Wednesday August 2, 2023
Public Policy Institute of California —
When it comes to state funding for water and natural resource projects, California has typically turned to general obligation bonds as the first resort. These bonds enable the state to borrow funds and pay them back over many years using General Fund dollars. The historic budget surpluses of recent years have shaken up this long-standing arrangement: awash in tax revenue, the state seized a rare opportunity to directly allocate large sums of General Fund dollars for water and natural resources. After two years of largesse, however, that funding source may be drying up—and we may see a return to general obligation (GO) bonds.
In the past two fiscal years, California took advantage of budget surpluses to allocate more than $12 billion from the General Fund to multi-year water and natural resource investments. With the recent budget shortfall, the state made some modest cutbacks (7%). Here’s the current breakdown:
Water: In fiscal years 2021–22 and 2022–23, the state allocated $8.7 billion through 2025 to support various projects, including dam safety, flood protection, water recycling, restoration of freshwater ecosystems, drought resilience, and implementation of the Sustainable Groundwater Management Act. This year’s budget retains $8.1 billion of this funding, with cuts ($632 million) to drinking water and wastewater, water recycling, Salton Sea restoration, and water conservation.