Wednesday, June 30, 2010

Thoughts on delaying the water bond

1. Is anyone happier about this news than the folks at the Environmental Defense Fund and Natural Resource Defense Council? I suspect that having "no position" on a major piece of environmental policy was going to become increasingly uncomfortable as the election grew near. The PPIC may be happy for the same reason.

2. Although I am sure that political strategy is probably the primary cause of delay, I have to wonder if some people in the administration, if not the Governor himself, were having some buyer's remorse about an enormous General Obligation bond. It is good that the Governor is putting the budget as a higher priority, because it is. I have no doubt that the more time he (and legislators) spend thinking about solving this budget mess, the GO bond will look worse and worse - and not just for political reasons, but for real human welfare reasons.

3. Lois Wolk had a great line, the bond is "not going to get better with age. It's not fine wine - it's just pork." Although it's a great line and attacking pork is an excellent political tactic, I don't get all that upset about a little bit of pork in the policy making process. My problem with the bond is that it's fundamentally bad policy even if the "pork" is removed.

4. There isn't any guarantee that the legislature will muster a 2/3 vote to get the bond off the ballot. Thus, it is still important to articulate why the water bond is terrible economic and environmental policy:
  • The bond subsidizes water supply projects, and will result in artificially low water rates that encourage overuse and discourage conservation of a scarce natural resource.
  • The bond substantially increases California’s debt beyond its current record level, and puts further pressure on the nation’s lowest bond rating that increases the cost of all public borrowing.
  • Water bond annual debt service will exacerbate California’s long-run structural deficit, and will inevitably lead to higher taxes or cuts to general fund expenditures such as education.
  • The most valuable water supply projects will still be constructed if the bond fails. Financially feasible projects will be appropriately paid for by the water users who benefit.

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