Aug. 14 (Bloomberg) -- California Governor Jerry Brown agreed to boost water spending plans to $7.5 billion, a compromise 25 percent higher than he had said the state could afford, as drought tightened its grip on cities and farms.
Brown signed the bill he brokered with state lawmakers to place a measure on the November ballot asking voter permission to issue $7.1 billion in new bonds, with $445 million to come from previous debt sales.
“Water is the lifeblood of any civilization and for California it’s the precondition of healthy rivers, valleys, farms and a strong economy,” Brown said in a statement.
Three years of below-normal precipitation have brought extreme drought to 80 percent of California, and wildfires have consumed tens of thousands of acres, according to federal data. Most major reservoirs are at less than half of capacity, state records show. Farmers have idled fields, and urban residents face restrictions on lawn watering and car washing. Many restaurants no longer serve water to patrons unless they request it.
“The need is so great in California,” Senate President Darrell Steinberg, a Sacramento Democrat, said before his chamber gave unanimous approval to the water plan late yesterday. “We have to pass this bond in November, otherwise the work here is for naught.”
The agreement replaces an $11.1 billion package package developed in 2009 by lawmakers and then-Governor Arnold Schwarzenegger that Brown called “pork-laden” and said would add $750 million a year to the state’s $8 billion annual debt service.
“This bond will cost nearly $4 billion less than what the legislature agreed to in 2009, while providing nearly $1 billion more for water storage than what the governor proposed,” Senate Republican Leader Bob Huff, a Republican from Diamond Bar, said in a statement.
Brown, a 76-year-old Democrat, agreed to devote $2.7 billion to storage such as dams and reservoirs, after initially proposing $2 billion. Republicans had wanted $3 billion.
“This bond does a great deal of good for everyone,” Senator Lois Wolk, a Democrat from Davis. “We have all compromised.”
The plan also earmarks $900 million for groundwater sustainability, $725 million for water recycling and $395 million for flood protection.
The California Farm Bureau, the state Chamber of Commerce and the California Alliance for Jobs urged legislators to put a water bond to a vote.
Brown had previously urged legislators to limit water spending to $6 billion, saying it was what the state could afford.
California’s borrowing costs for general-obligation bonds have dropped this year as a recovering economy lifts revenue above Brown’s projections. Taxes and fees collected in July came in 4.5 percent above expectations, Controller John Chiang said this week.
The extra yield that buyers demand to own 10-year California debt rather than top-rated securities narrowed to 0.22 percentage point this month, the smallest since at least the start of 2013, according to data compiled by Bloomberg.
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