The 2023-24 Budget: Department of Water Resources

2023-24 BUDGET The 2023-24 Budget: Department of Water Resources GABRIEL PETEK | LEGISLATIVE ANALYST | MARCH 2023 SUMMARY This brief analyzes the Governor’s budget proposals for the Department of Water Resources (DWR) related to flood management and ongoing implementation of the Sustainable Groundwater Management Act (SGMA). Governor Proposes $175 Million in 2023-24 for Flood Management. The Governor’s budget proposes $119 million from the General Fund in 2023-24 to support numerous Central Valley flood projects and studies, most of which would be conducted in collaboration with the federal government. It proposes another $41 million for Delta levee projects and $16 million for flood management activities. Because the state currently is experiencing a budget problem, the Legislature will need to weigh the importance and value of proposed new activities against those to which it has already committed. In this context, we think the Legislature might want to consider approving the Governor’s proposed flood-related spending because it would (1) help protect public safety and important water supplies, (2) help the state draw down federal funding, and (3) allow key projects that are already in progress to continue. Nearly all of the requests are one time in nature, even those for continuing projects, which would provide the Legislature with the flexibility to consider associated future spending within the context of a given year’s budget and available revenues. Governor Proposes $14 Million in Ongoing General Fund to Support SGMA Program. The Governor’s budget proposes $14 million in ongoing funding for 11 new positions as well as to backfill expiring bond funds in order to continue supporting 29 existing positions. These positions would conduct ongoing SGMA implementation activities. The budget also includes $900,000 on a one-time basis in 2023-24 to develop a groundwater trading implementation plan. We find that the proposals should help the department better carry out its responsibilities and help ensure the success of local agencies in reaching groundwater basin sustainability. Given its importance in overall statewide water resource management and protecting vulnerable communities, we think the Legislature should consider approving the Governor’s proposals to provide additional resources to support successful SGMA implementation. We also recommend the Legislature continue to conduct robust oversight of ongoing SGMA activities. INTRODUCTION OVERVIEW In this brief, we analyze the Governor’s budget DWR protects and manages California’s water proposals for DWR related to flood management resources. In this capacity, DWR plans for future and implementation of SGMA. The first section water development and offers financial and provides a summary of DWR’s overall proposed technical assistance to water agencies for local 2023-24 budget. In the next section, we provide projects. In addition, the department maintains the background about flood management, review the State Water Project (SWP), which is the nation’s Governor’s flood-related proposals, and provide largest state-built water conveyance system. our assessment and recommendations. In the Finally, DWR performs public safety functions final section, we describe the importance of such as constructing, inspecting, and maintaining groundwater to the state’s water system and the levees and dams. history of SGMA, detail the Governor’s proposal, and offer our assessment and recommendations. www.lao.ca.gov 1 2023-24 BUDGET Governor’s Budget Proposes $2.9 Billion FLOOD MANAGEMENT for DWR in 2023-24. As shown in Figure 1, the Governor’s 2023-24 budget proposes $2.9 billion in Background total expenditures for DWR from all fund sources, California Faces Significant and Increasing including $900 million from the General Fund. Flood Risk. Estimates from a 2013 comprehensive Major budget fluctuations over recent years are due statewide report, California’s Flood Future, in large part to significant one-time General Fund suggest 7.3 million people (one-in-five Californians), augmentations to respond to drought and build the structures valued at $575 billion, and crops valued state’s water resiliency. In addition, recent budgets at $7.5 billion are located in areas that have at included new energy-related responsibilities for least a 1-in-500 probability of flooding in any given DWR, providing more than $2 billion from the year. According to a recent study by scientists at General Fund in 2022-23 to establish a new state the University of California, Los Angeles, climate energy reliability reserve. The proposed budget change has already doubled the likelihood of an includes funding in 2023-24 that was planned as extreme storm bringing catastrophic flooding in part of 2021-22 and 2022-23 budget packages to California, and this risk will continue to increase. address water resilience, energy, and nature-based Moreover, recent data reported in the 2022 Central activities. The Governor proposes moderate Valley Flood Protection Plan (CVFPP) suggest spending reductions and delays for DWR, yielding that more than 1.3 million people and structures $87 million in budget solutions in 2022-23 and valued at more than $223 billion in the Central 2023-24. (Please see our report, The 2023-24 Valley region are at risk from flooding. These data Budget: Crafting Climate, Resources, and suggest that without adequate investments in flood Environmental Budget Solutions for more on these systems, annual deaths could more than double proposed budget solutions.) The budget includes in the Sacramento River Basin and quadruple in several new General Fund spending proposals for the San Joaquin River Basin over a 50-year period DWR, primarily in the areas of flood management (2022 through 2072). The plan also estimates that and SGMA implementation, as discussed below. failing to adequately prepare could cause annual economic damages to double in the Sacramento River Basin and Figure 1 more than quadruple in the San Department of Water Resources Budget Summary Joaquin River Basin. (In Millions) State Has Special Responsibility for Flood Change From Management in the 2022-23 to 2023-24 2021-22 2022-23 2023-24 Central Valley. California Fund Source Actual Estimated Proposed Amount Percent gave assurances to the federal State Water Project fundsa $1,117b $1,271 $1,464 $193 15% government that it would oversee Bond funds 273 1,719 452 -1,267 -74 and maintain the State Plan of General Fund 1,019 4,484 900 -3,584 -80 Flood Control (SPFC) along the Special funds 613 201 46 -155 -77 Federal funds 7 31 35 4 14 main stem and certain tributaries of Totals $3,028 $7,706 $2,897 -$4,809 -62% the Sacramento and San Joaquin a Continuously appropriated outside of the annual state budget process. Rivers, including parts of the b The State Water Project operates on a calendar year. Amount reflects actual expenditures for Sacramento-San Joaquin Delta. calendar year 2021. The SPFC includes 1,600 miles of levees, four dams, and seven flood bypasses. DWR is the state’s lead agency in flood-related activities, 2 LEGISLATIVE ANALYST’S OFFICE 2023-24 BUDGET while the Central Valley Flood Protection Board (an independent body housed administratively • Maintenance Subventions Program. within DWR) has responsibility for overseeing the This program provides an annual grant to SPFC on behalf of the state. For most segments local agencies, reimbursing them for up to of SPFC levees, the state has developed formal 75 percent of their costs to maintain levees. agreements with local government entities DWR anticipates that claims will be higher this (primarily local reclamation and levee districts) year due to recent storms. to handle regular operations and maintenance • Special Flood Control Projects Program. responsibilities. A court decision in 2003 found This program provides grants to local that the state was ultimately financially responsible agencies for projects that protect water for the failure of SPFC facilities, even when they conveyance systems (including roads and had been maintained by local entities. State utilities) and water quality from flood hazards. statute requires DWR to prepare, and the Central Valley Flood Protection Board to adopt, an update Recent State Budgets Have Committed to the CVFPP every five years. The first version Significant Funding for Flood Management. was adopted in 2012. The CVFPP guides flood Over the past couple of decades, voter-approved management activities and funding for the SPFC general obligation bond funding has been the and Central Valley region. primary funding source for flood projects—including Many Levees Are at Risk of Failing. In addition levee repair and maintenance—and related state to providing flood protection, levees located in operations support. However, after several years the Delta region also are essential components of of significant expenditures, the state has now the state and federal water systems that convey expended most of the flood-related bond funding water from the northern part of the state to Central that voters have authorized. Recent budget and Southern California. As such, levee failures surpluses helped facilitate an unusually high level could put public health and safety as well as of General Fund support to help supplement the water supplies at risk. Given such importance, the expiring bond funds. Specifically, recent budgets current condition of statewide levees is concerning. committed approximately $600 million General Nearly 90 percent of Central Valley levee systems Fund from 2021-22 through 2024-25 to support currently fail to meet federal performance numerous flood capital outlay projects, flood standards, increasing the risk that they might fail. management activities, and dam safety projects. Reclamation districts’ recent five-year plans (which (An additional $140 million in bond funding was assess current conditions and lay out plans for committed for these purposes over this same rehabilitation) have identified 500 miles on 75 Delta period.) This funding has provided support to islands in need of improvement, with an estimated numerous flood projects. For example, nearly all of associated cost of $1.4 billion. the roughly $300 million in combined General Fund and bond funds appropriated in 2021-22 has been State Also Helps Ensure Delta Levees Remain committed to 14 different Central Valley flood or Functional. Within the 1,100 miles of levees in Delta levee projects in various stages of planning, the Delta, only 380 miles are part of the SPFC. development, or construction. The majority—730 miles—are instead privately or locally owned. Because of their importance, Federal Government Also Builds Capital however, the state provides some funding to local Projects to Reduce Flood Risk and Helps agencies to support both SPFC and non-SPFC Support Flood Emergency Response Delta levees, generally through DWR’s Delta and Recovery. The federal government supports Levee System Integrity Program. This program, flood projects in California in two main ways. historically funded with Proposition 1E (2006) and • U.S. Army Corps of Engineers (USACE). Proposition 84 (2006) bond funds, includes two USACE authorizes and undertakes capital subprograms through which it allocates funds: flood protection projects when authorized by Congress, generally in partnership with state www.lao.ca.gov 3 2023-24 BUDGET and local agencies. USACE inspects federally emergency-related costs (such as debris removal) constructed levees for compliance with federal and repair or replacement of facilities damaged standards, provides planning and assistance by the storms. Generally, FEMA reimburses at during flood events, provides funding to least 75 percent of eligible costs until funding is repair flood-damaged levees, and establishes exhausted. The extent of the December 2022 and flood storage and release standards for January 2023 storm damage is still being assessed certain reservoirs. and the timing for when public agencies will receive • Federal Emergency Management reimbursement is still unknown. Agency (FEMA). FEMA operates the Governor’s Proposals National Flood Insurance Program, which The Governor proposes funding for both flood includes developing flood hazard maps that management projects and studies as well as define flood risk, establishing floodplain operational support. management standards, and offering federally backed insurance policies. It also provides Proposes $119 Million General Fund in coordination, assistance, and funding for 2023-24 for Central Valley Flood Projects federally declared flood disasters. ($114 Million) and Studies ($5 Million). The Governor’s budget proposes $119 million Federal Funds Will Help Pay For Damage General Fund in 2023-24 and $35 million General From Recent Storms. State and local agencies Fund in 2024-25 for various flood projects in the can apply for FEMA reimbursement for eligible Central Valley. As noted in Figure 2, the funding Figure 2 Governor’s 2023-24 Flood Project and Study Proposals General Fund, Unless Otherwise Noted (In Millions) Proposed Funding Estimated Estimated Estimated Total Project Future State Completion Activity 2023-24 2024-25 Cost Funding Needed Date Flood Management Projects $114 $35 $4,647 $577 Mossdale Tract Multibenefit Projecta $40 $35 $100 — 2025 West Sacramento Projectb 25 — 1,130 $70 2030 American River Common Features Projectb 20 — 1,230 61 2026 Yolo Bypass Fix-in-Place Projects 15 — 40 45 2027/Ongoing Paradise Cut Bypass Expansion and Ecosystem 10 — 300 180 2030 Enhancement Project Lower Cache Creek Projectb 1 — 323 77 2036 Lower San Joaquin Projectb 1 — 1,240 135 2032 Marysville Ring Levee Projectb 1 — 193c 10 2030 Smith Canal Gate Projecta 1 — 91d — 2023 Flood Management Studiese $5 — $22 $8 Yolo Bypass-Cache Slough Master Plan and $3 — $9 $6 2027 Comprehensive Study Yolo Bypass comprehensive studyb 1 — 8 1 2027 Reclamation District-17 feasibility studyb 1 — 5 1 2027 Various Delta Levee Projects $41 — — — Delta levee special projects and state operations support $41f — — Unknown Ongoing Totals $159 $35 $4,669 $585 a Urban Flood Risk Reduction project. Project consistent with U.S. Army Corps of Engineers (USACE) feasibility study. Expenditures can serve as state cost share for a future USACE project. b USACE project. Figure reflects state share of cost. c Preliminary estimate that could change based on the USACE Post Authorization Change Report, which will be completed by 2027. d Construction is still ongoing and could result in additional cost increases. e Figure reflects costs to complete each study; subsequent projects will result in additional and more significant costs to complete. f Includes $27 million from Proposition 1 (2014) bond funds. 4 LEGISLATIVE ANALYST’S OFFICE 2023-24 BUDGET would support five projects and two studies resulting in a four-year funding commitment of conducted in collaboration with USACE. It also $52 million through 2026-27. The proposals include: would support two projects as part of the Urban • State Operations Support for Urban Flood Risk Reduction (UFRR) Program. (UFRR Flood Projects ($10 Million One Time). projects are consistent with USACE feasibility This proposed funding would support DWR studies, but can be conducted on a faster time staff management costs for USACE/UFRR line by the state. Additionally, USACE typically projects, which could include support on requires the state to contribute a share of the the specific projects displayed in Figure 2 as costs of undertaking federal projects in California, well as activities such as land acquisition, and UFRR expenditures can be credited toward construction management, or closeout these requirements on future USACE projects.) activities on previous USACE/UFRR projects. Finally, funding would support two additional state Funding would be available for expenditure projects and one study. until June 30, 2028. Proposes $41 Million in 2023-24 for Delta • Preparation of Next Iteration of the CVFPP Levees. Also shown in Figure 2, the Governor’s ($4.4 Million in 2023-24; $36.9 Million Total budget proposes $41 million for Delta levee special Over Four Years). The Governor proposes projects and state operations support. Specifically, providing $4.4 million in 2023-24, $11 million it includes $27 million from Proposition 1 (2014) in 2024-25, $11.5 million in 2025-26, and bond funds for local grants supporting multi-benefit $10 million in 2026-27 to prepare the next levee projects through the Special Flood Control version of the CVFPP, which is due in 2027. Projects Program. In addition, it includes $11 million Activities would include developing the from the General Fund to backfill bond funding for main document, updating the status of all state operations (to oversee and manage the Delta components of the SPFC system, conducting Levee System Integrity Program), as these funds will technical analyses of climate change impacts run out at the end of the current fiscal year. Finally, to the system, preparing a conservation it includes $2 million from the General Fund for strategy update for species recovery, real estate acquisition and planning for previously developing a 30-year investment strategy, funded projects to satisfy regulatory requirements. conducting public engagement, and ensuring Proposes $15.7 Million General Fund in compliance with the California Environmental 2023-24 for State Operations Support and Quality Act and tribal policies. Several Related Activities. As shown in Figure 3, • State Flood Maintenance and the Governor proposes $15.7 million General Operations Support ($655,000 Ongoing). Fund in 2023-24 for state operations support and The Governor’s budget proposes funding other flood management activities. Some of these and authority for two environmental activities would have multiyear or ongoing costs, scientist positions to support ongoing flood maintenance and operations. Figure 3 Governor’s 2023-24 Flood Management Operations and Related Proposals General Fund (In Millions) Totals: Proposal 2023-24 2023-24 Through 2026-27 Term State operations support for urban flood projects $10.0 $10.0 One time 2027 Central Valley Flood Protection Plan 4.4 36.9 Through 2026-27 State flood maintenance and operations support 0.7 2.6 Ongoing Central Valley Flood Protection Board engineer positions 0.6 2.5 Ongoing Totals $15.7 $52.0 www.lao.ca.gov 5 2023-24 BUDGET These positions would be located at the Flood and Levee Proposals Might Meet That two DWR maintenance yards to handle Higher Bar. In our view, several reasons make the environmental permitting and tribal case for the Governor’s flood-related proposals consultations. Funding also would support potentially meeting this high threshold for justifying associated baseline costs, including new spending. As we discuss in more detail below, consulting and professional services. these proposals would (1) respond to various • Three Flood Board Engineer Positions critical flood protection and risk management ($623,000 Ongoing). The Governor’s budget needs, (2) help the state draw down federal funding, proposes funding and authority for three new and (3) allow key projects that are already in engineer positions at the Central Valley Flood progress to continue. Additionally, although many Protection Board. These positions would of the proposals do support continuing projects, be dedicated to addressing noncompliant nearly all of the current requests are one time in levee encroachments (which are structures nature. This structure provides the state with the or features, such as landscaping, piping, or flexibility to consider associated future spending fencing, that cut into a levee). The purpose within the context of a given year’s budget and of this work is to help Central Valley levees available revenues. retain or attain compliance with federal Central Valley Flood and Delta Levee USACE standards. Projects Are Important Part of State’s Flood Management System. The Governor’s flood Assessment proposals focus on the Central Valley and the Delta. Higher Bar for Approving New Proposals This makes sense because the state has particular Given General Fund Condition. The Governor’s responsibility for maintaining the SPFC and given new flood-related proposals would commit the that the reliability of Delta levees is essential for the state to significant discretionary General Fund continued operation of statewide water conveyance expenditures in 2023-24. Importantly, the state systems. Taking steps now to mitigate existing flood currently is experiencing a budget problem, where risk—as well as the increasing hazards expected General Fund revenues already are insufficient to to result from climate change—could prevent both fund existing commitments. In this context, every significant and costly damage as well as threats to dollar of new spending in the budget year comes at public safety in future years. the expense of a previously identified priority and Share of Flood Project Funding Would requires finding a commensurate level of solution Help State Draw Down Federal Support. somewhere within the budget. The Governor The Governor’s proposed spending on flood “makes room” for proposed new spending on management would not only help mitigate flood flood projects by making reductions to funds risk, but also would help the state generate committed for other programs, including many in significant federal support. Of the proposed the climate and natural resources areas. We think $119 million for flood projects and studies, the Legislature will want to apply a higher bar to its $50 million reflects the state’s required cost share review of new spending proposals such as these for USACE projects. In addition, the two projects than it might in a year in which the General Fund that are part of the UFRR program could generate had more capacity to support new commitments, credits toward state spending requirements for as it will need to weigh the importance and value future USACE projects. Nearly all of these projects of the proposed new activities against the activities are already in progress and the proposed funding to which it has already committed. Essentially, would allow the next phase to be completed. it will want to consider whether it wants to make Therefore, the proposed $10 million to support state reductions—either those proposed by the Governor staff associated with oversight and management or equivalent alternatives—to free up resources for of these and other USACE/UFRR projects also these flood projects. merits consideration. 6 LEGISLATIVE ANALYST’S OFFICE 2023-24 BUDGET Funding for Delta Levees Would Prioritize reductions from other existing spending the Most Critical Areas. We also find merit commitments, which the Governor does through his in the Governor’s proposed spending on Delta package of budget solutions. However, this funding levee programs. The proposal would support would support important activities that help protect multi-benefit projects to improve levees and restore public health and safety by lowering risks to flood habitat in the Delta, providing flood protection prone areas and protecting key water conveyance benefits to the SWP. In addition, the General Fund infrastructure. To help avoid the potential losses to portion of the request would backfill expiring bond life and property that can result from serious flood funding for state operations and satisfy regulatory events, the Legislature might want to consider requirements for previously funded projects. approving the funding despite the associated Finally, although the proposed project funding budget trade-offs. The proposed funding would ($27.4 million Proposition 1 bond funds) would only help draw down federal support for many of the partially address what reclamation districts have projects and, because nearly all of it is one time in identified as a $1.4 billion need for Delta levees, nature, the state could consider out-year spending DWR indicates it would prioritize the funds for the within the context of future fiscal conditions. most urgent projects. Specifically, it would first allocate funding to those projects on Delta islands SUSTAINABLE GROUNDWATER or tracts deemed as “very high priority” in risk MANAGEMENT ACT assessments developed by the Delta Stewardship IMPLEMENTATION Council. (The council used new levee geometry, hydraulic data, and projected impacts on vulnerable Background populations to develop these assessments.) Groundwater Depletion Is Escalating. CVFPP Costs Appear Reasonable, in Line Groundwater is a key component of the state’s With Previous Iterations of the Plan. Average water supply. Water users rely less on groundwater annual costs to prepare the CVFPP have been in wet years—when surface water is more about $8.5 million since development of the first abundant—and more in dry years. In some smaller version, which was released in 2012. The current and more vulnerable communities that lack access request, which would average $9.2 million annually to surface water, groundwater provides up to for four years, is thus in line with historical costs. 100 percent of drinking water supplies. Overall, These costs may seem high for the development of California uses more groundwater than is restored a plan—especially one that is an update of several through natural or artificial means. This imbalance previous iterations. Generally this is because is leading to depletion (known as “overdraft”), failed these updates involve detailed, comprehensive, wells, water quality problems, permanent collapse and technical analyses, including modeling the of underground basins, and land subsidence. The potential impacts of climate change and related current drought has heightened the urgent need for adaptation activities. Although the time and sustainable groundwater management. And while staffing resources to prepare the next plan seem recent storms may have helped recharge some reasonable, the Legislature might wish to ask if any shallow groundwater basins, years of overdraft in of these activities or processes—such as modeling deeper basins mean it could take months or years climate impacts—could be more streamlined or to recharge groundwater in some areas. automated given that this plan has to be updated State Passed Major Legislation to Regulate every five years. Groundwater in 2014. In 2014, the Legislature Recommendation passed and the Governor signed three new laws—Chapters 346 (SB 1168, Pavley), 347 Consider Approving Funding for Flood (AB 1739, Dickinson), and 348 (SB 1319, Pavley)— Management Projects, State Operations, and collectively known as SGMA. With the goal Related Activities. Approving General Fund for of achieving long-term groundwater resource these proposals requires identifying commensurate sustainability beginning in 2040, the legislation www.lao.ca.gov 7 2023-24 BUDGET represents the first comprehensive statewide entities, through the required formation of requirement to monitor and operate groundwater groundwater sustainability agencies (GSAs). basins to avoid overdraft. The act’s requirements SGMA requires GSAs to develop and implement apply to 94 of the state’s 515 groundwater basins long-term GSPs. These plans define the specific that DWR has found to be “high and medium guidelines and practices that govern the use priority” based on various factors, including of individual groundwater basins, including overlying population and irrigated acreage, potentially limiting extractions from these number of wells, and reliance on groundwater. basins. Among the 94 high- and medium-priority (The remaining 421 basins ranked as being lower basins, DWR identified 21 as being “critically in priority—generally smaller and more remote— overdrafted,”which it defines as a condition where are encouraged but not required to adhere to a “continuation of present water management SGMA.) While comprising less than one-fifth of the practices would probably result in significant groundwater basins in California, the 94 high- and adverse overdraft-related environmental, social, medium-priority basins account for 98 percent or economic impacts.” The GSAs managing of California’s annual groundwater pumping. groundwater in those basins were required Figure 4 displays the time line for meeting to submit their GSPs to DWR for review by SGMA’s key requirements. January 2020, while GSPs for the remaining SGMA Required Local Agencies to basins were due by January 2022. SGMA allows Submit Groundwater Sustainability Plans DWR two years to review GSPs. Among the (GSPs). SGMA assigns primary responsibility critically overdrafted basins, DWR deemed for ongoing groundwater management to local GSPs for 12 basins to be incomplete and required that they be resubmitted in July 2022. DWR continues to review new and Figure 4 resubmitted GSPs. DWR Undertaking Implementation Time Line for Major Sustainable Numerous Key Activities. Groundwater Management Act (SGMA) Requirements SGMA tasked DWR with several key responsibilities in the initial phases of the act’s implementation. As GSAs developed and have begun to January 2015 The Department of Water Resources (DWR) released initial basin prioritization. implement their GSPs, DWR’s role High- and medium-priority basins are subject to SGMA requirements. has continued to grow. Figure 5 January 2016 displays some of DWR’s key DWR identified final list of basins subject to critical conditions of overdraft. These basins face some expedited compliance deadlines. SGMA activities. June 30, 2017 The State Water Resources Local agencies established groundwater sustainability agencies (GSAs). Control Board (SWRCB) also has certain responsibilities in January 31, 2020 GSAs from basins in critical overdraft had to adopt and begin implementing implementing SGMA, such as to groundwater sustainability plans (GSPs). DWR reviewed plans for adequacy after adoption and required resubmission of plans it deemed incomplete. intervene when local entities do not follow the law’s requirements. January 31, 2022 GSAs from basins not in critical overdraft had to adopt and begin implementing If any basins ultimately fail to GSPs. DWR must review plans for adequacy by January 2024. comply with SGMA, SWRCB January 31, 2040 is charged with taking over GSAs from basins in critical overdraft must achieve sustainability goals. their management. January 31, 2042 GSAs from basins not in critical overdraft must achieve sustainability goals. 8 LEGISLATIVE ANALYST’S OFFICE 2023-24 BUDGET State Has Provided Significant Figure 5 Funding to Implement SGMA. As shown in Figure 6, the DWR’s Key Sustainable Groundwater state has provided more than Management Act (SGMA) Implementation Activities $800 million since 2014-15 for 9 Defining and prioritizing groundwater basins. SGMA implementation activities. This includes: 9 Collecting and disseminating data and best practices, including: • State Operations. DWR • Collecting groundwater level data (and installing new monitoring wells to do so). has received $314 million • Collecting statewide land use and land subsidence data. • Conducting statewide geophysical surveys (to understand subsurface ($84 million from conditions and land subsidence, which informs recharge and dry well Proposition 68 bond funds mitigation). and $229 million from the 9 Providing technical and financial assistance to groundwater sustainability General Fund) to support agencies (GSAs). state management of the 9 SGMA program. Reviewing groundwater sustainability plans (GSPs) to determine if they comply with the law. • Local Planning Grants. The state has provided 9 Assisting GSAs in implementing the activities detailed in their GSPs. $93 million in Proposition 1 9 bond funds for planning Reviewing GSAs’ annual GSP reports. grants, which supported 9 local agencies as they Reviewing GSAs’ five-year GSP updates. formed GSAs and developed 9 their GSPs. Maintaining an online SGMA portal (for GSAs and the public) and information repository. • Local Implementation DWR = Department of Water Resources. Grants. The state has provided $430 million About 125 DWR Staff Currently Support ($134 million from Proposition 68 bond funds SGMA Program. Currently, the SGMA program and $296 million from the General Fund) for has authority for 69 positions. In addition, staff from local implementation grants. Examples of other DWR programs are sometimes assigned to grant-funded activities include developing the SGMA program and typically are funded on a ways to inject surface water into aquifers, limited-term basis. Currently, about 56 positions are expanding conveyance infrastructure to on loan from other DWR programs. Of the 125 staff increase recharge, installing monitoring wells, currently supporting SGMA, 31 are funded with and developing or upgrading infrastructure to Proposition 68 bond funds, while 94 are funded by increase the use of recycled water. the General Fund. Figure 6 Sustainable Groundwater Management Act Resource History (In Millions) 2014-15 Through 2021-22 2022-23 Proposition 1 Proposition 68 General Fund Proposition 68 General Fund Totals State operations — $68 $203 $16 $27 $314 Planning grants $93 — — — — 93 Implementation grants — 134 180 — 116 430 Totals $93 $202 $383 $16 $143 $837 www.lao.ca.gov 9 2023-24 BUDGET Governor’s Proposals Proposes $900,000 in One-Time General Fund Support to Develop Groundwater Proposes $14 Million in Ongoing General Trading Implementation Plan. The budget Fund to Support 40 Positions, 11 of Which proposes $900,000 General Fund on a one-time Are New. The Governor’s budget proposes basis to develop an implementation plan for $14 million General Fund on an ongoing basis and groundwater trading that considers vulnerable authority for 11 new positions to support SGMA users. The funding would support two DWR implementation activities. In addition to supporting positions and engage consulting services to help the new positions, this funding would backfill complete the plan. The plan would be developed expiring Proposition 68 funds in order to continue based on recommendations in the California funding 29 existing positions. Overall, the proposal Water Commission’s white paper, A State Role in would sustain roughly the same current number Supporting Groundwater Trading with Safeguards of positions in the SGMA program, as most of the for Vulnerable Users: Findings and Next Steps. 11 new positions would backfill some of the current This one-time planning effort would include staff who were temporarily assigned to SMGA work interagency coordination among DWR, Department but will be transitioning back to their other DWR of Fish and Wildlife, Department of Food and responsibilities beginning in 2024-25. The 11 new Agriculture, and SWRCB. It would consider impacts positions would be conducting: on disadvantaged communities, small and medium • Enhanced Data Collection. DWR plans to farmers, and the environment. increase the frequency at which it collects data from existing and new monitoring wells, Assessment particularly in high-priority areas, such as Successful Implementation of SGMA Is Vital areas in which vulnerable communities rely on to State’s Water Supply, Community Drinking domestic wells, areas identified for recharge Water, and Agricultural Sector. The state relies projects, and areas where land is actively heavily on groundwater, both for drinking water— subsiding and dry well mitigation measures particularly for small, vulnerable communities are taking place. dependent on wells—and agricultural irrigation. • Enhanced Basin Characterization. As it grapples with periods of prolonged drought DWR plans to conduct higher resolution and a resulting lack of consistently adequate aerial and ground-based geophysical surveys amounts of surface water, the importance of of groundwater basins. These surveys will groundwater continues to grow. Successful benefit recharge projects by providing implementation of SGMA’s requirements will help information about ideal recharge pathways ensure that the goals envisioned by the Legislature and subsurface layers and land subsidence. are achieved and remain a priority. The past They will also inform placement of additional decade has included a number of key SGMA groundwater monitoring stations. implementation milestones, including definition • Enhanced Reporting. DWR plans to and prioritization of groundwater basins; formation continue sharing information online, to of GSAs; data collection; and development, aid in data-informed decision making. In submission, and review of GSPs. The state has addition, it will more frequently update entered the next period of SGMA implementation— dry-well susceptibility analyses and provide undertaking the activities articulated in the GSPs this information to all levels of government that will eventually lead to basin sustainability. DWR for drought, flood, and recharge planning plays an important role in ensuring these activities and response. are successful, and the proposed increase in SGMA program funding and position authority could help the department better carry out its responsibilities. 10 LEGISLATIVE ANALYST’S OFFICE 2023-24 BUDGET Having DWR Collect and Disseminate Recommendations Key Data Makes Sense. DWR has taken on Consider Approving Ongoing and One-Time more responsibility for collecting and reporting Funding and Positions. As discussed earlier, groundwater data statewide than was originally in the context of the state’s budget problem, envisioned. This seems appropriate, in that it we recommend the Legislature employ a higher leverages DWR’s economies of scale relative to threshold when considering new General Fund having each local agency collect and report data. spending proposals, given that they necessitate Moreover, having DWR collect key information, making reductions to existing spending such as data about groundwater levels and land commitments. We find that the proposed funding subsidence, not only ensures that the data and and position authority for SGMA implementation measurements are consistent across groundwater activities could meet this higher bar, despite the basins statewide, but that data are collected on a associated trade-offs. They would allow DWR to regular and frequent basis. continue implementing SGMA activities that the Expanding Role of DWR Would Benefit From Legislature has previously indicated are among Increased General Fund Support. Although its high priorities. Moreover, ensuring sustainable SGMA implementation continues to move from groundwater management is key not only to future planning to execution, DWR still has workload water supplies and the state’s agricultural sector, associated with reviewing GSPs and providing but also to protecting drinking water for many technical assistance to GSAs on their plans. vulnerable communities. The proposed funding DWR also will have ongoing workload associated would support DWR activities that are important to with reviewing GSAs’ annual reports and regular the success of local agencies in achieving statewide five-year GSP updates. Because Proposition 68 groundwater sustainability, and would allow the funds have mostly all been expended, DWR would state to take advantage of economies of scale by not be able to continue these existing activities at supporting centralized data collection. We therefore the same level without more support. In addition, recommend the Legislature consider approving the DWR is taking on an expanded role that should Governor’s proposals. help facilitate better decision-making and inform Continue to Monitor Successes and recharge, dry well mitigation, and flood projects. Challenges of SGMA Implementation. Ongoing Legislative Oversight of SGMA Given its importance in overall statewide water Implementation Is Important. Given the state’s resource management and protecting vulnerable reliance on groundwater and the importance of communities, we recommend the Legislature SGMA to ensuring the sustainability of groundwater continue to conduct robust oversight of ongoing basins, ongoing oversight by the Legislature SGMA implementation. The Legislature could do can help ensure implementation remains on this through a number of ways, including requesting pace and legislative priorities are being met. updates at annual budget subcommittee hearings, Legislative oversight also can help ensure that conducting oversight hearings, or requesting GSPs adequately account for equity concerns and additional reporting when warranted. For example, that inequities are not exacerbated. For example, the Legislature could consider holding oversight legislative oversight can shine a light on whether hearings or requesting additional reporting at enough is being done in vulnerable communities particular milestones, such as the completion of the that rely on domestic wells for their drinking groundwater trading implementation plan, DWR’s water and where reports of dry wells have been final determinations on all GSPs, or at the five-year increasing. The success of SGMA ultimately is not mark when GSAs must submit GSP updates. about whether deadlines are being met—although deadlines can help ensure progress—but whether groundwater use, banking, and recharge allow the state to actually reach sustainability. www.lao.ca.gov 11 2023-24 BUDGET LAO PUBLICATIONS This report was prepared by Sonja Petek, and reviewed by Rachel Ehlers and Anthony Simbol. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 12 LEGISLATIVE ANALYST’S OFFICE