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Two-step bond eyed in water talks

The closed-door negotiations over California's water future between Gov. Arnold Schwarzenegger and Legislature's leaders include a plan to borrow $9.4 billion with voter approval — but use only half the funds through 2015 and the rest later.

About a third the money, perhaps $3 billion, would be used to develop storage, but whether that would be performed by dams or through groundwater storage has not yet been spelled out. The bond money would be spent in conjunction with matching funds from the locals and money derived from the rates of water consumers.  The money would not be used to build a canal through or around the Sacramento-San Joaquin River Delta east of San Francisco.

"Generally, we support what the Democratrs came out with yesterday," said Schwarzenegger spokesman Aaron McLear. "Hopefully, we are in a position to have a vote soon."

There is no agreement on the finance piece of the water proposal, but sources in both houses believe the political leadership appeared closer on this section than on other sections of the complex water puzzle. And by mid-day Tuesday, a potential agreement loomed, according to Capitol sources. 

Earlier, state Treasurer Bill Lockyer questioned the wisdom of adding more bond indebtedness. "If we're not careful, rising debt service payments soon will consume more than 10 percent of General Fund revenues," he noted. "The days of blithely heaping more and more debt burden on the Gneral Fund are over – at least they should be." He said improvements in the state's water works should be financed mainly by users, not the state's General Fund, which is backed by all taxpayers. 

At issue is a plan to overhaul California aging water delivery system that would move more water from rain-rich northern California to mid-state farmers and the vast population centers of the arid south. The plan would include environmental protections for the delta east of San Francisco and a create a new body called the Stewardship Council. Its seven members — including four gubernatorial appointees — would make critical decisions on water projects.

Potentially, the plan could lead to the construction of two new reservoirs – thus far, however, they are not spelled out in the proposed legislation and none are guaranteed — and increase the water level of a third. Similarly, the hotly contested building of a canal to move water through or around the delta to the south is not specifically spelled out in the latest negotiations but is included in separate state planning.

If ultimately approved, the proposals would mark the most significant water development in California since voters approved the State Water Project a half-century ago.

The governor and legislative leaders said that they were close to an agreement last year and earlier this year, but negotiations collapsed as time ran out and partisanship kicked in. Major players in the latest political fight over water, including environmentalists and an array of water agencies, say they have been excluded from the Capitol negotiations, which have been tightly held in the governor's office. 

The construction of billions of dollars in projects has drawn fire from environmentalists, who contend that too little attention is being directed at conservation, groundwater storage, species protection, groundwater monitoring and other issues. They questioned provisions in the latest proposals, still under discussion, that could lessen monitoring and lower the amount of set aside to protect wildlife.

The governor has called a special session on water to begin Wednesday, but Capitol sources in both houses said it was unlikely that lawmakers would be able to act this week, in part because any newly drafted legislation reflecting the a deal would need to be in print and vetted.

A north-south, bipartisan agreement on water, a rarity in the Capitol, is the culmination on months of negotiations and a bitter, three-pronged fight between environmentalists, northern water interests and the powerful public water districts of the Central Valley and Southern California.

Despite legal hurdles, two reservoirs have figured in the discussions. One is the 1.9 million acre-foot Sites Reservoir near Maxwell in Colusa County in the Antelope Valley. The other is Temperance Flat complex above Fresno, a $3.3 billion project that would store about 2 million acre-feet. A third reservoir, Los Vaqueros run by Contra Costa water officials, could have its level raised.

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