Governor’s Budget Banks on Voters Passing Water Bond

Governor Brown’s proposed budget―the last of his tenure―highlights his priorities for the state. For water, the proposal includes new funding to address some pressing public safety and environmental health issues, including improving drinking water quality in low-income communities, flood protection, groundwater management, and air and water quality at the Salton Sea.

Carrying out this proposal will depend not only on passing the budget, but also on getting additional approvals from California voters and the legislature for some of the needed funds.

To pay for most of the new initiatives, the governor is banking on California voters approving a $4 billion parks and water bond (SB 5) that will be on the ballot in June. More than $400 million in proposed spending on water for 2018–19 is contingent on SB 5, including safe drinking water projects ($63 million), flood management ($99 million), groundwater sustainability ($146 million), and restoration of the Salton Sea ($30 million).

To improve water quality in impoverished communities, the budget proposes using $4.7 million of general fund dollars to administer a new program to cover the ongoing costs of providing safe water. But the governor is counting on the legislature to approve a funding stream for the program itself—on the order of $100 million annually. One current measure (SB 623) would do this by assessing fees on agricultural chemicals and water bills. Or the governor may propose a similar measure as a trailer bill to the budget. Like any new tax, this kind of fiscal measure requires approval by at least two-thirds of both houses, which can be a significant hurdle. To date, water agencies have opposed this measure.

The budget proposal’s heavy reliance on bonds to pay for water projects continues a tradition that voters have supported over the past two decades. Since 2000, seven state general obligation bonds—voter-approved debt reimbursed with general fund taxes—have provided roughly $22 billion for water projects. State agencies are still awarding funds from Proposition 1—a $7.5 billion bond approved in November 2014. Bond funds have generally gone to “fiscal orphans”—areas of public and environmental health that do not have adequate alternative sources of funding. But bonds have not created a reliable way to fund ongoing needs.

The current proposal to create a steady stream of funding for the costs of safe drinking water programs is one way to break from this tradition. But it can also be a more difficult path. Setting up long-term funding streams, such as new taxes and fees, will require going beyond bonds. Leadership at the state and local levels are needed to pave the way.