Sacramento River, looking north near Old Sugar Mill. Photo by John Howard, California Water Wars

A feisty Brown unveils new water plan

“I want to get shit done,” Brown declared Wednesday to his surprised listeners at a news briefing.” —- An impatient and feisty Gov. Jerry Brown unveiled an extraordinary plan to bore two More »

Sacramento River - Photo by Steve Martarano, USFWS

Grappling with the water bond

“Steinberg said it was conceivable that the bond could be reduced to $7 billion to $8 billion, but raised doubts about whether the proposal could be substantially rewritten. “All this needs to be More »

Lower American River, USFWS

Economy: Big player in November water bond

“There’s a lot of head-scratching right now,” said Assemblyman Jared Huffman, D-San Rafael, the chair of the Assembly water committee.” The most ambitious and expensive water program to confront California voters since More »

Air and water

Sacramento River - Photo by Steve Martarano, USFWS

 “The crux of the program – and the most contentious – is the carrot-and-stick method by which carbon emitters in the private market place actually will be forced to reduce their greenhouse gases.”

 

Air and water don’t mix — usually.

But as California’s air-quality enforcers are poised to adopt a highly complex plan in Sacramento to ratchet down on climate-changing greenhouse gas emissions over time, the impact of the new policy is likely to be felt at regional and local water districts throughout the state.

At issue is cap-and-trade, a system by which a key requirement of California’s landmark anti-carbon emissions law, AB 32, is put into effect. Cap-and-trade forces companies to steadily cut their greenhouse gases, while allowing the use of credits to ease their burden until their emissions-limiting equipment is fully up and running. The overall goal is to cut greenhouse gases in California to their 1990 levels in nine years.

The state Air Resources Board, perhaps the nation’s premier air-quality enforcer – even more so than the U.S. EPA – considers the issue on Thursday in a hearing that will be closely watched around the country. That’s because the ARB’s decisions often serve as a guide to the heavily industrialized Northeast, which has long followed the ARB’s anti-pollution decisions.

Much has been written about AB 32 since it was signed into law in 2006 by then-Gov. Arnold Schwarzenegger. But the crux of the program – and the most contentious – is the carrot-and-stick method by which carbon emitters in the private market place actually will be forced to reduce their greenhouse gases. This is what the ARB will be deciding tomorrow.

To some extent, the ARB  is leaping into the unknown: There is no real certainty how California’s cap-and-trade system will work. And while there are models in Europe to follow, the bottom line is that we won’t know until it actually gets cranked up.

But another issue arises.

Water agencies need power to pump water around their systems, and power generation means facilities that spew carbon emissions. Those emission sites or the power they produce will need to be brought into conformance with the cap-and-trade system. And that will cost money.

The Metropolitan Water District of Southern California, a huge wholesaler to agencies throughout the south state, says home customers may see a $2.50 yearly hike in bills to cover pumping-related costs. The State Water Project, which ships water southward along the California Aqueduct, also will see costs for the use of coal-fired energy, and those costs presumably will be passed on.  A discussion of these issues, and others, can be seen here.

The costs aren’t immediate, but they will accrue over time. They also are only part of an array of fiscal impacts associated with water protection and delivery – including environmental protections for the Sacramento-San Joaquin River Delta and potential construction of a tunnel or canal through the Delta.

Politics and money

Geoff

 

“While experts disagree on how much is too much when it comes to debt service, 7.8 percent is high. In fact, it’s the highest since 1977.”

The buzz in the Capitol is that the $11.1 billion borrowing planned for the November 2012 ballot may get pushed back or downsized, in part because of the miserable economy, in part because of the ballot’s volatile political mix.

The size and timing of the bond election has been part of the political calculation since lawmakers and then-Gov. Schwarzenegger approved it two years ago. When times are flush, voters are more prone to approve spending for public works projects than when times are tough – and times are tough. In 2010, tight-fisted voters rejected new spending on a number of levels, and even refused to allow an $18-a-year levy – that’s $1.50 per month — to keep California’s state parks open. Now, that’s cheap.

State Treasurer Bill Lockyer noted recently that California’s debt service accounts for about 7.8 percent of the state’s General Fund, its main coffer of personal income, sales, corporation and insurance taxes. That’s a lot of dough in an $80 billion-plus General Fund, and while experts disagree on how much is too much when it comes to debt service, 7.8 percent is high. In fact, it’s the highest since 1977 even though the state is borrowing less than before – the disparity here is that the state’s revenues went down, driving the debt service proportion up.

Last fiscal year, from July 1, 2010, to June 30, 2011, the debt service level was 7.1 percent. Twenty years ago it stood at 2.36 percent.

Those are not good numbers. In California, General Obligation bonds – voter-approved borrowings – have the full faith of the state behind them and bond holders go to the front of the line and take priority over other state debts. Nobody ever lost money on California’s GO bonds, as Lockyer often points out, and bond buyers know it: The state is the nation’s largest issuer of municipal debt.

If lawmakers decide to trim the $11.1 billion bond offering, the big question is what will be cut and what will be left? Cut each project by 25 percent – that’s one proposal on the table – or cut entire projects out all together? Politically, this is a tough call, since the fragile agreement that put the bond on the ballot in the first place reflected compromises between environmentalists, agriculture, Delta protectionists, water districts, reservoir construction advocates and others. If entire projects are removed, the support could dwindle and rewriting a scaled-back plan could prove difficult.

If there were solid indications that the recession was waning – and with it, the parsimonious views of voters – the bond could be pushed back two years. There is precedent for this – a major school bond for example – but it is a gamble, too. Putting it on the November 2014 ballot may give it a better chance of passage — or it may not. Voters are fickle.

Politically, the November 2012 ballot is probably the bond’s best shot. A presidential ballot brings out a higher turnout than off-year or special elections, and a high turnout in California traditionally means more Democrats at the polls, which means more voters likely to approve spending.

But there are other issues on the ballot that could affect passage of a multibillion-dollar bond offering.

One proposal would modify the term limits of lawmakers, allowing them to serve up to 12 years in any one house. State lawmakers used to have unlimited terms of office, but in 1990 angry voters – led by Republicans – approved limiting them to six years in the Assembly and eight years in the Senate. The term modification on the ballot in 2012 may draw large numbers of Republicans to the polls to oppose it – and the Legislature with a 14 percent approval rating is even less popular now than it was in 1990.

If Republicans come to the polls in droves – it’s a presidential election, remember – will they be inclined to oppose the bond issue?

Also on the ballot is a $1-per-pack tax on cigarettes – and in tight times, new taxes typically aren’t too popular. But will anti-tax sentiment spill over into an anti-borrowing mood?

Another ballot proposal is a constitutional amendment for a “rainy day fund” for the state budget, a set aside to act as a buffer for the state’s books when revenues dip.

{Update: Gov. Brown has signed legislation that pushes the “rainy day fund” election to 2014.}

Just how this proposal will play out as voters decide whether to borrow $11.1 billion is anybody’s guess, but now we paraphrase Bette Davis in All About Eve: Fasten your seat belts. The November 2012 ballot is going to be quite a ride.

 

Speaking out

Sacramento River, south of Freeport, photo by John Howard

“Among water folks, Wanger definitely is quite a catch. His public profile rose sharply last month because of his characterization of federal scientists …”

Newly retired U.S. District Judge Oliver Wanger, who ruled on numerous water and environmental cases during 20 years on the bench in the Central Valley, is going on the speaking circuit: He’ll be making a major public appearance next month before at south state water group’s fundraising dinner.

He’ll also be appearing at an Oct. 11 fund-raiser for a candidate to the Fresno County board of supervisors – his first presentation since leaving the bench, according to the candidate.

There is nothing improper about retired jurists — or doctors, journalists or school superintendents, for that matter — saying anything they want to whomever they want.

But both groups he’s addressing have vital political or fiscal interests in water issues — and did have when he was on the bench.

Among water folks, Wanger definitely is quite a catch. His public profile rose sharply last month because of his characterization of federal scientists – Jennifer Norris from the Fish and Wildlife Service he described as a “zealot” and Frederick Feyrer from the Bureau of Reclamation was deliberately deceitful.  His statements reverberated across the country.

“I have spent my life in courtrooms. This is my life. I have never seen anything like this,” he said, according to a transcript of the proceedings.

Wanger, a retired Marine who grew up in Beverely Hills, will address the 27th annual meeting of the Southern California Water Committee, a 200-member group that was formed in 1984, at the Pacific Palms Resort in the City of Industry.

Tickets to the dinner and fundraiser start at $200, although a table for 10 comes in at $1,750. The committee’s board chairman is Charles Wilson of Southern California Edison. Its members include business and engineering groups, water agencies, and others. The nonprofit group was founded by several Southern California counties – Kern, Los Angeles, Orange, San Diego, San Bernardino and Riverside.

Next week, Wanger is expected to address a $250-a-person fund-raiser for Andreas Borgeas, a former clerk for the judge in law school and a candidate for Fresno County supervisor.

A campaign notice for event said Wanger will discuss “A Perspective on the Future of the Valley’s Water,” and describes the former judge as “key in supporting Valley agriculture and its lawful access to essential water!”

The campaign noted that Wanger has not endorsed Borgeas’ political bid.

 

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