BILL ANALYSIS �
AB 2686
Page 1
Date of Hearing: June 18, 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 $11.14 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 $10.25 billion.
FISCAL EFFECT
1)Annual GF principal and interest payments of about $666.25
million, assuming a $10.25 billion bond.
Precise bond debt is unknown as the bill does not specify the
total amount of the 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.
COMMENTS
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
AB 2686
Page 2
provides the following funding by chapter:
CHAPTER 5. Clean, Safe, and Reliable Drinking Water, $1
billion:
a) $200 million for small community wastewater projects
b) $100 million for emergency clean drinking water grants
c) $400 million for safe drinking water projects
d) $ 50 million for Public University research
e) $250 million unspecified.
CHAPTER 6. Protecting Rivers, Lakes, Streams, Coastal Waters,
and Watersheds, $1.5 billion:
a) $750 million for watershed protection and specific
conservancies
b) $150 million for urban creeks
c) $100 million for urban rivers and waterways
d) $500 million for state obligations or settlements
CHAPTER 7. Climate Change Preparedness for Regional Water
Security and Drought Preparedness, $1.5 billion:
a) $1 billion for specific hydrological regions
b) Up to $250 million for water conservation grants and
loans
c) $350 million for regional conveyance projects
d) Up to $250 million for stormwater projects
(Chapter 7provides $1.5 billion, of which $1.350 is designated
for specific hydrological regions and regional conveyance
projects. The remaining $150 million is available for
appropriation to for water conservation or stormwater
projects, however, the language in the bond allows for up to
$500 million for these categories. The author may wish to
clarify this provision.)
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.
AB 2686
Page 3
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. As a result, a 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
decided 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), as amended May 8, 2014, 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), as amended May 19, 2014, repeals the
existing bond and places an $8.035 billion bond on the
November 2014 ballot. AB 2043 is currently pending in this
committee.
c) SB 848 (Wolk), as amended June 10, 2014, repeals the
existing bond and places a $10.5 billion bond on the
November 2014 ballot. SB 848 is currently pending on the
Senate Floor.
AB 2686
Page 4
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081