[env-trinity] HUGE STORY! Department of Water Resources Faces $60 Million Shortfall - Group says taxpayers and ratepayers are on the hook for BDCP!

Dan Bacher danielbacher at fishsniffer.com
Wed Jul 23 09:12:31 PDT 2014



“Ultimately, DWR cannot go broke because it has a default source for  
funding: property taxes and water rates,” Carolee Krieger, Executive  
Director of the California Water Impact Network (C-WIN), pointed out.  
“They believe property taxes can be increased to meet the agency’s  
needs without a public vote.”


Department of Water Resources Faces $60 Million Shortfall

Group says taxpayers and ratepayers are on the hook for BDCP

by Dan Bacher

It appears that California is not only running out of water during the  
drought, but it is running out of money to move that water because of  
mismanagement, according to the California Water Impact Network (C-WIN).

The environmental group accused the California Department of Water  
Resources (DWR) of facing a $60 million shortfall after failing to  
collect $125 million owed by water contractors.

“Even as it continues to promote the ruinously expensive,  
environmentally destructive and ultimately unworkable Bay Delta  
Conservation Plan (BDCP), the California Department of Water Resources  
has failed to collect $125 million for ongoing operations owed by  
water contractors, and now faces a $60 million shortfall,” according  
to a C-WIN media release.

“The dearth of cash couldn’t come at a worse time for the beleaguered  
agency,” said Carolee Krieger, C-WIN Executive Director. “DWR now has  
only $50 million available, enough for about 60 days of operations,  
including meeting payroll.”

The group said this shortfall required the agency to withdraw a $500  
million bond proposal for BDCP planning costs because the measure’s  
draft disclosure form did not cite the financing deficit.

While this shortfall is occurring, Krieger criticized Governor Jerry  
Brown and “his proxy, DWR,” for continuing to promote the Bay Delta  
Conservation Plan to build two massive water conveyance tunnels  
beneath the Sacramento/San Joaquin River Delta at a final cost to  
ratepayers and taxpayers of $ 67 billion or more, inclusive of  
interest and cost overruns.

“Ultimately, DWR cannot go broke because it has a default source for  
funding: property taxes and water rates,” Krieger pointed out. “They  
believe property taxes can be increased to meet the agency’s needs  
without a public vote.”

The group said an increase in property taxes is planned for Santa  
Clara Valley Water District and the Metropolitan Water District (MWD)  
of Southern California, where officials claim the moves are exempt  
from Proposition 13 and Proposition 218 that restrict state government  
options on raising property assessments.

A memo from the Santa Clara Valley Water District, obtained through a  
Freedom of Information Act (FOIA) request, demonstrates that district  
officials believe they can raise property taxes to pay for the Twin  
Tunnels without a vote, according to Tom Stokely, Water Policy Analyst/ 
Media Contact for the California Water Impact Network. (Seehttp://www.c-win.org/webfm_send/444)

“Staff financial modeling assumes that BDCP costs associated with  
conveyance of State Water Project supply (approximately 65 million out  
of the $228 million ten year total) would be paid for by the State  
Water Project tax. Consequently, the State Water Project tax for  
average single family residence would increase from $36/yr to $60/yr  
by FY 2023-24,” the memo stated.

Stokely also cited a document submitted on March 19, 2014 by Goldman  
Sachs to the State Water Contractors' Project Authority that flat out  
says the bonds will be secured by "ad valorem tax" increases. For  
example, page 10 of the document, the "Goldman Sachs Request for  
Qualifications and Proposals for Underwriting Services," cites "The  
authority of DWR to adopt a new Indenture, finance and build BDCP  
projects and obligate contractors to levy ad valorem tax (if  

Nancy Vogel, Director of Public Affairs for the Department of Water  
Resources, confirmed the shortfall that DWR now faces, attributing it  
to “cumulative underbilling” of $125 million in 2013 and 2014, and  
cited a number of reasons why the underbilling occurred.

“DWR is obligated to provide the State Water Project contractors with  
a projection of the following year’s costs and bills by July 1,” said  
Vogel. “We became aware in June that actual SWP operational costs for  
2013 and 2014 have been higher than previously accounted for due to a  
number of factors, including unanticipated maintenance needs and  
compliance requirements, elimination of State government furloughs,  
salary increases for skilled project trades and crafts staff, new  
staff positions, and increases in overhead.”

“Because these cost increases were not completely accounted for in  
2013 and 2014 bills, a cumulative under-billing of about $125 million  
occurred over these two calendar years,” she explained. “The under  
collection amounts to 6 percent of the cumulative billing in those two  

She noted that the total State Water Project billing was $1.06 billion  
in 2013 and $1.03 billion in 2014 – and that they are working to  
reduce charges and operating expense in 2015 and to mitigate the  

“We are working to reduce the charges for 2015,” said Vogel. “For  
example, we have identified about two dozen projects at existing SWP  
facilities that were originally billed as operating expenses that  
could have been capitalized. And we are evaluating the deferral of  
certain non-critical SWP work for six to 18 months. We anticipate  
having a revised statement of charges for 2015 in the next few months  
that reflects a reduction.”

She concluded, “No payments have been or are threatened to be missed  
on any SWP obligations. No compromise of safety has occurred, nor has  
SWP operational capability been impaired. We are working to reduce SWP  
operating expenses for 2014 and 2015 and otherwise mitigate the under- 
collection, and we are confident that the SWP water contractors will  
be able to absorb the increase without undue hardship.”

Krieger called DWR’s response “one of the most defensive spins I’ve  
ever heard to cover up blatant incompetence.”

“If they go ahead with this twin tunnel boondoggle, they’re on the  
verge of running out of money,” said Krieger.

Krieger said DWR’s quandary comes at a critical time for the BDCP.  
"The administration has yet to make a strong ‘business case’ for the  
Twin Tunnels. The lavishly expensive project is being pushed at a time  
of growing public resistance to gigantic infrastructure projects that  
have no palpable benefit,” she stated.

“As the facts emerge about the BDCP, it is clear the plan will not  
increase the state’s net supply of water, the Delta will be placed at  
great risk, and the beneficiaries will be a handful of corporate farms  
in the western San Joaquin Valley and Tulare Basin, not southern  
California urban ratepayers,” Krieger emphasized.

She also said secure funding is becoming increasingly elusive. “A  
large water bond seems foredoomed to failure,” noted Krieger.  
“Property owners are thus the only viable alternative.”

‘The $125 million dollars that ratepayers and taxpayers will cough up  
to pay for DWR’s shortfall is just the beginning. It will take an  
additional $1.2 billion to complete the planning process for the Twin  
Tunnels,” Krieger noted.

She said that if the project moves forward, many California residents  
will see their properties taxes and water rates rise to support the  
$67 billion Twin Tunnels.

“Few state citizens understand their properties can be so encumbered  
without a vote or even token input. Unfortunately, they may be about  
to receive an object lesson in property taxation without  
representation,” she summed up.

The twin tunnels won't create one drop of new water, but they will  
lead to horrendous environmental degradation, according to tunnel  
critics. The construction of the tunnels will hasten the extinction of  
Central Valley Chinook salmon, Delta and longfin smelt and other fish  
species, as well as imperil the salmon and steelhead populations on  
the Trinity and Klamath rivers.

Tunnels Background: CWIN and other BDCP opponents say Brown's "legacy"  
project will destroy the largest estuary on the West Coast of the  
Americas that provides a nursery for many species. It will harm  
salmon, halibut, leopard shark, soupfin shark, sevengill shark,  
anchovy, sardine, herring, groundfish and Dungeness crab populations  
stretching from Southern Washington to Southern California.

Under the guise of habitat restoration, the BDCP will take vast tracts  
of Delta farmland, among the most fertile on the planet, out of  
production in order to irrigate toxic, drainage impaired land on the  
west side of the San Joaquin Valley and provide Delta water to  
Southern California developers and oil companies conducting fracking  
and steam injection operations in Kern County.

The tunnels are being constructed in tandem with the federal  
government's plan to raise Shasta Dam, a project that will flood many  
of the remaining sacred sites of the Winnemem Wintu Tribe that weren't  
inundated by Shasta Dam.

Rally against the tunnels: Restore the Delta, C-WIN and other groups  
opposed to the construction of the twin tunnels will rally on July 29  
at the West Steps of State Capitol, 10th St and Capitol Street,  
Sacramento at 11:30 AM. July 29 is the final day of the public comment  
period for the Bay Delta Conservation and the EIS/EIR. The rally will  
feature a variety of speakers and music.

To RSVP for the bus ride from Stockton or Oakley or if you have any  
questions relating to event, please contact Stina [at]  
restorethedelta.org or call (209) 475-9550. For more information, go  
to: http://restorethedelta.org/events 
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