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Drought Watch: What’s in Proposition 1?

Caitrin Chappelle, Ellen Hanak October 24, 2014

This is part of a continuing series on the impact of the drought.

California voters are deciding the fate of Proposition 1—a $7.5 billion water bond. If Prop 1 passes, the water sector will get a big boost in funding. Prop 1 contains $7.12 billion in new debt (the remaining $400 million dollars is money that would be re-authorized from previously passed bonds).

So what kind of water projects will be funded if Prop. 1 passes? The bond focuses mainly on water supply ($3.6 billion) with the majority ($2.7 billion) designated as matching funds for storage projects. These matching funds are intended to support up to half the costs of projects that store water either in surface reservoirs or underground aquifers, and they can only be used to fund “public benefits.” Public benefits include, among other things, better flood protection and recreation opportunities, as well as improved environmental conditions. For instance, expanding surface reservoirs makes it possible to store more cold water, which can be released during warm months to support salmon habitat. Likewise, expanding ponds to recharge groundwater basins can create bird habitat.

The California Water Commission will determine which storage projects receive these funds through a competitive process. The rest of the water supply dollars are mainly for matching funds for water recycling and desalination projects ($725 million), with $100 million each for water conservation and groundwater sustainability planning.

Proposition 1 also has funds for the five areas PPIC has identified as critically underfunded “fiscal orphans” in our recent study of water system finance: ecosystems, drinking water quality, flood protection, stormwater pollution management, and integrated water resources management. Of the funds designated for water quality improvements, $520 million is intended for disadvantaged communities and $800 million is for cleaning up groundwater basins that have been contaminated with industrial and agricultural chemicals. Just over half a billion dollars is designed to encourage agencies to collaborate on water management priorities, with funds going to different regions for priority projects in Integrated Regional Water Management plans. These projects would overlap with the previously mentioned categories, and they would need to improve regional self-reliance and help adapt to the effects of climate change.

Since 2000, California voters have approved six water bonds, totaling nearly $20 billion dollars. These bonds looked a little different than Prop 1. Ecosystem improvement and flood protection were the main priorities, with smaller amounts for drinking water quality, integrated management, stormwater, and water supply projects (these bonds also had large amounts for parks and public access). While these bonds provided welcome support to these areas, they also came with fiscal tradeoffs: bonds are repaid with general fund tax dollars that also support other state programs.

The current drought is likely helping the bond’s chances of passage: according to the most recent PPIC Statewide Survey a record-high 68% of all adults say that the supply of water is a big problem in their part of the state. In this context, it is important to keep in mind that while continued investments in our water system will help us be better prepared for future droughts, this bond is not designed to provide immediate relief from the current one. Most water projects take time to design and build. And, whether or not Proposition 1 passes, the state’s water system will face significant challenges that require funding sources more reliable than a bond can provide.

News and analysis of California policy issues from PPIC

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