On the public record

The DSC is contemplating a number of ways to fund the Delta Plan. Perhaps they will apportion the costs by “stressor pays” or by “beneficiary pays’. Maybe they will impose a public goods charge that agencies collect and funnel up to the state. I just want to point out that we’re in this boat because our state legislature is utterly dysfunctional.

If our state budgeting rules weren’t so fucked, Democrats in the legislature could pass a majority budget and have a working General Fund. Work on the Delta could be funded from General Fund monies and water agencies wouldn’t have to squabble over the extent to which they’re a stressor or a beneficiary. Instead we have Republican legislators who have abandoned governing, and refuse to pass any budget that increases taxes despite the fact that there are prominent needs.

We wouldn’t be having these conversations about parsing costs out to local agencies if the state’s budget could include new taxes, is what I’m saying. That is the core problem, and we’re spending thousands of hours discussing policy work-arounds. Even in the weeds of those discussions, it is worth remembering where the real problem is located. Ideologue Republicans in the Legislature and rules that let them hold the state hostage are the reason we have to do this shit.

Last I saw him, Mr. Quinn was very vehement that any financing in the Delta Plan must be consensual. I can only paraphrase from memory, but I don’t think I am very inaccurate when I report that he said ‘the history of water infrastructure funding has been voluntary and consensual, that switching to a taxation basis that water agencies do not themselves propose would be ahistorical and would cause a revolt the likes of which hasn’t been seen since the Reign of Terror, which revolt would make the Delta Plan impossible to implement because of all the guillotining.’ (OK, I added in the part about the Reign of Terror and the guillotine. But he was very emphatic about the “must be consensual” part.)

First, it is simply not true the the history of water project funding has been “consensual” by the payors. The Central Valley Project, for example, was created to subsidize growers in the Central Valley. Those subsidies are the result of a vote decades ago, but they have fallen into disfavor since. Millions of dollars of annual subsidies are now the default, but it would be hard to say the taxpayers of the nation are now paying those “consensually.” Unconsciously, yes. Consensually, no.

There is an entire class of users of the system that are paying non-consensually, for whom “consensual” isn’t even a meaningful term. So long as the Delta is in collapse, the fish in the system are subsidizing every human user, and they are paying in dozens of ways. They are paying by living in hotter saltier water. They are paying by not having places to live and breed. They are paying by enduring pesticides. They are paying by being pulped in pumps. They are paying. But not in money. Their payment wasn’t and can never be consensual.

Not everyone one who paid for the water projects, local or state, was in favor of them. There has always been a subset of payors that opposed the projects, and were nevertheless included in the general taxation, because that’s how it works. Mark Dubois chained himself to a boulder at the bottom of New Melones to prevent that project, but since it is a Reclamation dam, his federal taxes go in tiny part to operating it. Environmentalists all over the place pay state and federal taxes that support water projects they hate; their contribution is not consensual support of a water project. If water users who love projects now have to pay against their will to restore the environment the projects damage, that is a reversal of the non-consensual situation, but it is not a new phenomenon.

Finally, even if Mr. Quinn’s proposition were true, we aren’t in the era of consensual spending anymore. We are paying for a new type of expenditures, and frankly, they suck. Undoing damage from environmental negative externalities? No one wants to pay those; they want to continue to free-ride. Paying for decades of deferred maintenance? Also blows. Someone else should pay for it. Paying to counteract climate change so that we can keep getting some part of our supplies but not even what we’re used to? Sucks donkey cock. We aren’t buying glamorous gravity-fed aqueducts delivering pure Sierran water anymore. Even if it were true that people paid for that kind of project consensually, we’re doing different things now. Consensual is irrelevant. ACWA’s rhetoric sounds good if you don’t think about it, but it has nothing to do with the things the Delta Plan must achieve.

While I’m at it, I want to address a meme I’ve heard floating around the DSC finance meetings. I’ve heard Mr. Fiorini and others recommend treating the DSC finance plan like a “business plan”, one that tracks expenditures and prioritizes projects by the value they create. At some level, this is incontrovertible. I too am in favor of good accounting and acknowledge that we don’t have that now. I am heartily in favor of projects that create larger societal value. These are good practices for either businesses or governments. But the metaphor (DSC finance plan should be like a business plan) is as dangerous and misguided as comparing the federal government to a household (that should live within an austere budget during recessions).

Governments and their subsidiary agencies are not businesses. The purpose of a business is to sell goods or services at enough profit to continue to exist. The purpose of a government agency is to implement the aggregate will of the people, as expressed through the votes of their elected representatives. (These are likely to be the types of non-exchangeable benefits that business either cannot provide at a profit or incidentally destroy, like good air quality.) Governments should create value for the society they serve, but they will generally not do so in ways that lead to a direct profit that they can collect. A business plan would be a failure if it doesn’t identify a profit, but that criteria doesn’t apply to the Delta Plan.

More specifically for the Delta Plan, it is worth remembering what the Delta Plan has to achieve. The activities that the Delta Plan must fund generally fall into three categories: correcting the environmental damage caused by the negative externalities of our water and land use; bringing current deferred maintenance on a giant scale; and countering the scarcity-inducing effects of climate change. Those are not profitable activities. They are simply things that need to be purchased with a pot of money from somewhere. The DSC is not a business selling something here; it is the buyer of a whole bunch of changes and decreased risk. It could have a “spending plan”, but it cannot have a “business plan”.

Forgive me, friends. I will be back, but not for a bit. Thank you for sticking with me.

Principle 3 of ACWA’s comments on Financing the Delta Plan is to broaden the base, and see if we can’t get some of the other infrastructure users to shell out a little.

So, rather than placing much of the burden for financing theplan on water users, the Delta Plan should show how a sustainable Delta benefits users of highways, railways, energy transmission facilities, agriculture and other economic sectors, and how these value centers should play an appropriate part in the overall finance plan.

Sure, I suppose, although I can’t imagine ACWA would be pleased if all those other infrastructure needs started looking for ways to poach from water funds.

Principle 4 makes the case that as much of the Delta Plan as possible should be paid for out of the general fund, unless you can really pin down a narrow beneficiary getting a specific benefit.

Fundamental to the definition of “beneficiaries” is the concept that the public as a whole is a beneficiary of many values that will be provided by the Delta Plan. It is clear that substantial state general funds and program funds, as well as a variety of federal funding sources must be brought to the table to finance these public benefits.

Fine. This is even true. But it is a very silly distinction. The following three terms all refer to the same 39 million Californians: 1. water users, 2. taxpayers, 3. beneficiaries of a restored Delta. I don’t see how a water user fee on every household in California, which ACWA adamantly opposes, is different from a tax that would feed into the general fund, which is what “beneficiaries” should pay? I don’t understand the fetish for very carefully parting those out and assigning costs by fine gradations of value received. It is worth having conversations about which is the cheapest to administer, and which is most vulnerable to plunder if the prison system needs more money, and what message the different fees send. Those are interesting conversations. Parsing gradations of benefits and allocating costs accordingly sounds horrible.

Principle 5. Dude. I don’t know anyone who thinks the bond will pass.

ACWA testified before the Delta Stewardship Council last week; their written testimony is here. They reiterate their position that the Delta plan should run on kumbaya, or maybe teaching the world to sing, but definitely not regulation. I take issue with their Principle 1.

Principle 1: Create Value
The fundamental principle of the financing strategy must be to create value for those who are expected to provide the funds. This depends on completing a Delta Plan that clearly describes the projects and management practices to be financed, and that creates value from the perspective of those providing the funds. Value cannot be dictated by the state or other governmental entity. [emphasis in the original]

This is patent nonsense. I’m sure they feel this way, but dictating value is the primary function of a representative democracy. That is the very thing an elected government is supposed to do: decide what the voters think is valuable through a series of contests and dictate that to their subsidiary entities by laws. (Worse, here in California, the voters can do that directly through the referendums.) Saying “value can’t be dictated by the state” is is like saying that “value cannot be dictated by a district’s Board of Directors” when that is single most important thing the Board of Directors should do, as elected representatives of the people of the district.

Water agencies may fear the specter of oppressive state governance, as embodied in the Delta Stewardship Council*. But frankly, the local v. state distinction isn’t as strong and pure as ACWA’s principles suggest. Water agencies themselves are creations of the state legislature, although that was long enough ago that they’ve forgotten their origins and gotten uppity. So is the Delta Stewardship Council. If the Legislature wants one of its creations to manage its other creations to accomplish co-equal goals, that is wholly right and appropriate for the Legislature to decide. If it wrong, or the DSC tells agencies that the wrong things are valuable, the voters can tell them so.

My guess is that ACWA is really driving at something like “Look, if we’re going to provide the funds for this, we want to see positive returns on investment within our agency boundaries. We aren’t looking to subsidize a whole bunch of activities that don’t return money or water to us.” This is understandable from a narrow point of view, which is the view that any jurisdiction would naturally take. Again, though, it is the very function of the larger governing entity to look at the whole and consider what needs to be done for the whole, especially the things that have fallen between jurisdictional cracks.

I get that there’s a lot of rhetoric out there about place-based this and Regional that, and local knowledge and state incompetence. All this de-legitimizes the State. But saying that the “Value cannot be dictated by the state or other governmental entity” is to reject the very concept of representative democracy. In a representative democracy, that is what the State does.

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I quite enjoyed Mr. Carter’s compilation of the annual pay of the top employees at Westlands Water District. I wasn’t too surprised. I agreed with Mr. Kurtz in the comments, that the managers are being paid market scale for their political skills and connections. Fine. I was mostly interested that the growers in the district are willing and able to bear the cost.

Assuming 570,000 irrigated acres in the district:

Tom Birmingham alone costs $0.60 per acre every year.
Jason Peltier alone costs $0.30 per acre every year.
The ten managerial positions mentioned by Lloyd Carter cost $3.10 per acre every year.

When LAO and Professor Howitt posit a public goods or user fee for agricultural water, they suggest imposing a per acre fee. Prof. Howitt suggests the laughably low fee of $2 per irrigated acre. Westlands growers, at least, are willing to pay more than that to have a powerful water district.

I couldn’t find a cost for providing shade to farmworkers, on any scale. But if I ever do, I’ll have something to compare it to.

Saw this in Matt Weiser’s story on farms getting surplus water this year:

The abundant water has dramatically changed the fortunes of the San Joaquin Valley farm economy.

Shawn Coburn, a farmer near Firebaugh, planted processing tomatoes this year on 500 acres that had been fallowed the last two years due to water shortages.

This will yield about 40,000 tons of a relatively high-value crop, which also required a substantial investment on his part, including the purchase of a new tractor and harvesting equipment.

“In essence, it’s another $2 million that I’m going to spend (on equipment) that I wouldn’t spend if I didn’t have the water,” said Coburn, who also grows almonds and wine grapes. “It’s definitely a year where it’s pretty easy to convince us that water equals prosperity, and not just for the farmer but the overall farm economy.”

I’m sure that’s what Mr. Coburn said, but I don’t think it is true. I suspect Mr. Coburn said that to the nice reporter to help bolster the argument that more water equals more economic activity in the San Joaquin Valley. Maybe he needed a new tractor and harvester this year anyway, and the tomatoes helped. But if Mr. Coburn bought a new tractor and harvester to support his most marginal 500 acres of land, he is so fucking stupid he deserves to lose his farm. Mr. Coburn knows from the past two years that he doesn’t get water for that acreage every year. How many wet years does he need to amortize $2M worth of equipment on 500 acres? Right now he’s burdened those 500 acres with $4,000 per acre worth of machinery, because in the wettest year in recent memory, he got some surplus water? I’d worry about that grower, except that I don’t believe the explanation he gave. It was just a political talking point.

This is the danger of setting the expectation that the San Joaquin Valley’s economy should be size it is in freakishly wet years. Most years won’t be freakishly wet, and in the average and dry years, there isn’t water for those 500 acres. Growers shouldn’t buy machinery for them; picking in those fields gives an occasional extra jobs, not reliable ones every year. It it great for farmers and farmworkers to get the occasional boost of a very wet year. But that year doesn’t instantly peg the new baseline, compared to which everything is an economic contraction.

What an interesting quote from Jerry Brown:

“We need a centralized base of arbitrary intervention to overcome the distributed political power that is blocking forward progress,” Brown said.

I’m not a fan of desert solar, but it does seem as if Gov. Brown is emerging from his intense focus on the budget. Could get interesting around here.

LATER: I got an email asking for more context. I haven’t heard that Gov. Brown is turning his attention to water. My perennial complaint is that the state is incapable of making decisions, especially decisions that create winners and losers. I’ve long thought that there are too many veto points in all of water’s different venues. So I am very intrigued to hear the governor making the same critique and sounding willing to make decisions that ultimately must be arbitrary.

At brunch a while ago, a friend told me that Egypt (which depends on the lower Nile) has declared that it would bomb Sudan if Sudan were to start building hydropower dams on the top of the Nile. I had never considered that solution to the tailender problem, although maybe Paolo Bacigalupi has.

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Borders Books is closing, putting 11,000 people out of work. That’s about the same as the number of agricultural jobs in the Delta (13,000). If I don’t want to be a hypocrite, I should either care more about the jobs lost in the Borders closing, or care less about the prospect of losing Delta agriculture to climate change and a Peripheral Canal.