Pacific Institute Insights

Huffington Post: What Does Proposition 1 — the 2014 California Water Bond — Really Say?

by Peter Gleick, President

October 23, 2014 

On November 4, California voters will decide the fate of Proposition 1 — the 2014 Water Bond — which authorizes the sale of $7.12 billion in new general obligation bonds and the reallocation of an additional $425 million of previously authorized, but unissued, bonds.

Do you live in California and are you trying to figure out how to vote on Proposition 1? Today the Pacific Institute has released a comprehensive assessment of Prop 1. The Institute is neutral: We are taking no formal position, choosing instead to try to offer the voting public some insights into the complexities of the bond. If passed by the voters, Proposition 1 would be the fourth-largest water bond in California history, funding a wide range of water-related actions and infrastructure. The total cost of Proposition 1, including interest, will exceed $14 billion over 30 years.

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In the Pacific Institute’s full analysis (available for free, here), we focus on the following key questions:

  • How does Proposition 1 compare to past water bonds?
  • Are general revenue bonds the best way to pay for water investments?
  • How would the bond funds be allocated?
  • How might the funds for water storage be allocated among competing projects?
  • How does the bond address the needs of disadvantaged communities?
  • How does the bond address ecosystem needs?

Key findings by the Pacific Institute regarding Proposition 1 include:

  • Proposition 1 will not provide any immediate drought relief.
  • While Proposition 1 contains funds that could provide important benefits for California’s environment and communities, there is also a risk that major provisions could cost taxpayers a substantial amount of money without producing any real improvements to water supply, reliability, or environmental quality.
  • Thirty-six percent ($2.7 billion) of total Proposition 1 funds are allocated to the “public benefits” of possible surface or groundwater storage projects. While some reports suggest that the storage funds will go to controversial surface dams and reservoirs, this is by no means certain.
  • Nine percent of the funds are devoted to helping alleviate water challenges in “disadvantaged communities.” A majority of these funds would support much-needed drinking and wastewater system improvements; however, funding to support ongoing operation and maintenance costs and technical assistance is limited, raising questions about the long-term sustainability of these projects.
  • Only one percent of funds are devoted to water conservation and efficiency, despite extensive evidence and broad agreement that such projects could produce more benefit at lower cost compared to other water supply options.
  • Other major provisions would provide funds for some ecosystem protection and restoration and to improve surface and groundwater quality.
  • None of the funds can be used directly for building the controversial Delta conveyance infrastructure (the Delta tunnels) that is also being debated statewide.

Ultimately, if Proposition 1 passes, its true effectiveness in addressing California’s overall water problems will depend on how the money is actually allocated and spent by the state and local agencies that receive the funds. The Pacific Institute strongly recommends that these agencies, especially the California Water Commission, develop rigorous, independent, and transparent process to evaluate and quantify the public benefits of proposed storage projects and other investments.

We also recommend that decisions about the rest of the funds be made with a focus on meeting public and ecosystem needs for safe and reliable water, improvements in efficient use, and reducing the risks of future droughts and floods. But voters should not expect immediate relief from Proposition 1 for the impacts of the current drought; nor should they expect these funds to be the last investment that is needed for better institutions, smarter planning, and more effective water management strategies. It can be, at best, a down payment on our water future.

One Response

  1. sung cha says:

    Fact 1): Lake Pyramid, just north of L.A. County is the fullest it’s ever been. You cannot even see the waterline from previous dry spells while Castaic Lake just below it is at the lowest level I’ve ever seen in 30 years. The point is, Castaic Lake is not low due to lack of water but due to political decisions to keep it low instead of filling it with water from Lake Pyramid.
    Fact 2): According to an interview of Mr. Gary Breaux on C.N.B.C by Jane Wells, (June 01, 2015), Metropolitan Water District Chief Financial Officer serving over 19 million people, stated that “80% of the water cost is fixed just to have the water available and does not go up due to water use…the fact is that reduced water use will lead to decreased revenue for the water district and result in increased unit price in the future to make up for the decreased revenue…” In other words, most of our water cost is not due to increased home water use.
    Fact 3): 80% of the water in California is used by farmers and only 20% is used by homeowners. However, 90% of the produce grown by farmers in Cal. are sold outside of Cal. to other states and even other countries. What this means is that 90% of the water Cal. homeowners give up and subsides through taxes for farmers to grow produce is used to give profits back to farmer’s pockets by selling their produce outside of Cal. Why should Cal. taxpayers and homeowners pay the increase in water costs so that farmers can sell 90% of their produce outside of Cal. and pocket the profits?
    Fact 4): Tiered pricing is illegal according to a recent court verdict in a case which took place in San Juan Capistrano. According to Cal. state law, a government entity, being funded by taxpayers moneys, cannot charge taxpayers more than the cost of procurement for any goods they purchase. In other words, if it costs the state $.01 per gallon, they cannot charge $.01 per gallon for the first 100 gallons and $.015 for the next 100 gallons and $.02 for the third 100 gallon according to the increased use by a homeowner, since the government entity itself has not paid more for the additional second and third 100 gallons.

    Homeowners of Cal. need to unite and file a joint complaint and vote out the current Water District politicians and demand that changes be made accordingly. We should not be made to pay from our hard earned dollars, to compensate for the mismanagement of the politicians and water district supervisors!
    Sung C. Cha,
    Castaic, CA

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