Calif. voters have final say over $11B water bond

Gov. Arnold Schwarzenegger and legislative leaders say their $11.1 billion water bond is an essential investment for California's future, but it may be a hard sell to voters.

California already is saddled with debt, and the bond measure that will appear on the November 2010 ballot is filled with special-interest earmarks added in the late hours through backroom dealmaking.

The bond ballooned by $1.7 billion over two days while legislative leaders sought to win the votes they needed to pass the measure.

"It is a little bit of a Catch-22," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. "We did go into this thinking it would do better if we kept the financing piece smaller and yet, as we moved toward the finish line, I think we recognized there's a whole lot of unmet need."

Schwarzenegger is expected to sign the bond and four companion bills that would change how the state uses water and manages the Sacramento-San Joaquin Delta, the estuary that funnels fresh water from Northern to Southern California, where most people live.

The Republican governor described the bond as a wise investment to upgrade California's antiquated water system and meet the needs of a growing population. Schwarzenegger noted the bond had fluctuated between $8 billion and $12 billion during the past few months of negotiations.

"What is of interest to me is the result," Schwarzenegger said at a news conference Wednesday. "The result is a great package of approximately $11 billion."

The bond was initially presented to senators at a total cost of $9.4 billion. The biggest increase of $1 billion was inserted by the Assembly late Tuesday to satisfy Southern California area Democrats who complained the bond favored rural areas.

Funding to boost water recycling and groundwater supplies was added at the request of the mayors of Los Angeles, San Diego, San Jose, Fresno and Santa Ana, according to a copy of an Oct. 23 letter sent to the governor and legislative leaders.

Assembly Speaker Karen Bass, D-Los Angeles, said it was necessary to include resources that represent the entire state.

"The bond that came over from the Senate was not complete," Bass said. "We absolutely had to add the resources so the major population centers would be eligible for funding."

Among the earmarks tucked into the bond by Steinberg was a $10 million allocation to build a tolerance center in Sacramento featuring an aquarium and botanical garden. It was removed by the Assembly early Wednesday, and Steinberg acknowledged it was a mistake.

Lawmakers wrote the bond so only half could be sold before July 1, 2015, aiming to minimize initial costs to the state's strapped general fund. Assemblywoman Anna Caballero, D-Salinas, said the cost of the bond would be negligible and there would be no disastrous impact on the general fund.

Jason Dickerson, director of state administration at the Legislature's nonpartisan analyst's office, said voter approval of the water bond would add to California's massive debt, which could soon require 10 percent of state revenue to pay down.

Debt service on the water bond alone would likely cost between $725 million to $809 million a year after all the bonds have sold, he said.

Several unions expressed concern about the bond, including a teachers union that fears a dollar used to pay off debt is a dollar less for classroom education and other government services.

Willie Pelote Sr., a lobbyist with the California branch of the American Federation of State, County and Municipal Employees, said taxpayers shouldn't have to foot the bill for a bond that benefits farmers and Southern California cities.

"It's absolutely wrong and irresponsible," Pelote said.

Department of Water Resources director Lester Snow said the bond would stimulate the economy by encouraging local spending and jobs. Previous water bond dollars have led to an additional $2 to $3 in local construction spending, he said.

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Associated Press Writer Judy Lin contributed to this report.