California Senate Pushes $11 Billion Bond Measure Off November Ballot

California’s Senate voted to pull an $11 billion water-bond referendum off the November ballot, postponing it for two years, on concern that voters might reject the measure amid a $19 billion state budget deficit.

The Senate passed the postponement to 2012 by 27 to 7. At least two-thirds of the members had to vote in favor for passage. The state Assembly hasn’t voted on the measure. Governor Arnold Schwarzenegger, a Republican who championed putting the water bond on the ballot, in June asked lawmakers to delay it, saying he needed to focus on the budget.

Schwarzenegger and lawmakers last November ended months of haggling and agreed to put the referendum on the ballot. The bonds would finance an overhaul of the state’s aging public water system, which depends on aqueducts, reservoirs and pipelines, some almost 100 years old. The issue gained momentum after three years of drought and court-ordered supply limits withered the $6 billion-a-year agriculture industry.

“If we need more time to educate voters about this investment to get it passed, I’m all for that,” said Senator Dave Cogdill, a Republican from Modesto.

California, the biggest U.S. state by population, has operated without a budget since July 1 as Schwarzenegger and lawmakers remain at odds over how to eliminate the resurgent deficit. The state has about $68.8 billion of outstanding general-obligation bonds. Another $41.6 billion have been authorized, according to Treasurer Bill Lockyer’s website.

Use of Proceeds

Proceeds of the water bonds would be used to pay for building new dams, underground reservoirs and a canal to skirt the Sacramento-San Joaquin Delta, which supplies water to two- thirds of California’s more than 36 million residents. If passed by voters, the measure would limit approved debt sales to no more than half the amount authorized before 2015.

The referendum that passed in November was part of a broader package of bills to repair a network of levees, contingent on the bonds, mandate new water restrictions and provide supply and distribution oversight. Money from the bonds also would fund, among other things, recycling programs, restoration efforts and groundwater cleanup.

To contact the reporter on this story: Michael B. Marois in Sacramento, California, at Or mmarois@bloomberg.net

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