Welcome, Hydrovisions Readers, to this kick-off edition of the Legislative Corner for the second year of the 2005-2006 Legislative Session. A year ago, we doubt many people would have imagined the turn of events that would lead to Susan Kennedy’s emergence as a power player in the Schwarzenneger Administration, or, to the Governor’s announcement of a $220 Billion investment (or “spending,” depending on your orientation) program. We live in “interesting times,” to say the least. And, if the first 3 weeks of Session are any indication of what lays ahead, 2006 promises to be a year of historic frenzy if not accomplishment in Sacramento!
Governor’s Strategic Growth Plan and Proposed Budget
Water and Infrastructure Bonds
The Legislature reconvened on January 4; the next day, Governor Schwarzenegger delivered his State of the State address. Following the resounding failure of his special election initiatives last November, the Governor struck a conciliatory tone, pledged to cool the partisan rhetoric and work with the Legislature to resolve the problems facing California. The centerpiece of the Governor’s speech was his announcement of a “Strategic Growth Plan,” one that might well be characterized as, “since we know they are coming, let’s just build it.” Among other things, the plan outlines the first 10 years of a 20-year vision to increase the state’s water supply in order to serve an additional 8.5 million people. This ambitious, $220 Billion Ten-Year Infrastructure Plan calls for more schools, more roads and for investment in water supply reliability and flood protection. The Governor’s 06-07 proposed State Budget includes on-going funding for water programs including flood control, water supply and water quality.
The Governor’s water bond proposals are contained in AB 1839 (Laird) and SB 1166 (Aanestad/Machado). The legislation would place a $3 billion general obligation (GO) bond before voters in 2006 and a $6 billion GO bond on the ballot in 2010 to support integrated regional water management and for water and flood control improvements. The bills also create a controversial Water Resource Investment Fund (RIF) to be collected by all retail service providers which is intended to provide a long-term stable funding source for investment in California’s water infrastructure currently estimated to produce revenues of $380 million per annum. “Subject matter” hearings began last week in the Senate Natural Resources and Water Committee (NRWC) and Assembly Water, Parks and Wildlife Committee (Assembly WPW); in this hearing process, the authors will not present bills and no formal amendments will be taken. Some of the significant areas of concern that have been expressed thus far by members of the Legislature and various stakeholders include:
(1) Water Resource Investment Fund – Fee or Tax? There is a significant question presented whether the RIF constitutes a tax which most Republicans in the Legislature have vowed never to raise. Because the Governor’s proposals include borrowing, he will need “aye” votes from six Assembly Republicans and two GOP senators to pass.
(2) Separation of Powers. The Governor’s proposal contains programs that (a) would be continuously appropriated; (b) do not explicitly require appropriation by the Legislature; (c) allows the California Water Commission to change rates for the RIF, unless the Legislature acts within 60 days to deny the change; and (d) commits to funding priorities (e.g., surface storage facilities and future Delta Risk Management Strategy and California Water Plan updates) without explicit authorization or approval by the Legislature.
(3) Oversight and Transparency. Comparing recent program development processes which provide for broad public participation (e.g., guidelines for implementing Prop 50), the question has been raised whether numerous provisions in the Governor’s proposal allow DWR to take actions without comparable oversight and transparency.
(4) State/Local/Regional Responsibilities and Access to State Bond Funding. There is a significant concern among many Legislators and retail water suppliers and local agencies that the roles and responsibilities at the local, state and federal level are unclear in the Governor’s proposal. Moreover, retail water suppliers are concerned that they have the obligation to meet safe drinking water and other regulatory responsibilities while the decision-making about resource allocation is left to undefined regional entities which may not have the same responsibilities or funding priorities.
In addition to the Governor’s bond proposals, Senator Don Perata, President pro Tempore of the Senate, introduced SB 1024 at the end of last year. It is a $10.275 billion infrastructure bond measure that includes $1 billion to evaluate, strengthen and improve designated levees and $200 million for flood control, but contains no other water supply or infrastructure funding. Assembly Speaker Fabian Nunez has also introduced a bill for infrastructure financing, AB 1783, in an unspecified amount expressing his priorities for bond funding. These bond measures are consistent with recent expressions of Legislative priorities and differ from those identified in the Governor’s investment package. An Infrastructure Bond Conference Committee (Conference Committee) has been established to deal with all facets of the bond proposal, chaired by Senator Murray and including Senators Chesbro and Hollingsworth and Assembly Members Laird, Chu and Keene.
Assembly WPW held two hearings last week on the subjects of flood management and parks and wildlife. The next and final scheduled hearing is on Tuesday, January 31, when the Committee will take up “water management” issues. Assembly WPW is currently adhering to a schedule of February 3 to provide its report to the Conference Committee.
The Senate NRWC has not yet established a firm deadline for its report to the Conference Committee and has scheduled hearings as follows:
January 31 Flood Aspects
February 7 Integrated Regional Water Management Issues
February 14 Water Resource Investment Fund
February 21 Remaining Issues
Unlike the first hearing, public testimony will be taken at the upcoming Senate NRWC; the Chair has requested that witnesses address the “big picture” and transmit “line item” issues separately in writing. Senator Kuehl stated a hope that a single NRWC report could be filed with the Conference Committee but that if the report is not acceptable to the Republicans, a minority report will also be filed.
At this time the Legislature is working to have a bond proposal on the June 2006 ballot. However, while there is significant focus and momentum and bipartisan support to move an infrastructure bond forward this year, the ultimate content of the measure that will emerge is highly uncertain. The Governor has stated that he is indifferent about whether the bond package goes on a June or November ballot.
Still lurking in the background is a water and resource bond measure drafted by Joe Caves, the principal author or Prop 50, with the support of the Association of California Water Agencies (ACWA’s support has subsequently been called into question). The authors had indicated from the start that if an acceptable legislative package does not move forward this year, they intend to advance the bond measure through the initiative process just as they did with Proposition 50.
Of particular interest to GRA members is that the Governor’s budget proposes an additional $8.5 million ($4.5 million in federal funds and $4 million in Waste Discharge Permit funds) to enhance existing water monitoring efforts by the State Water Resources Control Board. Not only would these funds be used to expand the Water Board’s monitoring activities, but also to integrate exiting data collected by various state and local agencies into the Surface Water Ambient Monitoring Program.
Other Water and Groundwater Bills.
Given that this is the second year of the session, January has been spent addressing “two-year” bills (bills that were unable to move last year when they were introduced). Two-year bills must move out of their house of origin by the last day of January. Typically the last week of January brings long floor sessions to pass bills from one house to the other. All of the bills that are passed this month are only half way through the process. The bills must go to the policy committees for hearings in the other house before reaching the Governor’s desk.
This year the volume of two-year bills is somewhat less than in years past, primarily because the focus of the Capitol is on the infrastructure bonds proposed by the Governor. The extensive, FAST TRACK hearings on the bonds have distracted legislators from working on bills from last year. The deadline for introducing new legislation this year is February 24th. One bill we are likely to see again this year is SB 820 (Kuehl). One of the most watched bills of last year, SB 820 was vetoed by Governor Schwarzenneger, but Senator Kuehl has indicated that she intends to reintroduce the bill this year. Senator Kuehl is GRA’s invited “focus” speaker at this year’s Legislative Symposium and Lobby Day on March 29, 2006 – mark your calendars and don’t miss a great opportunity to learn more about this exciting year in the Capitol!
Hatch & Parent will be monitoring closely all bills as they are introduced during February and report out to GRA’s Legislative Committee.
Chris Frahm and Paul Bauer of the firm of Hatch & Parent are GRA’s legislative advocates in Sacramento. If you would like to know more about any of the issues described in this report, obtain a copy of any pending bills or other information, or to speak with one of our lawyers or legislative advocates about how the bill will affect you, your water rights, or your business operations, please contact Chris or Paul at (916) 441-1232 or cfrahm@hatchparent.com or pbauer@hatchparent.com.
