Water, Parks and
Wildlife Vote: 10-1
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 a GO water bond of an unspecified amount, but
at least $10.6 billion.
FISCAL EFFECT
1)Annual GF principal and interest payments of at approximately
$639 million.
Bond debt is unknown as the bill does not specify the amount
of the GO bond. 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
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1)Purpose. This bill reduces and updates the provisions in the
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. Clean, Safe, and Reliable Drinking Water, $1
billion:
a) $200 million Small Community Wastewater projects
b) $100 million Emergency Clean Drinking Water Grants
c) $400 million Safe Drinking Water projects
d) $ 50 million Public University Research
e) $250 million Unspecified.
CHAPTER 6. Protecting Rivers, Lakes, Streams, Coastal Waters,
and Watersheds, $1.5 billion:
a) $750 million Specific State Conservancies
b) $150 million Urban creeks
c) $100 million Urban rivers and waterways
d) $500 million State obligations or settlements
CHAPTER 7. Climate Change Preparedness for Regional Water
Security and Drought Preparedness, $1.85 billion:
a) $1 billion Specific hydrological regions
b) $250 million Water Conservation
c) $350 million Regional conveyance projects
d) $250 million Stormwater projects
CHAPTER 8. Sacramento-San Joaquin Delta Sustainability, $2.25
billion.
CHAPTER 9. Statewide Water System Improvements, $ 3 billion.
CHAPTER 10. Water Recycling, unspecified amount.
CHAPTER 11. Groundwater Sustainability, $1 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.
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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
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:
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 2043 (Bigelow) repeals the existing bond and places
an $8.035 billion bond on the November 2014 ballot. AB
2043 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
currently pending in the Senate Appropriations Committee.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081
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