The ability of wealthy interests to get what they want with respect to water extends all the way to using bonds to get California taxpayers to cover their projects, according to a two-part article by Lloyd Carter and Patrick Porgans.
In Part 1, Carter and Porgans show how
A few of California’s land rich billionaires – whose wealth, ultimately, depends on water – have had a significant role in using the “system” (tax-base revenue, credit rating, and natural resources) to promote and support issuances of tens of billions of dollars of General Obligation (GO) bonds to fund vested interest public works projects, particularly water and water-related grant programs which considerably enhance the value of their land. And the grant money, often used to build local water district infrastructure and help fund developers, is free. At the same time, they are having the public pay to increase their water supply, and are selling this water back to the public at astronomically high prices.
This strategy goes all the way back to Edmund G. “Pat” Brown, father of the present governor, who sold Californians on the $1.75 billion cost of the State Water Project (SWP) in 1960 with the argument that the project would “pay for itself.” It has never paid for itself; General Obligation bonds are still being used to pay it off.
In the Part 2, the authors show how under Governor Schwarzenegger, “voters were persuaded to approve more than $40 billion in GO bonds, which will cost $80 billion to repay. According to the state’s Department of Finance director, for every dollar borrowed with General Obligation bonds two dollars must be paid back for interest and principal.”
(This includes Propositions 84 and 1E, which were supposed to include funds to pay for levee improvements and flood control projects. Disbursement of those funds has been delayed, as noted above.)
“Over time,” note Carter and Porgans, “that $80 billion will be repaid from the state’s deficit-ridden General Fund, and could trigger even more cuts of General Fund programs in future state budgets. However, Team Billionaire players are not telling that to voters as they stump for next year’s water bond.”