Propositions 1E and 84: Funding the State's Water and Flood Control Infrastructure

Publication Date: September 2006

Publisher: Reason Foundation

Author(s): Skaidra Smith-Heisters; Adam B. Summers

Research Area: Economics; Environment

Type: Brief

Coverage: California

Abstract:

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. 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. 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.