Yesterday, just as the Senate and Assembly water committees began a joint hearing on an ambitious package of Delta and water reform bills, Governor Schwarzenegger released a letter outlining his  requirements for signing any water bills.  One of his requirements was particularly counterproductive: “I cannot sign a comprehensive water package if it fails to include a water infrastructure bond that expands our water storage capacity – both surface and groundwater.”   It's not news that the Governor is a supporter of new and raised dams.  But linking policy to money in this letter at this time is unhelpful brinksmanship at this point in the legislative process. 

First, the governor's own Delta Vision Task Force supports water policy reform legislation, not a bond, as the first legislative priority.  Legislators and water agencies love to debate how to spend general obligation bond  money.  Such a debate right now could very easily derail the already tough task of crafting a workable water policy reform package.  It will be difficult enough to get the policy right without the funding debate in this tough funding year.

Second, a policy reform package requires a simple majority vote to pass.   Bonds require a 2/3 vote, just like the budget, with the promise of similar stalemate.  The recent state budget outcome makes incurring more debt service payments, which would be required for a water bond, a very tough sell in the legislature, especially in light of the serious cuts to state programs like education, health care and other social services.  Passing a bond this year will be very difficult. 

Third, the dams that would be built with new bond funds are many years from being “shovel ready”.  The legislature and the voters should know how these funds would be spent before committing to spend public dollars on dam projects that could cost $4 billion or more – each.  The state has been studying Sites Reservoir in the Sacramento Valley, for example, for about 10 years, but DWR has yet to release the results of these efforts.  And the state still has money from previous bonds.  According to a Legislative Analyst’s Office report, the state currently has more than $4.2 billion in unexpended bonds already approved by the voters.

Fourth, there are cheaper ways to get a more reliable water supply than by building more traditional dam projects (California already has nearly 1200 dams).  A year ago, the Los Angeles County Economic Development Corporation, when releasing a major report about the best water supply sources for Southern California, concluded that “Surface storage in the San Joaquin and Sacramento watersheds offer Southern California little in the way of water reliability and if and when deliverable would be one of the most expensive and energy intensive options.”  The Public Policy Institute of California came to the same conclusion in a new report, which states that “water from new reservoirs may be too expensive to attract buyers.”  The skepticism regarding these projects is widespread.  Despite years of study, it does not appear that DWR has been able to persuade any water users to help  pay for new dams – including the agricultural  interests that are promoting them.  By contrast, DWR has agencies lining up to offer their funds to partner in the far less expensive tools that comprise a “virtual river” of new water supplies. 

In the short time left in this legislative session, it is most promising to focus attention on the package of water reform bills heard by the two committees yesterday.  After they get that job done, the legislature  can take the time needed  – before new public funds are needed – to debate alternative approaches bonds, such as using revenue bonds, rather than GO bonds, to finance new water projects.