Tag: Proposition 1

Governor’s Funding Plan for Climate, Drought

Governor Brown has released a proposed budget that reaffirms the state’s commitment to boosting drought resiliency and battling climate change. While specifics are likely to change before the budget is finalized in June, here is a summary of key proposals.

  • Cap and trade. California’s recent efforts to combat climate change have been funded from its cap-and-trade program. The program faces an uncertain future because its statutory authority is set to expire in 2020. Partly due to this uncertainty, 2016 cap-and-trade auctions raised a fraction of the money raised in previous years. At the governor’s budget press conference, he announced legislation that would extend the program beyond 2020. Appropriation of cap-and-trade funds in the new budget is dependent on the passage of this bill—which will require a two-thirds vote in both the senate and the assembly. Should it pass, the governor proposes appropriating $2.2 billion for cap and trade, a decrease from last year’s $3.1 billion. As in past years, 60 percent of the proceeds would be for ongoing funding of public transit, affordable housing, sustainable communities, and high-speed rail. The rest is split among one-time investments. This year, the largest sum in the one-time investment pot ($863 million) is for public transit improvements aimed at increasing ridership and decreasing greenhouse gas emissions. Smaller sums include $142 million to fund local climate actions in the state’s most disadvantaged communities and $128 million for projects in forests and urban and agricultural landscapes that remove carbon dioxide from the atmosphere and store it in vegetation or soils.
  • Emergency drought spending. While recent rains have drenched California, the governor’s emergency drought declaration is still in effect, and the new budget appropriates an additional $188 million in one-time resources for drought relief. Roughly half ($91 million) is allocated to CAL FIRE—the agency dedicated to fire protection and stewardship of the state’s forests—to enhance its firefighting capacities and support the removal of dead trees. The drought has contributed to widespread tree mortality, which has raised concerns that the dead trees might fuel future destructive wildfires.
  • Water bond updates. Nearly 80 percent of Proposition 1 water bond funding has already been appropriated (though far less has been awarded for spending). This year, the governor proposes appropriating $248 million from the bond for an Integrated Regional Water Management grant program. These funds are meant to incentivize regional cooperation with the goal of resolving complex water management challenges at a broad scale while balancing social, environmental, and economic objectives. For instance, these funds could foster a regional approach to helping water systems adapt to climate change. An additional $3.8 million would enable the State Water Resources Control Board to enforce the implementation of California’s groundwater law.

Although state money represent only a fraction of California’s total water sector spending (13%—the rest is mostly locally funded), it is an important piece of the funding pie. While the governor’s proposed budget would bring welcome funding to a number of critically important areas, key water challenges continue to experience long-term funding gaps—especially safe water for small rural communities, flood control systems, stormwater management, and ecosystem management.

Learn more

Read California’s Water: Paying for Water (from California’s Water briefing kit, October 2016)
Visit the PPIC Water Policy Center

Testimony: Addressing California’s Growing Flood Risk

The Assembly Water, Parks, and Wildlife Committee held its first hearing of the new legislative session yesterday. As a reminder that California is never more than one big storm away from flood problems—even when reeling from a multi-year drought—the hearing’s topic was flood management. A particular focus was the state’s role in supporting flood protection infrastructure using funds authorized by Proposition 1E, a $4.1 billion general obligation bond approved by state voters in November 2006.

I provided the committee with an introductory overview of California’s challenges in addressing growing flood risk. I began with some summary information on the extent and nature of the risk: Roughly 21 percent of California’s population lives in areas vulnerable to flooding, with 4 percent at extreme risk. This is a problem that affects all regions of the state—especially the Sacramento and San Joaquin Valleys and coastal areas. Risk is growing as the population grows, putting more people in harm’s way. A rising sea level and a changing climate—with warmer winters and more variable conditions—are also increasing California’s vulnerability to flooding.

California has a vast flood management system, overseen by federal, state, and local agencies. But this system faces significant challenges–including a large investment gap, with spending lagging far behind needs. In addition, state taxpayers face potentially high liabilities from levee failures within the Central Valley since a 2003 court ruling (the Paterno decision). And while improving flood infrastructure such as levees can reduce the frequency of floods, it doesn’t eliminate risk. If new development is allowed in places with the relatively low level of protection required by federal standards (against the “100-year flood”—a flood with a 1 percent chance of occurring in any given year), the total economic and social risk of flooding can actually increase. Flood insurance is a way to cushion against this remaining risk, but few Californians take advantage of this option.

In a recent study, PPIC took a closer look at the flood investment gap. We found that although the recent infusion of state bond funds has helped, California’s flood investments are still seriously lagging. California needs to raise an additional $800 million to $1 billion per year to undertake these investments within a reasonable time frame (25 years). Federal contributions are small (just $250 million/year in recent years), and likely to decline in the future. So the gap will need to be filled by state and local sources. In the very near-term, the state can step up with remaining bond funds. The governor’s budget proposes spending the remaining $1.1 billion in Prop 1E funds next year. Proposition 1—the new state bond approved by voters in November 2014—provides an additional $395 million for flood protection. Beyond this, the solutions lie in making it easier for local agencies to raise funds and identifying new state funding sources.

To reduce risk, the state should also consider extending reforms enacted for the Central Valley in 2007—which set higher protection standards for urban areas—to other flood-prone regions. One of the best defenses against flooding is land-use planning that keeps people out of harm’s way.

Voters More Optimistic, Less Engaged

A lot has changed since Californians cast ballots just four years ago.

Likely voters today are feeling much better about the direction and economic outlook of the state. In October 2010, most (77%) said that the state was headed in the wrong direction. In our latest survey, likely voters are much more positive about the state’s future—although they are still more likely to say wrong direction (54%) than right direction (40%). Similarly, in October 2010 less than a quarter of likely voters (20%) expected good economic times in the upcoming year and far more (65%) expected bad times. Today, the mood is decidedly different, with 42% expecting good times and 47% expecting bad times. In October 2010, most likely voters (59%) named jobs and the economy as the state’s most important issue. Today, just 30% name it as the top issue, which barely keeps it in first place, while 28% name water and the drought. Further, in September 2010 nearly all likely voters (90%) called the state budget situation a big problem—today, that number is 62%.

This year, likely voters are paying less attention to news about the candidates for governor than they did four years ago, when the race involved an open seat and a high-profile contest. In October 2010, an overwhelming majority were very (39%) or fairly closely (50%) paying attention to news about gubernatorial candidates. In our latest survey, just half of likely voters were doing so (18% very, 34% fairly). In addition, there is a big enthusiasm gap. Fewer voters today say they are “more enthusiastic about voting than usual” (53% 2010, 40% today).

In 2010, when many people were tuned into the top of the ticket race, nearly 60 percent of registered voters turned out to vote. With far fewer voters paying attention to the gubernatorial race—and with the lack of a Congressional senate race—what can we expect in 2014? Will concerns about the drought and the state budget drive people to the polls—and if so, how will this translate into votes on Proposition 1, the water bond, and Proposition 2, the establishment of a rainy day fund? Stay tuned to PPIC as we continue to follow the November 2014 election.

Drought Watch: What’s in Proposition 1?

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.