Given the breathless tone of the several press reports on the “great California water reform package”, you would have thought the Legislature had parted the waters, rather than simply passing five water bills. The lead-up to the passage had been long and dramatic. The Governor, who is extremely concerned about what he calls his “legacy”, that is, the fact that, so far, he doesn’t really have much of one, insisted that the Legislature very quickly come up with a package of bills to reform governance over the allocation, conservation and pricing of water in the state.
Earlier in the year, with over 700 bills awaiting his signature in a compressed few days of drama, the Governor withheld all approvals until legislative leadership (the so-called Big Five) made some progress on working out the water problems that have bedeviled the state over the past decades.
“Big Five” is the nickname given to meetings that include only Governor Schwarzenegger (always, however, accompanied by his apparently indispensable Chief of Staff, Susan Kennedy), Senate President Pro Tem (this year Darrell Steinberg), the Speaker of the Assembly (this year Karen Bass), the Republican minority leader in the Senate (this year Dennis Hollingsworth, although he allowed his deposed predecessor, Dave Cogdill, to participate) and the Republican minority leader in the Assembly (this year Sam Blakeslee).
The Big Five is a relatively new development in California decision-making, and, up until this Governor, met solely to work out budget conflicts. More and more, however, despite the fact that bills are mandated to be considered by committees and all amendments worked out there, other sorts of issues have come to be ironed out behind closed doors by the five leaders, leading to bills presented for Floor votes that have not been reviewed by committees. Water was no exception.
The Eternal Water Question: Who Pays
Beneficiary Pays: Until recently, major water investments have been the responsibility of those who stand to benefit from the construction. This is generally referred to as “user pays” or “beneficiary pays”. Since virtually everyone in the state receives water through a public or private water agency, such an approach might mean that a district or a consortium of districts would be responsible for the costs of construction that enhance the quality or amount of water coming to the district, and that cost would be divided among the ratepayers for those districts. Improvements that span the state would be borne by ratepayers across the state. This is not the case with the legislation just passed.
Bonds: When bonds are issued to cover the cost of any project, whether water, transportation, prisons, or some other proposed construction project, they are issued either as “general obligation” bonds or “revenue” bonds.
A revenue bond is one in which the principle and interest on the bonds is paid by revenue generated by the funded project. Bonds issued in this manner are paid off by users or beneficiaries, not by taxpayers. Because they do not get general fund (tax) money, they are not required to be voted on by the public.
With general obligation bonds, however, the principle and interest is paid over the years by taxpayers and, therefore, compete with and take precedence over other items funded through taxpayer monies in the general fund such as K-12 education, health and human services, higher education, the safety net, and ongoing maintenance of roads and parks. Because they involve the allocation of tax monies, general obligation bonds require a vote of the people.
As you will see in my third essay, the decision was made to issue general obligation bonds to pay for the many projects in this water package. This is deeply disturbing on two fronts:
- It means that taxpayers will be paying for all the projects in the bond without regard to whether they benefit from them and, given the size of the proposed bond, they could be paying up to $600,000,000 a year in interest when the bonds are fully sold.
- The second issue is one of economic philosophy. One of the most effective ways to encourage rational behavior in the use and allocation of water is to make the price of water equal to the actual cost of water. People then are forced to understand that, if they want to bring more water to their locality, or to use more water, there is a price tag. General obligation bonds don’t do that.
The opposing argument, of course, is that making certain that all communities in the state have clean and sufficient water is a general obligation and taxpayers should pay. This might be true if no private water purveyors were making a profit off the sale of water.
First Bill Description: All That Water Underground: SBX7 6
Think oil. Think sticking a straw into the ground and drawing water out of vast underground lakes. There is an amazing amount of fresh water underground in California and the state has mapped the various “basins” and “subbasins” where it lies. Some groundwater is polluted and can’t be withdrawn. As to the rest, private landowners, corporations, cities and other public entities draw it out in wells.
Generally, although many entities are required to report how much water they draw out, there is no systematic monitoring of the rise or diminution in the height of groundwater levels in each basin or subbasin. There is, therefore, no way to know how to plan for the future. For years, legislators (including me) have tried to pass bills to require measurement of the rising or falling levels of groundwater, without success. One of the bills just passed, SBX7 6 (Senate Bill 6 in the 7th extraordinary session of 2009), provides that entities may “volunteer” to do groundwater monitoring of the quantity, not the quality of the groundwater (a much watered down bill from its original introduction, no pun intended).
In addition, even if they do volunteer, monitoring entities are still prevented from entering onto private property or even asking private property owners in their entity district to submit to monitoring. So, although we finally have something in the law about groundwater monitoring, we can’t compel it. This is particularly troubling in the many districts where private landowners control most of an entire basin. Under the bill, voluntary monitoring may start in 2012.
Finally, paying for the monitoring is a problem as, when there is no monitoring entity, the Department of Water Resources is allowe
d to monitor, but may not charge private well owners. If DWR determines that all of part of a basin is not being monitored they must identify existing monitoring wells, determine whether these wells provide sufficient information and, if not, and if the State Mining and Geology Board concurs with the determination, perform the groundwater monitoring. However, since there is no extra money in DWR’s budget for increased monitoring, it is not clear how they would accomplish the goal.
Next: The bills on Delta Governance, Water Rights, Investments, and Conservation
Sheila James Kuehl
Sheila James Kuehl was appointed to the California Integrated Waste Management Board on December 1, 2008, after having served eight years in the State Senate and six years in the State Assembly. Senator Kuehl served as chair of the Senate Natural Resources and Water Committee from 2000-2006. Her website is www.sheilakuehl.org
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