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Why is the Governor pushing for this water package? - Why are legislative leaders following his lead?

October 7, 2009 -- According to a recently complete analysis by the East Bay Municipal Utility District on the proposed water bond and the Delta Water Package:
"The proposed $12B GO Delta bonds would result in debt service costs of nearly $780M/year to the General Fund for the next 30 years."

"The state budget deficit for the next three years is projected to be as much as $15B per year, and could climb even higher. Even these dire projections may not represent the worst case, should California's economy continue to slide. The $780M debt service burden would consume an increasing share of discretionary state funding, without counting the $1.3B annually that it will cost to service debt from resource bonds already approved since 2000. Which state programs are we willing to sacrifice to take on this massive, additional debt?"

"State expenditures for resources-related GO bond debt have grown rapidly, from 8% of General Fund spending in 2000-01 to a whopping 36% in 2009-2010. Adding a $12B bond would simply break the bank. According to State Treasurer Lockyer, between now and 2028, the state will assume another $225 billion in general fund bonded indebtedness. This mounting debt burden is an unsustainable trend, and is already interfering with the state's efforts to address its growing environmental and resource needs."

And it's not just costs from a GO bond. It is simply shocking to Restore the Delta staff members that the Governor and Legislative Leaders could be in favor of this package during this time of economic crisis. Look at what California's urban water users will be expected to pay, all to support agribusiness on the West side of the San Joaquin Valley. Also, according to the East Bay Municipal Utility District analysis:
"The legislature has embarked on a major reform of the state's water system, heedless of the enormous costs involved, just when the state's financial condition has never been more dire. A realistic assessment of the total costs of the Delta legislation comes to $52B to $78B or more. This includes a series of huge capital projects: new Delta conveyance, construction of several new surface storage reservoirs, construction of other local water management and delivery projects, Delta levee strengthening, ecosystem restoration, and creation of three new state agencies and expanded state programs to prepare and implement the Delta Plan."

"Of this total price tag, urban SWP and CVP customers (who comprise roughly 24 million Californians) located south of the Delta will pay between_$42B and $68B, likely to be amortized over thirty years. First, these customers will pay all of the costs of new Delta conveyance, which are estimated between $18B and $44B. As they comprise 70% of all Californians who reside within the Delta watershed, their cost share of all other components of this water package (totaling approximately $34B) will add another $24B. Paying this huge price tag via water user fees on the water bill will result in more than doubling of the water rates for these customers, as well as additional huge annual water rate increases for many years into the future."

"The costs of new Delta conveyance includes the construction cost of building a canal or tunnel on an eastern or western alignment, plus necessary levee upgrades to continue through Delta operations, new rights of way, mitigation and relocation of impacted facilities/infrastructure. The reason for the range ($18B-$44B) in estimated costs of new Delta conveyance is that a tunnel will be substantially more expensive than an open canal."

"All users of water from the Delta watershed will have to pay the $16B cost of new programs and projects in the "Delta Plan. These costs include:
·$14B in levee repair and strengthening, plus new staffing costs for the Delta Plan. $2B for ecosystem restoration not included as part of the new Delta conveyance."

So to be clear, Delta landowners and communities, which have riparian rights and rights to the use Delta water for beneficial use, will now have to pay for the restoration and mitigation needed from 50 years of excessive water exports. And if that's not enough...

"It is expected that these activities will be funded through a surcharge or fee on water use. $16B in state water fees spread over 30 years is approximately $530M per year in new state water fees, not counting the likely fee increases over time. For the same urban customers south of the Delta who are financing the new Delta conveyance, this fee would come to $11B more on their water bills."

The agricultural water districts have repeatedly told the Legislature that they can pay neither the costs of the new Delta conveyance, nor any fee on water use. This would shift all the costs enumerated above onto urban water customers in California. As a result, urban water customers south of the Delta carrying the full cost of a new Delta conveyance, two- thirds of the cost of the Delta Plan, plus their share of surface storage and regional projects. In the absence of drastic cost-cutting, the debt service for these urban customers could come to more than $4B/year.

"The money to pay the $52B to $78B price tag for these programs and projects will be demanded from the same Californians who are enduring the worst recession since the 1930s. The state share of any bond repayments will strain the state's already overburdened General Fund. This long-term over- commitment of taxpayer and ratepayer dollars must be rigorously scrutinized by the Legislature, and the costs scaled down to meet financial reality."