El Niño: Federal officials warn Californians to prepare for onslaught

As reported by the San Jose Mercury News:

With El Niño bearing down, federal emergency officials on Wednesday issued their strongest warnings yet, urging Californians to prepare for the predicted onslaught of storms by taking immediate steps that could save lives and property.

“It is critical that citizens take the risk seriously,” said Bob Fenton of the Federal Emergency Management Agency, who led an emergency response drill with regional agencies in Sacramento on Wednesday.

If this El Niño mimics the winters of 1982-83 and 1997-98, as expected, Bay Area counties face a trifecta of flood risk: seasonally high “king tides,” storm-induced surges near beaches, and rising rivers along flood plains, experts said. Already, sea levels are higher than normal, due to El Niño’s warm ocean temperatures. …

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Silicon Valley Moving Toward Alliance With Big Labor

Apple headquarters

Artists rendering of Apple’s new headquarters (public domain image)

Back in the late 1970’s something happened to the Santa Clara Valley. Increasingly it became referred to as the Silicon Valley, because the emerging silicon based semiconductor industry found its first home in plants nestled along the southern shores of the San Francisco Bay. Boasting what are among the finest universities in the United States – Stanford and Cal Berkeley – and the best weather in the world, high technology companies began choosing the San Francisco Bay Area in the 1940s and never looked back. Where once there were endless orchards of Prune, Apricot and Cherry trees, a sprawling ecosystem of high tech companies and venture capital firms now attracts talent from everywhere on earth. The Silicon Valley became, and remains, the epicenter of the most dramatic technological advances in history.

For the first 25 years or so, certainly through the end of the 20th century, the mantra in the Silicon Valley was “better, faster, cheaper.” Entrepreneurs were creating entire new industries, as digital technology enabled “mini-computers” to replace mainframes, and “work-stations” to replace mini’s, which were in-turn replaced by PCs and laptops, which are themselves being replaced for many applications by smart phones. But as we move to the “internet of things,” and as the Silicon Valley ecosystem matures from a jungle of creative destruction to a forest where a handful of gigantic firms wield unprecedented economic power, the “better, faster, cheaper” mantra is fading away.

Silicon Valley’s new breed of entrepreneurs have realized they don’t necessarily have to compete for customers who will voluntarily choose their products over those offered by their competitors. They have realized the government is a customer with very deep pockets, that more regulations will empower big companies and destroy the emergent ones, that environmentalist mandates will force consumers to buy their products as they forge OEM relationships with manufacturers of durable goods, that the security state is a voracious consumer of high technology, and that public bureaucrats can be sold billions of dollars worth of educational hardware and software.

The Silicon Valley’s new breed of “entrepreneurs” have realized something else, too. They’ve realized that as they evolve from competition to cronyism, big labor can be a powerful political ally.

A recent report in the San Francisco Chronicle entitled “Unions and tech: A most unlikely political alliance forms,” sums up the new reality. Author Joe Garofoli writes:

“Led by the 1.4 million-member Teamsters union, some in labor are ready to support friendly tech companies when the corporations face regulators in San Francisco, Sacramento and beyond. Support from the Teamsters will make labor-backed Democrats much more receptive to the needs of a tech company. ‘Labor supports their employers in a lot of cases,’ said Rome Aloise, Teamsters International vice president. ‘We fight with them, but we support them — because they’re the creator of jobs, which creates members for us. On the other hand, for the ones that don’t pay decent wages and benefits, we’re not going to be supportive of them.'”

This has little or nothing to do with wages and benefits. The firms where the Teamsters have already gotten a foothold, eBay, Zynga, Yahoo, Genentech, and Apple, can easily afford to offer their drivers pay and benefits that render union dues a superfluous drain on their paychecks. And if these well heeled high-tech corporations haven’t granted their drivers and other service employees stable hours and competitive pay, that is a shameful omission they ought to correct without union intervention. They should, they could and they would. But they don’t want to. Because what this is really about is acquiring political power.

A few examples should suffice to convey the nauseating threat heralded by this new reality:

When the crony “greens” want to force every toilet and faucet manufacturer to install sensors to micro-monitor indoor water consumption, when the crony “education reformers” want to force every home school parent to purchase laptops wired with approved educational software, when the crony security and law enforcement “innovators” want to sell more drones and remote sensors to look into our backyards and listen in on our living room conversations – the unions will be there, adding their political muscle, public and private, to make sure our elected representatives do the right thing.

If union activism in the Silicon Valley was merely about wages, benefits, work hours, and dignity, they would have a legitimate role to play. Ideally, in those situations, private sector unions earn their clout by acquiring and retaining members voluntarily in a right-to-work environment. But unions, unfortunately, care just as much about power and organizational aggrandizement as the big corporations they purport to fight. That’s why they thrive in the powerful places where they are needed the least, in monopolistic entities with captive markets who can afford them – government and giant corporations – entities that realize union alliances will help them intimidate the political objectors, appease the union controlled pension funds, and obliterate the commercial competition.

The dawning unionization of the Silicon Valley is an ominous development. It must be challenged. The people who run Silicon Valley should consider what will happen when there’s an economic downturn, and labor contracts curtail their options to restructure. They should ask how their new allies will view utilization of self-driving cars and countless other labor saving innovations. They are putting the culture of “better, faster, cheaper,” at mortal risk, a culture that has enabled unprecedented global prosperity, and has the potential to offer wondrous new achievements for decades to come.

*   *   *

Ed Ring is the executive director of the California Policy Center.

San Jose joins forces with seven other cities to raise minimum wage

As reported by the San Jose Mercury News:

SAN JOSE — Top officials from seven Bay Area cities will join Mayor Sam Liccardo on Thursday to announce an unprecedented joint venture to raise the minimum wage across the valley in a regional effort to close the growing gap between the rich and the poor in Silicon Valley.

The official announcement is expected in a news conference Thursday. The mayors of Campbell, Palo Alto, Cupertino, Milpitas, Morgan Hill, Monte Sereno and a representative from the city of Santa Clara are expected to announce their support for the initiative.

It’s the first time the region has seen such a large collective effort by multiple cities to raise wages. …

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California: “Land of Opportunity” or “Land of Poverty”?

For decades, California’s housing costs have been racing ahead of incomes, as counties and local governments have imposed restrictive land-use regulations that drove up the price of land and dwellings. This has been documented by both Dartmouth economist William A Fischel and the state Legislative Analyst’s Office.

Middle income households have been forced to accept lower standards of living while less fortunate have been driven into poverty by the high cost of housing. Housing costs have risen in some markets compared to others that the federal government now publishes alternative poverty estimates (the Supplemental Poverty Measure), because the official poverty measure used for decades does not capture the resulting differentials. The latest figures, for 2013, show California’s housing cost adjusted poverty rate to be 23.4 percent, nearly half again as high as the national average of 15.9 percent.

Back in the years when the nation had a “California Dream,” it would have been inconceivable for things to have gotten so bad — particularly amidst what is widely hailed as a spectacular recovery. The 2013 data shows California to have the worst housing cost adjusted poverty rate among the 50 states and the District of Columbia. But it gets worse. California’s poverty rate is now more than 50 percent higher than Mississippi, which long has set the standard for extreme poverty in the United States (Figure 1).

cox1

The size of the geographic samples used to estimate the housing adjusted poverty rates are not sufficient for the Supplemental Poverty Measure to produce local, county level or metropolitan area estimates. However, a new similar measure makes that possible.

The California Poverty Measure                           

The Public Policy Institute of California and the Stanford Center on Poverty and Inequality have collaborated to establish the “California Poverty Measure,” which is similar to the Supplemental Poverty Measure adjusted for housing costs.

The press release announcing release of the first edition (for 2011) said that: “California, often thought of as the land of plenty” in the words Center on Poverty and Inequality director Professor David Grusky, is “in fact the land of poverty.”

The latest California Poverty Measure estimate, for 2012, shows a statewide poverty rate of 21.8 percent, somewhat below the Supplemental Poverty Measure and well above the Official Poverty Measure that does not adjust for housing costs (16.5 percent).

The California Poverty Measure also provides data for most of California’s 58 counties, with some smaller counties combined due to statistical limitations. This makes it possible to estimate the California Poverty Measure for metropolitan areas, using American Community Survey data.

Metropolitan Area Estimates

By far the worst metropolitan area poverty rate was in Los Angeles, at 25.3 percent. The Los Angeles County poverty rate was the highest in the state at 26.1 percent, well above that of Orange County (22.4 percent), which constitutes the balance of the Los Angeles metropolitan area. However, the Orange County rate was higher than that of any other metropolitan area or region in the state (Figure 2). San Diego’s poverty rate was 21.7 percent. Perhaps surprisingly, Riverside-San Bernardcox2ino (the Inland Empire), which is generally perceived to have greater poverty, but with lower housing costs, had a rate of 20.9 percent. The two counties, Riverside and San Bernardino had lower poverty rates than all Southern California counties except for Ventura (Oxnard) and Imperial.

 

The San Francisco metropolitan area had a poverty rate of 19.4 percent, more than one-fifth below that of Los Angeles. San Jose has a somewhat lower poverty rated 18.3 percent (Note 1). The metropolitan areas making constituting the exurbs of the San Francisco Bay Area had a poverty rate of 18.7 percent. This includes Santa Cruz, Santa Rosa, Stockton and Vallejo. Sacramento had the lowest poverty rate of any major metropolitan area, at 18.2 percent.

The San Joaquin Valley, stretching from Bakersfield through Fresno to Modesto (Stockton is excluded because it is now a San Francisco Bay Area exurb) had a poverty rate of 21.3 percent, slightly below the state wide average of 21.8 percent. The balance of the state, not included in the metropolitan areas and regions described above had a poverty rate of 21.2 percent.

County Poverty Rates

As was noted above, Los Angeles County had the highest 2012 poverty rate in the state (Note 2), according to the California Poverty Measure (26.1 percent). Tulare County, in the San Joaquin Valley had the second-highest rate at 25.2 percent. Somewhat surprisingly, San Francisco County with its reputation for high income had the third worst poverty rate in the state at 23.4 percent. This is driven, at least in part, by San Francisco’s extraordinarily high median house price to household income ratio (median multiple). In this grisly statistic, it trails only Hong Kong, Vancouver and Sydney in the latest Demographia International Housing Affordability Survey. Wealthy Santa Barbara County has the fourth worst poverty rate in the state, at 23.8 percent. The fifth highest poverty rate is in Stanislaus County, in the San Joaquin Valley (county seat Modesto), which is already receiving housing refugees from the San Francisco Bay Area, unable to pay the high prices (Figure 3).

cox3

The two lowest poverty rates were in suburban Sacramento counties (Note 2). Placer County’s rate was 13.2 percent and El Dorado County’s rate was 13.3 percent. Another surprise is Imperial County, which borders Mexico and has generally lower income. Nonetheless, Imperial County has the third lowest poverty rate at 13.4 percent. Shasta County (county seat Redding), located at the north end of the Sacramento Valley is ranked fourth at 14.8 percent. Two counties are tied for the fifth lowest poverty rate (16.0 percent), Marin County in suburban San Francisco and Napa County, in the exurban San Francisco Bay Area (Figure 4).

Weak Labor Market and Notoriously Expensive Housing

The original Stanford Center on Poverty and Inequality press release cited California’s dismal poverty rate as resulting from “a weak labor market and California’s notoriously expensive housing.” These are problems that can be moderated starting at the top, with the Governor and legislature. The notoriously expensive housing could be addressed by loosening regulations that allow more supply to be built at lower cost. True, the new supply would not be built in Santa Monica or Palo Alto. But additional, lower cost housing on the periphery, whether in Riverside County, the High Desert exurbs of Los Angeles and San Bernardino Counties, the San Francisco Bay Area exurbs or the San Joaquin Valley could begin to remedy tcox4he situation.

The improvement in housing affordability could help to strengthen the weak job market, by attracting both new business investment and households moving from other states.

Regrettably, Sacramento does not seem to be paying attention. Liberalizing land use regulations is not only absent from the public agenda, but restrictions are being strengthened (especially under the requirements of Senate Bill 375). In this environment, metropolitan areas like Los Angeles, San Francisco, San Jose and San Diego could become even more grotesquely unaffordable, and the already high price to income ratios in the Inland Empire and San Joaquin Valley could worsen. All of this could lead to slower economic growth and to even greater poverty, as more lower-middle-income households fall into poverty.

Note 1: San Benito County is excluded from the San Jose metropolitan area data. The California Poverty Measure does not report a separate poverty rate for San Benito County.

Note 2: Among the counties for which specific poverty rates are provided.

isiting professor, Conservatoire National des Arts et Metiers, Paris

Cross-posted at New Geography.

CA Cities Engage in Minimum Wage Arms Race

Minimum WageForging ahead with plans to take minimum wages to new highs, California’s San Francisco Bay Area has touched off tit-for-tat increases, deepening fears that the region’s high cost of living has become a business-killer.

A growing dilemma

“Berkeley’s City Council approved a hike in June 2014 that will lift the minimum wage to $12.53 by next year,” the Los Angeles Times noted. “In November, voters in San Francisco and Oakland overwhelmingly approved increases, with San Francisco on track to hit $15 before Seattle does. Oakland went up to $12.25 this year.” Then, last month, nearby Emeryville surpassed Berkeley and Oakland with a $14.44 wage; “Berkeley sent its labor commission back to the drawing board. The council next month is expected to take up a proposal that would add paid sick days, extend wage hikes until they hit $19 in 2020 and then add cost-of-living increases in perpetuity.”

The upshot for businesses has been mixed at best: although some employers have crafted clever strategies for adding more value for customers, others have worried the path is unsustainable. “The necessity of paying people a living wage in the Bay Area is clear, so it’s hard to argue against it, and it’s something I’m really proud to be able to try doing,” one pizzeria owner told the Times. “At the same time, I’m terrified of going out of business after 18 years.”

As big wage increases have been passed into law across California, business interests haven’t always been the only ones to pump the brakes. In Los Angeles, where the city minimum is a $15 wage, critics of the increases howled when labor advocates wound up asking for a waiver on the eve of its passage. “The exemption was left out of the law’s final version after criticism from the local chamber of commerce and business groups,” noted the Wall Street Journal. “But similar exemptions are included in at least three other Los Angeles laws, including a minimum wage for hotel workers approved last year.”

Recalibrating business

Although California has led the country in grappling with stagnant wages and rising costs of living, the turn toward higher minimum wages has touched off broad debates across the country. Hospitality businesses such as the hotel industry have faced a particular challenge as wages have climbed upward. For years, bar and restaurant groups have lobbied policymakers to think twice, warning that dramatically hiking wages would undermine their business models, which politicians and analysts have often built into their assumptions about jobs and economic health.

“The problem with the minimum-wage offensive is that it throws the accounting of the restaurant industry totally upside down,” as Harold Miller, a restaurant consultant currently serving as vice president for franchise development at Persona Pizzeria, told the Chicago Tribune.

In tech-forward areas with high costs of living and high rents, the threat to the hospitality business model has accelerated the shift toward increased automation and decreased employment rolls.

Stalling statewide

Some California employers have set out to recalibrate their work forces, hoping that a shift to more temporary workers could blunt the economic impact of wage increases. But the political impact of such a shift has also become a problem. Faced with criticism over differential treatment between contract and career employees, the University of California system offered a $15 “minimum wage” set to apply to thousands of contract workers on a private, not public, payroll.

UC unions were still left cold. “Private contract firms will still make as much as $10 an hour or more in profit off the labor of workers being denied the same wages as UC workers doing the same jobs,” wrote the president of the system’s largest employee union in the San Francisco Chronicle. “UC could choose to send a different message by supporting SB376,” she argued, “legislation that would guarantee the employees of UC contractors equal pay as career employees doing the same work.” That bill was authored this spring by state Sen. Ricardo Lara, D-Bell Gardens.

But the latest Golden State bellwether, a bill creating a statewide $13 wage introduced by state Sen. Mark Leno, D-San Francisco, could signal that the minimum wage wave may be cresting. As the Sacramento Business Journal observed, Leno’s effort “moved farther than it did last year, but the bill’s fate is far from assured.” Although Gov. Jerry Brown has “proposed to tackle income inequality this year through an earned income tax credit,” he has declined to comment on the push for a $13 wage — letting a skeptical Department of Finance speak for him.

CARTOON: CA Bay Bridge Safety

CalTrans cartoon

Wolverton, Cagle Cartoons

Seller’s market: Bay Area real estate deal-making accelerates

As reported by the San Jose Mercury News:

How fast is fast? For Bay Area real estate, the speed of deal-making is accelerating this spring as homes spend less time on the market and cash deals close at bullet-train speed.

Just ask Steve Pierce, whose house in Redwood City attracted 17 offers last month and raced so quickly through the escrow process that he and his wife, Sheila, requested a delay so they could spend Easter dinner with the family: “It was like boom, boom, boom,” he said. “The buyers couldn’t wait to get in. All cash.”

Or ask Mei Zhang, who moved a year ago from Shanghai — another hot market — to the East Bay. In February, with all their loan pre-approval documents in order, she and her husband, Yudang, leapt on a house in Orinda, pushing it to contract in seven days. “We really liked it at first glance,” said Mei Zhang, “and so we made an offer really quick” — $41,000 over the $1,469,000 asking price. …

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Hillary Clinton buoyed by Bay Area donors, tech talent and goodwill

As reported by the San Jose Mercury News:

Not many candidates can draw more than 10,000 people into the Bay Area’s streets for a campaign rally, but two did so eight years ago — one of them is now president, and the other is running to succeed him.

As Hillary Clinton officially begins her quest for the White House by courting voters this week in Iowa, her campaign will feel a westward tug toward the money, technology and brainpower in the Bay Area. For months, Clinton supporters have been holding fundraisers and scouting Silicon Valley talent.

Days before Sunday’s announcement that she was running for president, Clinton hired Stephanie Hannon, Google’s director of product management for civic innovation and social impact, as her campaign’s chief technology officer — probably the first of many local hires, if the 2008 and 2012 Obama campaigns are any measure. …

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An Engineered Drought

California governor Jerry Brown had little choice but to issue a belated, state-wide mandate to reduce water usage by 25 percent. How such restrictions will affect Californians remains to be seen, given the Golden State’s wide diversity in geography, climate, water supply and demography.

We do know two things. First, Brown and other Democratic leaders will never concede that their own opposition in the 1970s (when California had about half its present population) to the completion of state and federal water projects, along with their more recent allowance of massive water diversions for fish and river enhancement, left no margin for error in a state now home to 40 million people. Second, the mandated restrictions will bring home another truth as lawns die, pools empty, and boutique gardens shrivel in the coastal corridor from La Jolla to Berkeley: the very idea of a 20-million-person corridor along the narrow, scenic Pacific Ocean and adjoining foothills is just as unnatural as “big” agriculture’s Westside farming. The weather, climate, lifestyle, views, and culture of coastal living may all be spectacular, but the arid Los Angeles and San Francisco Bay-area megalopolises must rely on massive water transfers from the Sierra Nevada, Northern California, or out-of-state sources to support their unnatural ecosystems.

Now that no more reservoir water remains to divert to the Pacific Ocean, the exasperated Left is damning “corporate” agriculture (“Big Ag”) for “wasting” water on things like hundreds of thousands of acres of almonds and non-wine grapes. But the truth is that corporate giants like “Big Apple,” “Big Google,” and “Big Facebook” assume that their multimillion-person landscapes sit atop an aquifer. They don’t—at least, not one large enough to service their growing populations. Our California ancestors understood this; they saw, after the 1906 earthquake, that the dry hills of San Francisco and the adjoining peninsula could never rebuild without grabbing all the water possible from the distant Hetch Hetchy watershed. I have never met a Bay Area environmentalist or Silicon Valley grandee who didn’t drink or shower with water imported from a far distant water project.

The Bay Area remains almost completely reliant on ancient Hetch Hetchy water supplies from the distant Sierra Nevada, given the inability of groundwater pumping to service the Bay Area’s huge industrial and consumer demand for water. But after four years of drought, even Hetch Hetchy’s huge Sierra supplies have only about a year left, at best. Again, the California paradox: those who did the most to cancel water projects and divert reservoir water to pursue their reactionary nineteenth-century dreams of a scenic, depopulated, and fish-friendly environment enjoy lifestyles predicated entirely on the fragile early twentieth-century water projects of the sort they now condemn.

It’s now popular to deride California agriculture in cost-benefit terms, given that its share of state GNP (anywhere from 4 percent to 8 percent, depending on how one counts related industries) supposedly does not justify its huge allotted consumption of state water (anywhere from 65 percent to 80 percent). But note the irony: California supplies a staggering percentage of the nation’s fresh vegetables and fruits; it’s among the most efficient producers in the world of beef, dairy, and staple crops. One can purchase an iPhone 6 or a neat new Apple watch, but he still must eat old-fashioned, pre-tech food. There are no calories in Facebook, and even Google can’t supply protein. On the other hand, I can live without an iPad. Who is to say which industry is essential and which isn’t? Insulin and antibiotic production constitute a micro-percentage of GDP, but is their water usage less important than Twitter’s? Is a biologist who studies bait-fish populations in the Sacramento-San Joaquin Delta really more important than a master tractor driver whose skill gives broccoli to thousands?

We’re suffering the ramifications of the “small is beautiful,” “spaceship earth” ideology of our cocooned elites. Californians have adopted the ancient peasant mentality of a limited good, in which various interests must fight it out for the always scarce scraps. Long ago we jettisoned the can-do visions of our agrarian forebears, who knew California far better than we do and trusted nature far less. Now, like good peasants, we are at one another’s throats for the last drops of a finite supply.

Drought Resulting in Water Rate Hikes Across CA

Faced with a drought that won’t quit, officials have taken new steps to add to Californians’ discomfort — a fresh round of rate hikes. Regulators in the San Francisco Bay Area have begun the march toward charging significantly more for water, pleading that limited rainfall this spring has left them with no choice.

As CBS San Francisco observed, the plans taking shape within three of the state’s largest water agencies reflect a cost crunch impacting the Santa Clara Valley Water District and the San Francisco and East Bay Municipal Utilities District.

The agencies have found themselves between a rock and a hard place this year, reluctant to put the squeeze on already restive residents, but strapped with mounting costs set to increase even further.

As Beau Goldie, CEO of the Santa Clara Valley Water District, bluntly told the San Jose Mercury News, “We don’t want to raise water rates.” But Goldie and other district chiefs have targeted hikes of 30 percent or more because water conservation has slashed sales. As the Mercury News reported:

“Because they have sold less water, the agencies have lost tens millions of dollars in revenues. They also have had to spend more money on drought-related expenses such as buying extra water from outside the Bay Area to help meet demand, expanding public relations budgets to ask the public to use less water amid shortages, and offering rebates to homeowners who replace lawns with drought-tolerant plants or old, leaky appliances with water-efficient ones.”

Groundwater bank

Santa Clara Valley has been reduced to shelling out millions of dollars to pump in water from a so-called “groundwater bank” located in Kern County. EBMUD, falling back on the same strategy, has put its hopes in using its share of limited drought relief funds to bankroll imports of its own, spokeswoman Abby Figueroa told KTVU Fox Channel 2 News. “We will have to continue asking our customers to cut back their usage,” she added. “How much is still being determined.”

According to KTVU, EBMUD saw customers conserve last year at a rate 13 percent higher than two years ago. But this year, residents seemed close to maxing out their ability to cut back. So far, the savings rate has dropped to just 4 percent.

Still, the size of the dropoff had EMMUD contemplating an increase in its current voluntary conservation rate to 15 percent, ABC 7 reported. Voluntary conservation could even be replaced with mandatory conservation.

Spreading confusion

At the same time as the utilities have sorted through unattractive options, water management outside the San Francisco Bay has also been hit with confusion and frustration. Because of the complexity created by the Golden State’s separate state and federal water programs, Kern County will receive more water than communities and farms on the Eastern and Western sides of the San Joaquin Valley.

As the Fresno Bee reported, while the State Water Project has supplied Kern, the federal government’s Central Valley Project has kept water flowing to those in the East and West of the Valley — that is, when there is water.

Though similar in size and infrastructure, the federal and state projects’ differences have created “a complex and uncomfortable flashpoint in the Valley,” according to the Bee. It added:

“For one thing, the smaller state project has a somewhat lighter burden, because it does not have to provide more than 300,000 acre-feet of water for wildlife refuges as the CVP does.

“The subtle difference is a big deal in a drought, when there is so little water to go around. Other below-the-radar differences, such as water-delivery pecking order dating to the 1800s, are magnified in a drought. Those with historic rights get their water first.”

With challenges radiating outward from San Francisco Bay into the Central Valley, utilities chiefs along the Central Coast and in Southern California soon could have reason to fret.

Originally published by CalWatchdog.com