The California Water Commission’s recent

Yet after harsh droughts for much of this century, state voters were ready for a new direction in 2014. They approved Proposition 1, a measure placed on the ballot by the Legislature which allowed for the issuing of up to $7.1 billion in state bonds for water infrastructure projects. After a lengthy review process, nearly 40 percent of these funds were allocated by the water commission last week for eight projects with the potential to add enough water capacity to serve more than 5 million households a year.

But skeptics have already made the case that by far the single biggest project – the Sites Reservoir in rural Colusa County north of Sacramento – actually suffered a setback in the water commission’s deliberations.

If built as envisioned, the project by itself would have been responsible for more than 60 percent of additional water storage statewide. Yet after the complex “public benefit” assessments that water commissioners used to decide how much each proposal got in bond funds, only $816 million was designated for the $5.2 billion Sites project – much less than advocates hoped. This means at the least that local water agencies and their ratepayers will have to pony up more more than they had hoped for construction.

This led Jim Watson, general manager of the Sites Project Authority, to tell the Sacramento Bee that it was possible that major changes lay ahead. If participating water agencies balk at higher costs, in the “worst case, we could build a smaller reservoir,” he said.

Commission, regulators differ on water availability

Yet the Sites Reservoir’s prospects are complicated by other factors as well. Key details of the reservoir’s construction plan have so far faced little direct criticism from environmentalists – perhaps surprising for what would be the biggest new reservoir to be built in California since the 1970s.

But as a Bee analysis noted, some environmentalists question the basic wisdom of the project. They cite the schism between the Water Commission’s conclusion that Sites could divert 500,000 acre-feet of water from the nearby Sacramento River each year and warnings from some state regulators that less water – not more – should be diverted from the river and the ecologically fragile Sacramento–San Joaquin River Delta (pictured).

One more obstacle also has less to do with Sites itself than the state’s fraught water policy fights. Critics of Gov. Jerry Brown’s California WaterFix plan – meant to shore up the state’s north-south water conveyance system – see Sites as an integral and thus objectionable part of Brown’s proposal.

The $17 billion project would build two 40-foot-wide tunnels to pump water from the Sacramento River some 35 miles south, where it would reach the water distribution network that allows wetter Northern California to provide much of the water used in desert-like Southern California.

The project appeared to be on the ropes until April, when the giant Metropolitan Water District of Southern California voted to commit its member agencies to covering $10.8 billion of the WaterFix tab – nearly two-thirds the total cost.

Brown is trying to win final approval of the project before leaving office in January. But Northern California environmental groups, local water agencies and farming industry groups are in a pitched battle to stall any final decision until after a new governor is elected.

Both remaining gubernatorial candidates – heavily favored Lt. Gov. Gavin Newsom, a Democrat, and Republican businessman John Cox of Rancho Santa Fe – are highly unlikely to embrace WaterFix if elected. Newsom thinks a smaller project makes more sense, and Cox is flatly opposed, according to the Restore The Delta website, which tracks candidates’ remarks on Delta issues.

The issue actually is quite simple, even though the political machinations are complex. There are two main types of bonds to finance long-term infrastructure projects. The most common are general-obligation ones, which are repaid through revenues in the state’s general fund. In other words, the money to repay investors comes directly from taxpayers. The California Constitution requires a vote of the people before the state government can take on such debt.

By contrast, revenue bonds are repaid by users of the project. For instance, they typically are used on bridge projects, where users repay the debt by paying tolls, or on water projects, where water ratepayers repay the debt. The state does not require a public vote for these projects. Proposition 53 would require such a vote if the bond amount tops $2 billion. It “applies to any projects that are financed, owned, operated, or managed by the state, or by a joint agency formed between the state” and another agency, according to its official summary.

Opponents believe it could harm the ability of the state – and local joint-powers agencies – to build necessary projects. “Prop. 53 could threaten a wide range of local water projects including storage, desalination, recycling and other vital projects to protect our water supply and access to clean, safe drinking water,” argued the Association of California Water Agencies, in the official ballot argument against the measure. They fear that, say, Northern California voters would not vote to fund a project designed to benefit Southern California water users.

The Banks Pumping Plant looking toward the Bay Delta, where tunnels are planned that could protect fish. Photo courtesy of www.hcn.org

But the nonpartisan Legislative Analyst’s Office, in its analysis of the measure, explains that “[r]elatively few state projects are likely to be large enough to meet the measure’s $2 billion requirement for voter approval.” Indeed, the only two current projects that could trigger its vote requirement are the $17-billion-plus plan to build twin tunnels underneath the Sacramento-San Joaquin Delta to divert water toward Southern California and the governor’s $68-billion high-speed rail project, which could possibly employ the use of revenue bonds, although its current funding is uncertain.

Critics of the measure note it is funded largely by Dino Cortopassi, a retired Stockton-area farmer and opponent of both projects. Supporters say the measure is about controlling the state’s wall of debt, not about stopping any particular project. Cortopassi, for instance, in 2014 sponsored a series of newspaper advertisements across the state (titled, “Liar, Liar, Pants on Fire!”) accusing state officials of using “deceptive” accounting to hide the size of the state’s debt and unfunded liabilities. The measure is designed to stop state agencies from using this particular form of debt to circumvent a public vote and fund mega-projects.

Even though revenue bonds are funded by user fees, they still often rely on taxpayer dollars, Prop. 53 supporters note. For instance, the revenue bonds that would fund the twin tunnels project would be funded “mostly by rate hikes and property tax increases on water customers,” according to a San Jose Mercury News report. In other words, the “revenue” stream is from higher property taxes and rate hikes on customers. Since those bills are ultimately paid for, in part, by taxpayers, supporters think taxpayers should have a vote. Furthermore, some projects funded by revenue bonds have sought taxpayer help and enjoy some taxpayer subsidies.

The initiative’s opponents say municipalities are not on the hook for these bonds. But supporters argue that, while governments may not legally be required to make good on them if a project fails, they might have little choice but to help pay off the debt, given the impact a failure would have on their community’s overall credit rating.

“Clever legislators and lobbyists have expanded the definition of revenue bonds to apply to many projects that are tough sells,” wrote the Sacramento Bee’s Dan Morain. “No voter wants to spend on prisons, for example. So lawmakers rewrote the law to finance prison construction with revenue bonds.”

Prop. 53 supporters see that as evidence that voters need to close a loophole used by legislators to fund projects without public support. Requiring a vote is not the same thing as stopping a project; supporters simply need to do a good job packaging the project in a way that appeals to voters, who tend to vote in favor of the vast majority of bond-funded projects that come before them anyway, they say.

Opponents point to this element of the LAO report: “(T)here is some uncertainty regarding which projects would be affected. This is because the measure does not define a ‘project.’ As a result, the courts and the state would have to make decisions about what they consider to be a single project.” There’s some question, the LAO continued, about whether a single building would be a project or whether the definition of “project” covers multiple buildings that are part of a complex. These uncertainties could create litigation problems, although supporters say the fear is overblown.

Primarily, supporters see Prop. 53 as a means to rein in runaway levels of debt that plague state government and to put into place a means to at least consult with voters the next time an administration proposes a massive statewide infrastructure project. Opponents fear the measure could hold up important regional projects, as a joint agency has to lobby the entire state to win approval for something that’s fairly local.

There is a third possibility: The bar is so high for triggering a vote that the measure may be much ado about very little. As the LAO explained, “(I)t is unlikely that very many projects would be large enough to be affected by the measure.” On a ballot filled with hot-button issues, such as marijuana legalization and eliminating the death penalty, this one might cause voters to shrug.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

Controversial language dropped from Title IX bill

Good morning and welcome to Thursday. While all eyes will be on the Legislature’s appropriations committee meetings today and the hundreds of bills they’ll be deciding the fate of, one bill found new life yesterday. 

After weeks of opposition from religious colleges and their supporters, state Sen. Ricardo Lara announced he would drop provisions from a bill that would have made it more difficult for faith-based institutions to receive Title IX exemptions.

The Bell Gardens Democrat said he wrote Senate Bill 1146 to protect LGBT students who may not be treated equally at religious colleges by putting roadblocks in the way for institutions making admission, housing and accommodation decisions based on traditional views about sexuality. 

But after pushback from religious colleges who claim the bill forces them to violate long-established standards of conduct, as well as making them vulnerable to lawsuits, Lara said SB1146 required a second look.

CalWatchdog has more. 

In other news:

• Around 1,341 people die annually from bad air in the Los Angeles area, making it the deadliest air in the country, according to a new study. The Orange County Register has more. 
• “Critics of Gov. Jerry Brown’s nearly $16 billion plan to bore two massive tunnels under the Sacramento-San Joaquin River Delta won a state audit of its ongoing costs on Wednesday, though state officials don’t expect the audit to delay the project,” reports The San Jose Mercury News/AP.
• The sponsor of a bill to would extend job protection for workers on parental leave plans to revive the bill before the end of the legislative session after it died in June at the hands of West Covina Democrat Roger Hernández. “Two months prior, (the sponsor) had issued a public letter demanding that Hernández take a leave of absence from the Legislature pending resolution of spousal-abuse charges filed in April,” writes the Santa Barbara Independent.
• “Orange County supervisors have unleashed a frontal assault on the California Shield Law, which protects journalists from disclosing unpublished information and is vital to the news gathering process in our democracy,” writes Voice of OC. 

Legislature:

• The Appropriations committees in both chambers convene today to clear out hundreds of bills from the “suspense file,” the beginning of which is done in near secrecy, writes the Los Angeles Times.

Gov. Brown:

• No public events announced. 

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