Farmers are likely to face yet another round of fee hikes this year from the State Water Resources Control Board, and trade groups are once again pleading for relief following a record year for fallowing. But the administration is hoping to instead grow the agency and its staff further to better handle drought needs and to fulfill Gov. Gavin Newsom’s goals for expanding the state’s drinking water supply.

Based on Newsom’s initial budget proposal, water board staff project a 2% growth in the water rights program and a 17% bump in the beleaguered cannabis program. The budget for irrigated agricultural lands could increase 9% while the program for confined animal facilities would rise more than 5%.

Fee payers have traditionally picked up the added costs, leading to fee rates escalating more than 130% since the agency switched to a fee-based system in the wake of the Great Recession.

A separate budget proposal submitted to the Legislature would add 28 positions to address critical municipal water supply needs. The agency needs more staff for permitting an influx of new recycled water projects as well as more desalination facilities for both brackish groundwater and seawater, and the state is seeking new ways to incentivize stormwater capture through the water board. The budget trailer bill would also grant the board the authority to assess new fees for water recycling requirements.

Last August, Newsom issued a set of goals for increasing the state’s water supply to adapt to a hotter, drier future, following projections that the existing supply could drop 10% by 2040. The strategic plan calls for expanding recycling and reuse by at least 800,000 acre-feet every year by 2030 and 1.8 million acre-feet every year by 2040. The water board has already invested $1.8 billion to support new recycling projects over the last five years, which will add 124,000 acre-feet of capacity. The plan tasks the board with engaging local water and sanitation agencies to identify more projects by next January.

A survey by WateReuse California estimated the state already stands to gain an additional 1.3 million acre-feet of water recycling capacity by 2035. But the agency has no staff dedicated specifically to permitting these projects.

The plan also calls for boosting desalination production by 84,000 acre-feet and stormwater capture by 500,000 acre-feet every year by 2040.

According to the budget proposal, the state “must modernize regulatory structures and expand staff capacity so the state water board can assess, permit, fund and implement projects at the pace this climate emergency warrants.” That has prompted stakeholders to question the state’s approach to paying for such critical water needs.

Emily RooneyEmily Rooney, Agricultural Council of California

During a staff workshop last week, Bob Gore, a senior advisor for the Gualco Group who represents several irrigation districts along with urban water agencies, argued that taxpayers should cover at least a portion of the costs through the state’s general fund.

“There is no clear benefit for the feepayers cited,” he said. “With water rights data modernization, we are told it will speed up data submittals and make them more convenient.”

He called for the board to break the habit of following the path of least resistance by placing 100% of the cost on feepayers.

“The farmers that I represent are burdened by a significant cost just for the water rights,” added Jon Rubin, general counsel for the Westlands Water District. “[Our] farmers are paying close to a million and a half a year for this program.”

Emily Rooney, president of the Agricultural Council of California, is again spearheading a coalition effort to urge lawmakers to shift some costs to the general fund. Rooney stressed to Agri-Pulse that it is normal in Sacramento for a policy proposal like this to take three or four years to gain traction, and she clarified that the state would not pick up all the costs, but just the portion that serves a public interest.

She hopes to offset such foundational costs as ocean and beach cleanup and some IT and HR expenses. She is also asking for a one-time contribution to “beef up” the reserve account for water quality fees from the current 5% to 10%, which would help the industry weather a potential economic downturn by avoiding new fee increases.

It is the third year Rooney is making the request. Despite the early start this year, she anticipates the pending state budget deficit will be a challenge in asking for new funding. But she has found several lawmakers to be sympathetic to the rising cost of doing business in California as well as the drought impacts to agriculture.

Farmers fallowed more than 700,000 acres of farmland last year, leading to $1.7 billion in losses. The Public Policy Institute of California, meanwhile, recently revised its estimate for the minimum amount of fallowing that will take place under the Sustainable Groundwater Management Act over the next two decades. The researchers now expect at least 900,000 acres to fall out of production and the San Joaquin Valley will face a 20% reduction in its annual water supply. Fewer ratepayers for water board fees means the farmers still in business will shoulder a larger share of the costs through higher fees.

Water and agriculture advocates have reminded board staff of this looming challenge for years and have found staff to be receptive. But that offers little comfort when it is the Legislature that has the final decision on budget spending. Often agency spending proposals remain confidential until they show up in a trailer bill at the Capitol, a process that has long frustrated Rooney.

“I'm thankful that the water board staff came to us with this budget change proposal,” she said. “In terms of transparency, that's a big deal.”

Yet she had concerns over boosting fees for water recycling. Though she is strongly in favor of recycling “every drop of water possible,” the proposal would add new fees for irrigation districts when recycling has already been a component of the current fee structure.

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“This entire time as stakeholders we thought a 100% fee-based process means we are picking up the entire cost of that regulatory burden,” she explained.

Rooney pushed back on a staff argument that some districts that recycle water have not paid fees at all, countering that they have been paying into the program for a decade.

In addition to the existing fees, Gail Delihant, senior director for governmental affairs at the Western Growers Association, worries about new fees passed down to farmers to account for the water board reviewing six groundwater sustainability plans. In early March the Department of Water Resources (DWR) denied the plans from advancing, triggering a process for the water board to act as the regulatory backstop and potentially take over control of the basins.

“If you look at the map, it’s a huge swath of acres, most of which are not getting their surface water and haven't for a very long time,” Delihant told Agri-Pulse, adding that if the groundwater agencies (GSAs) cannot correct the deficiencies in the plans and do go into probation, they will have to pay pumping fees to the board.

She noted that the same areas are also paying fees for drinking water replacement as districts implement plans for reducing nitrates and salts in the groundwater through a program called CV-SALTS, which the board approved in 2021.

But Delihant cautioned that DWR and the board are working closely with the GSAs to adjust the plans and avoid probation.

“It's a little too early to speculate what [any potential GSA fees] look like yet,” said Rooney. “Hopefully they can overcome those concerns and get out of the state board process.”

It is also too early to know if and how much the board would raise water quality and water rights fees. Staff will regroup with stakeholders in June, when the state typically has a clear assessment of revenues following the April tax deadline, and the board will approve the final fee structure in September. But Newsom has extended the filing deadline for most counties to October due to winter storms, which will leave lawmakers with an uncertain economic outlook when they approve a budget in June.

The administration has also tended to insert sweeping trailer bills in the waning days of the legislative session that add more staffing costs for agencies. Lawmakers too have introduced several measures this year that would add new priorities for the water board—though Erik Ekdahl, the board’s deputy director for water rights, said the measures “don’t really seem to include a ton of staff.”

The exact extent of the state budget deficit also remains uncertain. Last month the Legislative Analyst’s Office warned that it may be $7 billion worse than Newsom’s projections.

“That's one of the pushbacks we've been getting against using general funds,” said John Russell, a deputy director at the board, during last week’s meeting. “This is going to be a hard year to try to shift that burden politically over to the general fund.”

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