California On Verge of Second Massive Boondoggle

Gov. Jerry Brown, Anne Gust“I’ll gladly pay you Tuesday for a hamburger today.” That was the catchphrase of J. Wellington Wimpy, simply known as just “Wimpy” on the “Popeye” cartoon show. For good reason, the proprietor of the diner rejected Wimpy’s request because of his reputation for not paying on Tuesday.

The inability to repay one’s debts can come with severe consequences, as anyone who has borrowed money from a loan shark can attest. California, despite record revenue coming into the state treasury, has a real problem with debt. High on that list, of course, is the state’s multi-billion-dollar unfunded liabilities for its pension obligations. But we have a problem with bond debt as well.

State-issued bonds can be a legitimate method to finance public projects that have a long useful life. But key to bond financing is a clear and predictable plan to repay those bonds.

California is now on the verge of adopting a second massive boondoggle plagued with financing issues. We are all familiar with the notorious high-speed rail project that was sold to voters as a safe and economical alternative to air travel between Northern and Southern California. A third of the money was to come from the private sector, a third from the feds and the rest from the sale of Proposition 1A bonds. All three of those revenue sources have disappeared in a puff of smoke and, instead, the HSR project is kept on life support through “cap-and-trade” revenue that didn’t even exist when voters approved the original bond.

The second mega-project destined to adopt the boondoggle label is Gov. Jerry Brown’s “twin tunnels” project, intended to transport water from the Sacramento River to the pumping stations at the south end of the delta. Bear in mind that the project will not provide a new water source but would be built ostensibly for environmental reasons.

However, like the high-speed rail project, the financing for the twin tunnels is illusory. Virtually all the potential major wholesale customers of water from the twin tunnels are highly skeptical of its viability and balk at paying for it. The one exception is the Metropolitan Water District in the greater L.A. area, which is considering the adoption of a plan to finance a scaled-down version of the project — meaning one tunnel instead of two.

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This article was originally published by the Orange County Register

Delta Tunnels Water Plan Builds in Wrong Spot

As reported by the San Jose Mercury News:

A half century after building the largest water-delivery system in America, California officials say they now realize they put their giant straws to capture Delta water in the wrong place.

Last week, state and federal water project operators opened the case to win permission for a fix — construction of three diversion points near Sacramento tied to twin underground tunnels to shunt Delta water for 25 million people throughout the state.

Not surprisingly, the hearing before the state water board rekindled old wounds and produced two sharply different portrayals of what the proposed $17 billion California WaterFix would do for the state’s deeply troubled plumbing system.

Critics in Northern California call the plan a water grab destined to harm the Delta environment, fish and farmers. The 700-square-mile mile region of rivers and sloughs will end up with dirtier, saltier water with more toxic algae, while very little will be done to improve overall water supplies, they say. …

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