[env-trinity] Dan Walters Opinion: California’s big projects still face money questions

[Tom Stokely]

http://www.sacbee.com/news/politics-government/dan-walters/article4189576.html

Opinion: California’s big projects still face money questions

BY DAN WALTERSDWALTERS at SACBEE.COM
11/29/2014 4:01 PM 11/30/2014 12:01 AM
Jerry Brown occasionally suggests that a bullet-train system and twin water tunnels in the Sacramento-San Joaquin Delta were born during his first governorship.
The roots of both immense projects are actually further back in history, but their antecedents notwithstanding, Brown wants them as legacies and hopes to begin moving them from concepts to physical reality before ending his final term.
Both the bullet train and the tunnels face daunting political and legal hurdles that must be cleared if Brown is to move some dirt before leaving office. Their major uncertainties, however, remain financial.
The High-Speed Rail Authority has only a fraction of the bullet train’s estimated $68 billion cost in hand and plans to spend much of it to lay a short section of track in the San Joaquin Valley, if legal impediments can be overcome.
Republican control of Congress dooms any hope of additional federal funds, making the project’s future dependent on a big chunk of the state’s “cap-and-trade” greenhouse gas fees.
The Legislature has approved that allocation, and it could, in theory, be used to service a massive construction loan – if the fees themselves survive a legal challenge.
The tunnel project is estimated at $25 billion, about a third of which would be spent on environmental mitigation. The remaining $17 billion (in 2012 dollars) would, project planners assume, come from big agricultural and municipal water agencies south of the Delta, which see the tunnels as improving water supply reliability.
A new report prepared for state Treasurer Bill Lockyer projects that repaying construction bonds would cost those downstate agencies the equivalent of several hundred dollars per acre-foot of water, which for some agricultural users would triple current costs.
Lockyer’s consultant says those costs are absorbable, but that’s a financial calculation, not a political one.
Southern California’s huge Metropolitan Water District is already feeling heat from some of its member agencies about paying much more for water they are already buying.
Farmers in the Westlands Water District, the other major water buyer, might be compelled, Lockyer’s report implies, to shift to higher-value crops, such as almonds, to justify their extra water costs. But such crop shifts are expensive and trees cannot be left without water, which makes them even more water-supply-sensitive.
It’s uncertain, therefore, whether Westland’s farmers will truly be willing to pay much more for water whose reliability would be only marginally improved by the tunnels.
Moreover, these calculations also assume that the projects can be built for the estimated costs. And if there’s one thing we know about big public works projects (such as the Bay Bridge), it is that real costs are almost always much higher than estimates.
Call The Bee’s Dan Walters, (916) 321-1195. Back columns, sacbee.com/dan-walters. Follow him on Twitter @WaltersBee.
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