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Reason Foundation

Propositions 1E and 84

Funding the State's Water and Flood Control Infrastructure

Skaidra Smith-Heisters and Adam Summers
September 1, 2006

Executive Summary

While both Propositions 1E and 84 are being sold as necessary to improve vital infrastructure, there is actually very little infrastructure support included. Rather, the bonds offer token funds for real infrastructure projects and represent a grab-bag of funding for environmental programs, parks and recreation facilities, and non-infrastructure-related water programs.

Proposition 1E authorizes $4.1 billion in new General Obligation debt with annual debt service payments of $266 million and a total cost to taxpayers of $8 billion. These monies would be used for California’s aging system of levees, overflow weirs, and channels. Approximately $3 billion of this total would be dedicated to the state Central Valley Flood Control System. Of monies from the bond measure, 73 percent or more of the fund is for as-yet unidentified projects in the Sacramento- San Joaquin Delta, and 93 percent of the fund is available to projects without any requirement for federal and/or local matching funds.

Since 1996, California voters have authorized $11 billion in General Obligation bonds for water and resource-related purposes. Approximately $1.4 billion of this funding remains available. Proposition 84 would authorize another $5.4 billion in General Obligation debt with annual debt service costs of $350 million and a total cost to taxpayers of $10.5 billion over the life of the bond. While the title of the measure suggests that water quality, safety and supply (as in drinking water) are the primary aims of the bond, this is quite misleading. The funds from the bond would go to a range of purposes, including:

While there is a clear state interest in preserving the water supply which flows through the Delta, General Obligation debt is a poor and indirect method of funding these improvements. There is no guarantee that the funds will be used to address priority flood control and levee projects that increase the state’s long-term water infrastructure and financial security. In fact, the opposite is likely as the system does a poor job of prioritizing needs and pork barrel projects vie for a share of the funds. Why should California taxpayers take on another $10.5 billion in costs to fund more of the same system that hasn’t fixed our water and resource issues in the past? In recent years we have approved $11 billion in bonds for these purposes and little went to actual infrastructure. Instead, it is mostly comprised of funding for unrelated purposes, such as land conservancy purchases, protection of water quality for non-potable uses, funding for parks and nature education facilities like museums and aquariums, and programs for “sustainable communities” and “climate change reduction.”

Policymakers should adopt appropriate user-fees within drinking water rates, upon land-users that are protected by flood-control facilities, and upon users of recreational facilities. Adopting this “user pays” system would not only fund needed infrastructure improvements but would also encourage sensible land use in and around flood plains. Asking taxpayers to shoulder this obligation encourages inappropriate land-use within flood plains, worsening the potential impact of future flooding, and allows the legislature to avoid responsible budgeting for ongoing water and resource needs and instead rely on future generations to pay for their commitments through debt.


Skaidra Smith-Heisters is Policy Analyst

Adam Summers is Senior Policy Analyst

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