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IN THIS ISSUE – “It takes extreme political capital to get something like that done…it has to be governor-driven.”
Bob Hertzberg, former Democrat state Senate majority leader and Assembly speaker, on reforming the State’s tax revenue structure
- Legislators Return to the Capitol – 5 Daunting Challenges in 2024
- Budget Deficit Underscores Long-Time Need to Change the State’s Volatile Tax Revenue Structure
- Can Newsom Mount a POTUS Campaign?
- State Air Board Pushes US EPA to OK Sweeping Emission Rules Before a Possible 2nd Trump Presidency
- Legislative Analyst Lambasts State Water Board Urban Conservation Rules
- Low Snowpack Clouds Early Water Outlook
- Delta Tunnels Project Advances
- Groundwater + Food = A Costly, Complicated Equation;Solution May Be in California’s Pajaro Valley
Capital News & Notes (CN&N) curates California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique client service.
FOR THE WEEK ENDING JAN. 5, 2024
Legislators Return to the Capitol – 5 Daunting Challenges in 2024
Sacramento Bee
California lawmakers face all sorts of political brushfires as they return to work — the budget shortfall is huge, crime is on the minds of constituents, and voters start casting ballots in a month.
Assembly members and senators come back to a $68 billion budget gap while trying to look as attractive as possible ahead of the March 5 primary election. Voters will start receiving their mail-in ballots in about a month.
Democrats now have huge majorities in the Legislature. But they’re going to have to endure Republican attacks around crime, drugs and cost of living issues. And Gov. Gavin Newsom’s priorities, and what to many seems a shifting political philosophy, will undergird everything.
Here are five challenges that will affect lawmakers arriving at the Capitol for another year:
AN ENORMOUS BUDGET GAP. The budget will be top of mind for lawmakers, who will be involved in fixing a growing budget problem caused by a late-2023 tax revenue shortfall.
Assembly and Senate budget leaders in December told The Sacramento Bee “everything is on the table” to address the lack of funds, including spending cuts and dipping into reserves.
Newsom will unveil his budget proposal by Jan. 10. After that, his administration will begin negotiating a financial plan with Assembly Speaker Robert Rivas, D-Hollister, and Senate President Pro Tem Toni Atkins, D-San Diego.
In addition to developing budget solutions, lawmakers must tailor their bills and political expectations to fit a leaner year. Republicans have already been pushing belt-tightening, urging Democrats to pull back on priorities such as expanding Medi-Cal and providing reparations for Black descendants of slaves. But Democrats are hoping to avoid cutting funds for social services and schools.
ASSEMBLY AND SENATE LEADERSHIP SHAKEUPS. Both legislative bodies will have new leaders for most of the year. That brings a shift in priorities and committee assignments, which could spark fresh policy-making approaches.
Rivas took charge of the Assembly on June 30, after a bitter and extended leadership battle with outgoing Speaker Anthony Rendon, D-Lakewood. But he began his tenure late in the legislative year, after budget negotiations and before a month-long summer recess.
January marks the true start of his speakership, although he began making significant leadership and committee chair changes in November. Perhaps most significantly, the powerful Assembly Appropriations and Budget committees will get new chairs for the first time in years.
In the Senate, Sen. Mike McGuire, D-Healdsburg, will succeed termed-out Pro Tem Atkins on Feb. 5 after a quick and amicable leadership transition. McGuire will have more involvement in the budget and legislative priority-setting than Rivas initially did, but it remains to be seen whether he plans to make major Senate-side committee changes.
GOP PRESSURE ON CRIME AND DRUGS. Republicans have little power in a Legislature dominated by a Democratic supermajority, but GOP lawmakers managed to exert some influence over crime and drug policy in 2023.
In the spring, former Assembly Public Safety Committee Chair Reggie Jones-Sawyer, D-Los Angeles, ended up holding a special hearing for fentanyl-related legislation after Republicans publicly pressured him.
Bills to increase penalties for drug-related crimes did not get out of the committee, but the hearing and appearances from families who had lost loved ones to fentanyl overdoses were notable.
This year, Newsom already announced he plans to push legislation to curb xylazine trafficking and use, an indication he sees the importance of being proactive on the issue. Xylazine is a strong sedative often mixed with fentanyl.
The success of Grove’s child sex trafficking bill also stirred controversy in the Capitol, and it could spur similar bills adding new three-strikes crimes.
Rivas’ creation of an Assembly Select Committee on Retail Theft further shows Democrats’ desire to address crime before Republicans use it to hit them.
NEWSOM’S SHIFTING POLITICS AND PRIORITIES. Newsom in 2023 made it crystal-clear that he intends to seek a place on the national political stage, which appeared to affect his political decision-making and will continue to do so moving forward.
He created a political action committee to support Democratic causes, took a tour of Republican states and debated Florida Gov. Ron DeSantis on national television. Newsom continues to deny he is seeking the presidency in 2024, but his actions suggest a future bid.
This may have motivated the governor to take a more cautious approach when it came to bill-signings. In September, he vetoed a bill that would have required judges to take parents’ acceptance of their children’s gender identities into consideration when negotiating custody arrangements.
He also declined to sign bills that would have given unemployment pay to striking workers and workplace protections to domestic employees. Newsom likes to remind reporters he leaves office in about three years. This, and his future ambitions, will inevitably be on his mind as he enters 2024.
2024 ELECTION. Many lawmakers, especially Assembly members, will be on the 2024 ballot. That means every vote and public statement will be subject to a special amount of scrutiny as opponents hunt for campaign ad material. Even 2023 decisions could pop up as voters begin to return ballots.
Election concerns likely factored into Democrats’ decision to back a bill from Sen. Shannon Grove, R-Bakersfield, adding child sex trafficking to the state’s “three strikes” list.
The controversial policy increases prison sentences for those repeatedly convicted of felonies. The need to attract Republicans in purple districts likely motivated two Central Valley Democrats, Marie Alvarado-Gil of Jackson and Jasmeet Bains of Delano, to vote against a Newsom plan last year to hold oil companies accountable for high gasoline prices.
A handful of longtime lawmakers are also in their last year in the Legislature as they term out or pursue local or national offices, leaving their seats open.
https://www.sacbee.com/news/politics-government/capitol-alert/article283753203.html#storylink=cpy
Budget Deficit Underscores Long-Time Need to Change the State’s Volatile Tax Revenue Structure
Politico
California was on an economic sugar high during the Covid-19 pandemic thanks to a booming tech industry. Now, it’s dealing with the crash.
The state swung from a nearly $100 billion budget surplus in 2022 to a record $68 billion shortfall projected for next year — a gap larger than most states spend in 12 months.
Such a dramatic reversal of fortune — produced by a tax structure dependent on the wealthiest residents and a boom-and-bust tech industry — threatens the policy goals of Gov. Gavin Newsom and a Democratic-dominated Legislature. It could also damage their political futures in an election year when the state’s financial viability is under attack from national Republican leaders.
“It creates just complete chaos for the governor, for the Legislature, and also it hurts the California brand,” said Bob Hertzberg, a former Democratic state senator and Assembly speaker from Los Angeles.
California’s budget is more volatile than all but a handful of states like Alaska and North Dakota, which rely overwhelmingly on the energy industry. Its shortfall is unmatched even by other blue states with progressive tax systems, and it comes against the backdrop of relatively low unemployment and slowed inflation nationwide.
Newsom and his allies in the Legislature say it’s not time to panic. They insist the deficit can be addressed at least in part from the state’s reserves and some belt-tightening.
But the revenue swings are causing real political problems for Democrats in California as they pursue such long-term and costly projects as converting the state’s power grid to renewable energy, providing health care to undocumented immigrants and building the nation’s first high-speed rail system.
“This issue of tax volatility has been an extraordinary problem in California for many years,” Hertzberg said.
One-fifth of California’s GDP comes from tech, and half the state’s income tax revenue is derived from the top 1 percent of earners. As a result, tougher conditions in Silicon Valley have implications for California’s ability to fund its schools, build badly needed affordable housing and pull off its ambitious renewable energy transition.
“You really have the state’s largest source of tax revenue also being one of the most volatile,” said Justin Theal, an officer with the Pew Charitable Trusts whose work focuses on government spending.
Last year’s weak stock market returns and dearth of initial public offerings are major factors in next year’s projected shortfall. IPOs, which inundated the state with tax revenue during the pandemic, have slowed to a trickle.
A delayed IRS tax-filing deadline combined with the see-sawing investment market made it almost impossible for analysts to predict before early December how much money the state would have to operate this coming year.
If those numbers were available earlier, the state would have done more to balance the budget and “we would be looking at a much different — and much smaller — deficit heading into 2024,” said H.D. Palmer, spokesperson for Newsom’s Department of Finance.
The drastic revenue swings will make it difficult for the state’s Democratic supermajority to put billions toward homelessness and climate change as clean-energy goals loom. Newsom and top lawmakers have acknowledged the problems posed by relying so heavily on a small subset of income taxes.
Silicon Valley’s premier industry was pivotal in giving the state a nearly $100 billion budget surplus in 2022. DoorDash and Lyft had recently gone public, juicing taxes from initial public offerings. And an infusion of seed funding from venture capitalists accelerated an industry boom and contributed to a broader jump in U.S. stock prices.
“Right after the pandemic, the combination of the zero interest rate environment and the like led to really high valuations and soaring stock prices in the public markets,” said Mary D’Onofrio, a partner at Bessemer Venture Partners in San Francisco who invests in software companies.
But the boon for California revenues did not last.
As the Federal Reserve hiked interest rates, investments slowed and capital gains taxes faltered. The S&P 500 slid by about 19 percent in 2022, while the more tech-heavy NASDAQ index declined by about 33 percent. California revenues fell in response, more sharply than virtually anyone predicted.
Stock prices have since recovered significantly, unemployment remains relatively low and the Fed signaled this month it could reduce rates three times next year after slowing inflation.
But several attempts to overhaul the tax system that makes those downswings in revenue so sharp have failed to get the two-thirds votes they needed to clear the Legislature, with recent attempts splitting progressive and moderate Democrats.
During the recession, a group called the Think Long Committee for California studied ways to stabilize state revenue. Members of the group eventually proposed taxing business-to-business services — things like architecture, law and accounting work performed by one business for another. But those ideas never gained enough traction to become law.
“It takes extreme political capital to get something like that done,” said Hertzberg, who worked with the committee in between stints in the state Legislature. To get a change passed, he said, “I think it has to be governor-driven.”
Newsom also worked with the committee as lieutenant governor and was “very supportive,” in Hertzberg’s telling. On the campaign trail in 2018, Newsom floated reevaluating the tax system, saying “volatility is not our friend, it’s our enemy,” according to the Sacramento Bee.
Newsom endorsed a failed 2020 ballot initiative to increase corporate property taxes but has unequivocally rejected a wealth tax. And, earlier this year, he swatted down a state Senate plan to increase taxes on large corporations — one that would have generated revenue during a deficit but also made the tax structure more progressive. His office declined to comment for this story.
Some progressives would like to see California go further, including by tweaking or outright lifting Proposition 13, a cap on property taxes voters approved during a 1970s tax revolt. But tapping that more stable revenue stream is a third rail for many homeowning voters, and legislative changes have stalled.
Instead, the state draws much more heavily from income taxes and the investments of the wealthiest Californians — and there’s little sign that will change soon.
https://www.politico.com/news/2023/12/22/silicon-valley-california-budget-00132751
Can Newsom Mount a POTUS Campaign?
CalMatters commentary from Dan Walters
It wasn’t the most important political story in California this year, but Gov. Gavin Newsom’s headlong plunge into national – and international – politics was the most interesting.
Newsom insists he has “sub-zero interest” in running for president and couches his naked effort to create a national image as an effort to jolt his Democratic Party into a more aggressive attitude and help Joe Biden win a second lease on the White House next year.
However, his highly orchestrated squabbles with the governors of Texas and Florida, his obvious efforts to peddle himself to national media and his much-ballyhooed trip to China are exactly what he would be doing if, indeed, he has presidential ambitions – either next year if Biden drops out over poor approval ratings, or in 2028.
Newsom’s campaign-like efforts, which will probably shift to an even higher gear in 2024, make it difficult to take his declared lack of interest in the presidency seriously. It seems highly unlikely that Newsom would simply call it quits and go back to peddling wine after having spent half of his 56 years climbing the political ladder.
Just for fun, therefore, let’s assume that Newsom does have Potomac fever and speculate on whether he could emulate Ronald Reagan and run successfully for president after finishing his time in Sacramento.
First, he would have to win the Democratic nomination by running the gauntlet of primary elections, which means raising tens of millions of dollars, building a national political campaign apparatus and spending every waking hour hopping from state to state trying to connect with very different voter bases.
It’s a process that has humbled countless politicians of both parties, including Vice President Kamala Harris, who flamed out rather quickly in 2020, only to have her career extended by Biden. Harris is just one of the likely Democratic hopefuls that Newsom would have to overcome in 2028.
Assuming Newsom bucks the odds and wins the nomination, what then?
His chances of emerging triumphant would depend on many factors large and small, but the two most important would be the identity of his Republican rival and how well he could market himself to voters in about a half-dozen swing states.
Donald Trump won the presidency in 2016 because he captured the electoral votes in some states that Democrats had taken for granted in previous elections. He lost to Joe Biden in 2020 because those states largely rejoined the Democratic column, but the combined margin of Biden’s victory in those states was around 150,000 votes.
Newsom occupies a place on the ideological scale to the left of Biden and to the right of Bernie Sanders. For the past year he has quietly moved drifted rightward in governing California, annoying the progressives who had hoped he would embrace their ambitious agenda to remake California.
Opposition researchers would have a field day with Newsom. GOP campaign operatives would use images of a dystopian California – such as homeless encampments and smash-and-grab robberies – to suggest that a President Newsom would infect the rest of the country.
It’s already begun, with Republicans gleefully citing new data about increasing homelessness in the state Newsom governs and pointing out that 2024 is the 20th anniversary of Newsom’s pledge, as mayor of San Francisco, to end homelessness in that city in 10 years.
Could Newsom overcome all of those hurdles and claim the White House? Perhaps. Trump proved that nothing is impossible. But the odds certainly are against it.
https://calmatters.org/commentary/2023/12/gavin-newsom-winning-presidential-campaign/
State Air Board Pushes US EPA to OK Sweeping Emission Rules Before a Possible 2nd Trump Presidency
Politico
California is rushing to implement a sweeping array of climate change policies before a potential second Donald Trump presidency. But the state is running into a growing backlog of federal approvals for its nation-leading clean air rules.
California’s new rule requiring trucking companies to buy increasing numbers of zero-emission vehicles was supposed to take effect Monday. Instead, companies learned last week they wouldn’t be penalized for noncompliance until the federal government grants California permission to enforce the measure.
The Golden State is waiting on Biden administration waivers for several high-priority climate and air pollution rules to set more-stringent emissions standards than national requirements. Ironically, in most cases, it’s the Democratic president’s Environmental Protection Agency that’s putting the deep blue state’s pioneering environmental policies at risk over what appear to be mere bureaucratic delays.
“A Trump EPA is not going to give these waivers,” said Dan Sperling, a former member of the California Air Resources Board who directs the Institute for Transportation Studies at the University of California, Davis. “Getting EPA to accelerate the granting of the waivers has to be a priority.”
The rule that the California Air Resources Board postponed last week would require large trucking fleets to use zero-emission vehicles by 2042. Other rules in EPA’s queue include emissions limits on lawn mowers, ferries, locomotives and refrigeration units on trucks and railcars.
Industry groups are closely watching how Biden’s EPA will handle the logjam, anticipating that federal regulators will try to clear their agenda before the possibility of a Trump takeover.
“The political calculation in the Biden White House is going to be really interesting,” said Joe Rajkovacz, director of governmental affairs for the Western States Trucking Association, which represents small trucking companies and is suing over a pair of California emissions rules, including the truck-purchasing mandate. “Do they push EPA to grant the waiver before November, or do they wait till after the election?”
Several of the rules have been at EPA for more than a year, and several more just entered the queue in November. Given that EPA generally takes at minimum six months but often over a year to act on waivers, the timeline is bumping up against the presidential election — and creating a new sense of urgency among environmentalists.
“In my opinion, it’s not too early to panic,” said Bill Magavern, policy director for the Coalition for Clean Air, an environmental group.
The reason environmentalists are so worried about Trump is his administration’s shattering of norms in 2019, when EPA withdrew a waiver that the Obama administration had previously granted to enforce auto emissions standards. It was the first time an administration had attempted to revoke an existing waiver, and sent shock waves through California and the other 18 states that are signed on to follow its tailpipe emissions rules.
California’s waivers are now a perennial punching bag for congressional Republicans, who have taken aim at the state’s electric vehicle mandate and ban on gas-powered lawn equipment. And a group of red states, led by Ohio, is challenging the constitutionality of California’s unique authority to set stricter-than-federal air quality standards, in a case that could reach the Supreme Court.
EPA officials said they didn’t have a timing estimate for any of the waiver requests. “With each of the waiver requests submitted by California, EPA must follow the process of a public comment period and final determination,” agency spokesperson Angela Hackel said in an email. “We have no timeline for when EPA will reach a final decision for these actions.”
Legislative Analyst Lambasts State Water Board Urban Conservation Rules
CalMatters & Legislative Analyst
California’s legislative advisors Thursday lambasted the state’s ambitious proposal to regulate urban water conservation, calling the measures costly and difficult to achieve, “in many cases without compelling justifications.”
The proposed rules, unveiled in August, call for more than 400 cities and other water suppliers serving about 95% of Californians to meet conservation targets beginning in 2025.
The state Legislative Analyst’s Office (LAO) suggested significant changes to the State Water Resources Control Board’s proposal, warning that the regulations would set “such stringent standards for outdoor use that suppliers will not have much ‘wiggle room’ in complying.”
They also warn that the added costs will ultimately be borne by customers.
“Whether the benefits of the new rules ultimately will outweigh the costs is unclear,” the report says. “These doubts are particularly worrisome given we find that suppliers will face notable challenges complying with these requirements.”
The report recommended that lawmakers direct state regulators to “make several of the proposed requirements less stringent (such as the residential outdoor standard), consider how to target state funding to assist lower‑income customers, and extend some of the deadlines for suppliers to ensure they can actually achieve the framework’s goals.”
Water board officials didn’t comment on the criticism or recommendations, but spokesperson Edward Ortiz said the report, along with other feedback received from industry and the public, will be considered. He said a new draft of the rules will be released this spring.
Mandated by a package of 2018 laws, the intent of the rules is to make conservation “a way of life” in California. The rules, which are two years behind schedule, are expected to be adopted by the water board this summer before taking effect in October.
The rules don’t target individuals or businesses, instead setting individualized conservation targets for urban water agencies across the state based on goals for indoor and outdoor water use, leaks and other factors.
By 2035, water providers will collectively need to reduce water use by 14% . The savings would be enough to supply about 1.2 million homes every year, or about 1% of the state’s total water use.
The report called this amount “modest,” noting that “the agricultural sector uses about four times as much water as the urban sector.”
Water agencies and city officials warned state regulators last fall that complying would be costly — roughly $13.5 billion from 2025 to 2040 for rebates and other efforts to cut residential use. The benefits are anticipated to reach about $15.6 billion, in large part because suppliers and customers will buy less water.
The Legislative Analyst’s report noted that an assessment by a consulting firm commissioned by a water supplier raised questions about those calculations. They noted that customers — particularly low-income households — would likely bear the brunt of rates increased to cover the costs.
“Even if benefits outweigh costs in the long run, whether they merit the amount of work and costs to implement the requirements as currently proposed is uncertain,” the report said.
Jay Lund, vice-director of the Center for Watershed Sciences at the University of California, Davis, called the report “an unusually frank assessment.”
“Although there is good room for further conservation, this additional State effort seems like it is probably not needed, or at least, need not be as stringent and complicated as it seems. It has been asked, ‘Is this juice worth the squeeze?’” he told CalMatters in an email.
MORE:
https://calmatters.org/environment/2024/01/california-new-water-conservation-rules-analyst-report/
LAO Report:
https://lao.ca.gov/reports/2024/4823/Early-Implementation-of-Urban-Water-010424.pdf
Low Snowpack Clouds Early Water Outlook
NY Times California Today e-newsletter
California’s wet season is off to a relatively slow start, despite El Niño conditions that often mean a rainy winter.
Of course, there were big, damaging storms last week that battered parts of the coast with enormous waves that topped 30 feet in some places. But overall, there’s been about a third less precipitation across the state so far than the average for this time of year, according to rainfall totals through Sunday.
More worrisome is the state’s snowpack, which state officials said on Tuesday is just 25 percent of what it typically is at the turn of the new year. The unusually warm weather in December meant that precipitation was more likely to fall as rain than as snow, experts say.
That 25 percent figure is the lowest for California in a decade, and a huge change from a year ago. By Jan. 2 last year, a series of atmospheric rivers — storm systems named for their long, narrow shape and the prodigious amount of water they carry — had built the snowpack up to almost twice the 30-year average.
“The dry fall and below-average conditions today shows how fast water conditions can change,” Sean de Guzman of California’s Department of Water Resources said in a statement. “It’s still far too early to say what kind of water year we will have, and it will be important for Californians to pay attention to their forecasts and conserve water, rain or shine.”
The state’s reservoirs are still in good shape — all are near or above historical averages — because of California’s wildly wet 2023.
But the snowpack is an essential part of how they will fare in the seasons to come: Snowmelt from the Sierra Nevada typically provides about 30 percent of the state’s water supply, filling rivers and reservoirs and propelling hydropower systems that provide the region’s electricity.
Officials said the storms that are expected to move through the state in the next few days should deepen the snowpack, though perhaps not a lot.
“Even if these next two storms come in and dump every ounce of precipitation they have, it’s probably not going to take us up to average,” Andrew Schwartz, the lead scientist and manager of the U.C. Berkeley Central Sierra Snow Lab, said on Tuesday. He said 32 inches of snow was on the ground at the lab, compared with 100 inches on Jan. 2 of an average year.
Still, experts say there’s still plenty of time for California to make up its snow deficit. The state typically receives half of its annual precipitation between Jan. 1 and March 31, according to Michael Anderson, a state climatologist.
“A lot can change between now and April 1,” when snowpack levels typically peak, Anderson said.
The effects of the El Niño wind pattern are difficult to predict with certainty, but 50 to 70 percent of the El Niños since 1950 have led to above-average winter precipitation in California.
Delta Tunnels Project Advances
Sacramento Bee & Dept. of Water Resources
California’s leading water agency approved a controversial water infrastructure project to build a tunnel underneath the Sacramento-San Joaquin River Delta, marking a significant step in a decades-long effort to advance it.
Governor Gavin Newsom has long advocated for the tunnel, called Delta Conveyance, as a key way to protect water supply from climate change.
The Department of Water Resources’ (DWR) decision in late December is expected to usher in extensive legal challenges.
Despite consistent opposition to the tunnel from the state’s leading environmentalists, state officials celebrated the approval of the multi-billion dollar project as a step toward modern and affordable water management.
“Today marks another significant milestone in our efforts to modernize state water infrastructure and adapt to the challenges of changing precipitation patterns,” said Karla Nemeth, the department’s director.
“The State Water Project is one of the most affordable sources of water in California, and we need to help local water agencies in protecting both reliability and affordability for their ratepayers.”
For decades, water has been pumped directly out of the Delta estuary and shipped south to 30 million Californians and 6 million acres of farmland through the State Water Project. But state agencies predict that climate change and environmental regulations will lead to a decreasing supply.
State officials say the tunnel is intended to slow that decline by capturing water upstream on the Sacramento River, bypassing the Delta. They estimate it would yield about 500,000 acre-feet per year — a significant amount but a fraction of annual water needs.
DWR”s final environmental impact report found the tunnel’s construction and operations would affect the Delta’s endangered and threatened fish species, tracts of important regional farmland and tribal cultural resources that include human remains.
The final approval was met with support from the municipal and agricultural water agencies that receive water through the State Water Project, calling it a “critical step” to securing California’s water future.
“With this certification, the state is recognizing that the time to modernize the SWP’s infrastructure is now — improving the way we capture and move water during high-flow weather events to store for later use when it’s dry,” said Jennifer Pierre, General Manager of the State Water Contractors, in a statement.
The last time California finalized an environmental impact report for a similar Delta project was in 2016. That plan, which constituted a pair of tunnels, stumbled amid high costs and Newsom eventually withdrew support.
Even as a slimmed down version, the price tag for this tunnel will be high. In 2020, the estimated cost of one of the alternate paths was just under $16 billion. Negotiations will need to take place between major urban water agencies across the state, including Los Angeles and the Bay Area, to determine who pays how much.
Bonds will be issued to fund design and the construction process.
With this approval, DWR will now pursue several state and federal permits, including through the Endangered Species Act and a water right required by the State Water Resources Control Board. Jay Lund, director of the center for watershed sciences at UC Davis, said to expect around 2 additional years of obstacles before the project breaks ground. That means Gov. Newsom may not be around to see it through. “There’s a very long process still so it might well take longer than this governor is sitting,” Lund said. “This is already at least a two governor project, and the previous governor worked on it since his first term in the 1970s and 80s. I think you basically have to set it up for the next.”
The Delta, the central hub of California’s water system, is home to hundreds of thousands of people and 415,000 acres of farmland. Its fragile ecosystem has been deteriorating for years as more water is exported or used upstream.
Delta residents, farmers, Native American tribes and environmental groups vigorously oppose the tunnel projects. Opponents say drawing freshwater from the historic region coupled with years of construction will endanger native fish, imperil farms and destroy vulnerable communities.
https://www.sacbee.com/article283409313.html#storylink=cpy
DWR media release:
Groundwater + Food = A Costly, Complicated Equation;
Solution May Be in California’s Pajaro Valley
NY Times
The strawberry, blackberry and raspberry fields of the Pajaro Valley stretch for 10 miles along the coast of California’s Monterey Bay, jeweled with fruit from April through early December. The valley’s 30,000 acres of farmland are also ruffled with emerald lettuces, brussels sprouts and kale, bringing in roughly $1 billion in revenue to the region each year.
Abundance is not cheap.
While American farmers elsewhere have watered their crops by freely pumping the groundwater beneath their land, growers in Pajaro must pay hefty fees for irrigation water — making it one of the most expensive places to grow food in the country, if not the world.
A combination of groundwater impacts 40 years ago prompted the evolution of the grower-funded water management system.
The cost: Up to $400 per acre-foot, a standard measurement equal to water covering one acre, one foot deep. The fees bring in $12 million a year, which is used to recycle, restore and conserve the region’s groundwater.
Today, as the nation faces a spreading crisis of dwindling groundwater, stemming from a combination of extreme weather, agricultural overpumping and other issues, some experts say the Pajaro Valley is a case study in how to save the vital resource.
Experts from as far away as China and Egypt are traveling to the valley to study the system. But replicating it elsewhere could face major challenges. For one thing, “People don’t like taxes,” said Nicholas Brozovic, an agricultural economist at the University of Nebraska. “There’s nothing mysterious about that.”
New research on the program revealed a direct connection between paying for the groundwater and conserving it: A 20 percent increase in the price of groundwater has resulted in a 20 percent decrease in the extraction of groundwater.
One reason experts see Pajaro as a model: Despite the high price of water, agriculture in the region is thriving. It is the headquarters of major brands, including Driscoll’s, the world’s largest berry supplier, and Martinelli’s, which grows most of the apples for its sparkling cider in the Pajaro Valley.
Soren Bjorn, a senior executive at Driscoll’s who in January will become the chief executive, said in an interview that he “absolutely” sees the region as a model. “Water can’t be free anywhere, because you can’t run a sustainable water supply without pricing it,” he said. “That would apply to the globe.”
Yet, if the Pajaro Valley experiment were to be replicated across the country, it could trigger changes across the economy that affect both farmers and shoppers, resulting in higher prices at the grocery store while forcing farmers to abandon low-cost commodity crops that are needed for animal feed and other purposes, such as textiles.
While growers of premium products like berries, which are shipped to the shelves of major chains like Whole Foods, Safeway and Trader Joe’s, can absorb the price of Pajaro’s water, there is no way farmers of commodity crops like cotton, alfalfa and soybeans can make the economics work, said David Sanford, the agricultural commissioner of the Santa Cruz County, which includes the Pajaro Valley.
In the years since the price on water was imposed, growers of those crops either shifted to high-priced berries and lettuces, or simply left the region for cheaper pastures.
“There’s a big public-policy argument for pricing groundwater,” said Louis Preonas, an agricultural economist at the University of Maryland. “But if you were to try something this across the country, it would mean farmers would shift away from growing crops like corn, or leave agriculture altogether. Any way you cut it, it would likely raise food prices. But the alternative is running out of water.”
For many of the nation’s farming regions, the day of reckoning with the loss of groundwater is fast approaching. In the Pajaro Valley, it came 40 years ago.
With its loamy, sandy soil and cool nighttime breezes, the Monterey coast is an ideal climate for strawberries. But in the 1980s, disaster struck. Growers overpumped the coastal groundwater, allowing saltwater from the Pacific Ocean to seep in below their fields, up through the roots of the berry crop.
Faced with an economic disaster, growers formed a local water agency with two goals: preserve the groundwater and prevent the state from taking control.
The Pajaro Valley Water Management Agency, still locally run today, got to work. Its first project was installing meters to measure how much groundwater growers were using. In 1993, it started charging farmers a modest fee of $30 per acre-foot to cover the cost of managing and reading the meters.
The water agency hired hydrologists and other consultants, who concluded that the aquifer was severely overdrawn and could be lost entirely to saltwater. In response the agency built a $6 million project to capture and divert excess rainwater from a creek near the ocean and pump it into a storage basin, where it percolates into underground wells and is eventually used for irrigation.
Next came a $20-million water recycling plant, which cleans approximately five million gallons of sewage each day and sends it through a network of purple pipes to farm fields. The purple signals that the water inside is recycled.
Now the agency is building an $80 million system to capture and store more rainwater to be used for irrigation. Some of the cost the agency’s projects has been covered by federal grants and loans, with the rest from the groundwater pricing system, said Brian Lockwood, who has been the general manager of the Pajaro Valley Water Management Agency for 18 years.
“These projects are millions of dollars, and without this source of revenue they could never come to be,” he said.
As the ambitions of the water agency increased, so did the price of the water. It is scheduled to reach $500 per acre-foot by 2025.
In the early years, farmers chafed under the rate increases. “The pricing was really difficult, when the water used to be, you know, free,” said Thomas Broz, who has farmed about 75 acres in Pajaro since 1996.
Eventually, a group of growers challenged the water agency in court and were able to drive down the prices for a few years, and even forced the agency to refund about $12 million to farmers between 2008 and 2011.
But then, from 2012 to 2017, California was struck by its worst drought in recorded history, parching farmland and devastating the rural economy. Growers across the state, particularly in the Central Valley, reached a deal with the state to sharply restrict their water use and fallow their fields.
In the Pajaro Valley, water became more expensive, but at least it was still flowing. To save money many Pajaro farmers invested in precision irrigation technology to distribute carefully measured water exactly where it was needed. Gone were the days of sprinklers that drenched fields indiscriminately.
In the midst of the drought, the then-governor of California, Jerry Brown, signed a law requiring every part of the state to devise a plan to conserve groundwater. Miles Reiter, the outgoing chief executive of Driscoll’s, spoke in support of the law.
Suddenly, Pajaro was a model.
The last time the agency raised rates, in 2021, there was almost no resistance from growers, said Amy Newell, who chairs the Pajaro Valley Water Management Agency Board of Directors.
In the central California valley’s Westlands water district, where many farmers fought the groundwater-management law, the board of directors will soon vote on a plan that would allow growers to pay for credits to use groundwater above a certain allocation. They could buy and sell the credits, starting at about $200 a credit. A handful of other water districts in California are implementing similar measures.
Many farmers worry about the beginning of such a trend.
“The concern is that any kind of pricing scheme or market based mechanism that tries to manage or distribute this resource is likely to privilege a certain kind of producer — a multinational corporation — at the expense of small-scale independent farmers,” said Jordan Treakle, program coordinator for the National Family Farm Coalition.
And in some parts of the country, pricing groundwater could spell an end to current crops altogether. For example, some experts said that could be the case for producers of Texas cotton, a commodity crop that relies almost entirely on groundwater from the depleting Ogallala aquifer.
Mr. Bjorn of Driscoll’s said Americans should be ready to face just that outcome.
“We can’t get away with producing something for which the resources do not exist,” he said. “We would be fooling ourselves to keep growing low-value crops in places in the desert. Overcoming the hump of the politics is the hardest part. After that it’s just managing the resource.”