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Legislative Leaders Announce a Deal on Safe Affordable Drinking Water Issue

Deal will include $130 million annually for the next 10 years in cap-and-trade funding, avoiding a tax on water

June 11, 2019
After a marathon joint budget conference committee hearing on Sunday, Legislative leaders announced a deal has been reached on providing safe and affordable drinking water in the finalized proposed state budget, without a “water tax.”
 
This deal, pending final budget approval later this week, would appropriate a total of $130 million annually to a safe drinking water fund, established by a forthcoming budget trailer bill.
 
Deal Details
 
Legislative leaders and Gov. Gavin Newsom have announced that starting next year, funding from the Greenhouse Gas Emissions Reduction Fund (GGRF) would be allocated for water system improvements in California, specifically in disadvantaged communities whose residents are being exposed to unsafe drinking water in their homes and schools. The proposed budget deal would include in the first year, $100 million from the GGRF, $30 million from the General Fund, and $3.4 million from the General Fund for the State Water Resources Control Board for administrative costs and a fund framework through 2030.
 
After the first year, a forthcoming trailer bill will provide further details that include a five percent continuous appropriation of total GGRF funds to fund the safe drinking water fund, up to $130 million a year, combined with a General Fund backstop, should the GGRF fund decline.
 
The League supports this deal as a better option, rather than placing a tax on water, to provide safe and affordable drinking water with a secure funding source for the near future.
 
Overview of the “Water Tax” and Safe Drinking Water Fund
 
Several proposals have been introduced this year that seek to address providing safe and affordable drinking water to low income and disadvantaged Californians.  Earlier this year, the Governor included in both his January and May budget proposals a tax on water to fund a clean drinking water fund and associated programs. In addition to the Governor’s budget proposal, the Assembly and Senate introduced their own legislative safe and affordable drinking water proposals.
 
The Assembly introduced two bills, AB 217 (Garcia, E) and AB 134 (Bloom) that seek to create a safe drinking water fund funded through placing a tax on water. AB 217 raised the funding through placing taxes of agriculture, livestock, fertilizers, and local water systems and AB 134 created and implemented a safe drinking water fund.
 
The Senate also introduced two bills, SB 669 (Caballero) and SB 200 (Monning) to address providing safe and affordable drinking water. SB 669 creates a water trust fund that was funded through General Fund appropriations, and SB 200 creates and implements a safe drinking water fund, absent a funding source. The League supported SB 669, but the bill was ultimately held in the Senate Appropriations Committee in May and did not move forward. After SB 669 was held, the Senate Budget Subcommittee #2 then proposed a $150 million dollar General Fund appropriation combined with Senator Monning’s SB 200 to fund and implement a safe drinking water fund as an alternative proposal to the Governor and Assembly proposals.
 
However, with the announcement of the recent budget deal between the two Houses and the Governor, all of legislative safe drinking water proposals may not be necessary and could not move forward.
 
Team Effort for Alternative to a Water Tax
 
The League has been working with a number of other stakeholders, such as the Association of California Water Agencies (ACWA) and the California Municipal Utilities Association (CMUA), to oppose unless amended water tax proposals and advocate for an alternative source of funding to fund safe and affordable drinking water programs. The League appreciates the support it has received from AWCA and others on this issue.
 
Next Steps
 
The Legislature and Governor need to formally adopt the proposed budget bill that includes the $130 million GGRF funding allocation and a forthcoming trailer bill that will create and implement the safe drinking water fund. The final proposed budget is now in print and can be voted on as soon as Thursday morning.


 
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