Talks continue to place $10 billion water bond on ballot

A long-stalled attempt to place an unprecedented water bond before California voters is making new progress, with a proposed $10 billion plan that would include money for both groundwater and surface storage. The on-again, off-again negotiations gained momentum this week, but an agreement with legislative Republicans remained elusive as the Thanksgiving holiday approached.

Captiol sources say negotiations continue between Senate lead Don Perata and Gov. Schwarzenegger. But Republicans in both the Assembly and the Senate continue to balk at key financial provisions. Among them is a debate over how much ongoing control the Legislature would maintain over water projects. The Republicans want guaranteed funding for projects that have been approved, and not subject them to continuing legislative review.

On Tuesday, it looked as if the Senate might vote on a deal as early as Monday, Nov. 26. But Senate Republicans say they have not been consulted on the latest developments, and Perata has cancelled floor sessions until Dec. 5. Those sessions were canceled,  sources said today.

Supporters have sought to put the water proposal on the Feb. 5 ballot.  But the postponing of the Nov. 26 floor session makes it that much more unlikely that a bond deal can be reached in time to make the February ballot. If the bond does not make the February ballot, it could be before voters in June. If it appears in February, the secretary of states’s office might be required to publish a third ballot pamphlet — the first for the candidates and propositions originally placed on the ballot, the second for the referendums on the tribal gaming compacts and a third for any water plan.

If ultimately approved by voters, the bond would be nearly double the size of the water quality bond that voters authorized last year, about $5.4 billion. That bond was part of a larger infrastructure improvement package approved by voters to overhaul California’s aging freeways, improve transit and freight corridors, provide money for local water projects, beef up levees and other projects.

Negotiations involving legislative leaders and others were held through the weekend and continued this week.  Perata, who is taking the lead in the discussions, sources say, and he has been meeting with Gov. Arnold Schwarzenegger on the issue. The governor apparently is supportive of the proposal, although he has not yet signed off on it. There was no immediate comment from the governor’s office.

The Republican governor earlier rejected a water proposal authored by Perata, but negotiations resumed after partisans in the debate over whether to build new dams could not reach a compromise. The dispute over dam construction has been at the center of the debate over a comprehensive water program.

But Capitol sources say the outlines of a compromise were in play, on at least one of two key pieces that earlier were stumbling blocks.

First, there was tentative agreement to provide at least $2.5 billion for both surface and groundwater storage. The money, with matching funds, could be used to build, revamp or expand reservoirs, as well as develop new or expand existing groundwater storage. In the negotiations, environmentalists backed off their position opposing surface storage, while dam proponents accepted more groundwater storage.

Second, there was a growing sense that a critical piece of the financing scheme in the original proposal, a “continuous appropriation” that would allow top state water officials to approve financing without prior legislative approval, should  be removed. Republican sources, however, said those discussions were still up in the air.  

The proposal also includes competitive language for builders and contractors, requires water districts to demonstrate a public benefit to obtain bond money. There is also language relating to conservation.

The governor has already shown his support of spending major money on water. In September, he added some $3.5 billion to his original proposal, pushing the state’s end of the tab to more than $9 billion.

The governor’s plan, which drew support from U.S. Sen. Dianne Feinstein, includes $1 billion for conservation and local water projects and nearly $2 billion for Delta restoration. The biggest piece, $5.1 billion, would go for three projects: two new dams and the expansion of the 100,000-acre-foot Los Vaqueros Reservoir northeast of San Francisco. Under the governor’s plan, the reservoir could be expanded up to 275,000 acre-feet at a cost of $600 million to $800 million. The funding, which comes from voter-approved bonds, limits the state’s cost to 50 percent of the projects, which means the total cost of the projects is double the amount listed in the legislation.

The new round of negotiations apparently include the Los Vaqueros project, but it was unclear how much dam construction would be authorized. State water officials had recommended all of the projects nearly a decade ago, but the funding was never developed.

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