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Congressman Tom McClintock

Representing the 4th District of California

Association of California Water Agencies

February 24, 2010

Remarks by Representative Tom McClintock, Washington, D.C., February 24, 2010.  

A generation ago, the principal objective of our water and power policy was to create an abundance of both.  It was an era when vast reservoirs and hydro-electric facilities produced a cornucopia of clean and plentiful water and electricity on a scale so vast that many communities didn’t even bother to meter.

 But the last generation seems to have abandoned this objective, and to replace it with a very different philosophy that now dominates public policy: that the principal purpose of government is not to produce abundant water and power, but rather to ration shortages that government has caused by abandoning its abundance as its objective.

 The result is increasingly expensive water and power that is now affecting our prosperity as a nation.  We’re no longer looking at cost-benefit analyses of which projects make economic sense and which do not.  Instead, practicality has been replaced by an entirely new ideological filter: those projects that ration or manage shortage are considered worthy regardless of feasibility or cost – and projects that produce abundance are to be discouraged regardless of their economic benefits or simple common sense.

I’d like to mention five disturbing developments in water policy that I would seek your organization’s leadership to remedy.

The first is the agony of the Central Valley.  One of the great travesties of California Water policy is the willful diversion of 200 billion gallons of water away the San Joaquin Valley -- where communities and farms are desperate -- in order to dump that water into the Pacific Ocean to serve the Environmental Left’s pet cause, the three inch Delta Smelt. 

What good are additional water projects if the water is simply to be dumped into the Pacific Ocean?  At some time this issue is going to have to be addressed.  You can already hear the public snapping shut its checkbook as long as such folly persists.

Second is the wanton destruction of Klamath Dams, agreed to just last week.  I submit to you that at a time when Californians are already paying the highest electricity prices in the Continental United States and at a time when California officials can’t guarantee enough electricity to keep your air conditioner running this summer, the willful destruction of FOUR hydro-electric dams that generate 155 megawatts of the cleanest and cheapest power our technology can produce – is insane.

155 megawatts is enough to produce electricity for 150,000 average households at a cost of $30 per year.  The replacement power will cost many times that amount.  Not only will ratepayers be required to pay those replacement costs, they will also have to pay a surcharge to pay for the dams’ destruction.

The rest of the cost will be paid for with money from the proposed water bond.  Think about that: a water bond being used to destroy four perfectly good hydro-electric dams.  Do you really think the public is going to go along with such lunacy?

My third concern involves the absurd restrictions on cement production inherent in AB 32 – the so-called Global Warming law.  

If we’re going to build more dams and aqueducts, I think we can all agree that cement is a pretty useful thing to have around. 

The chemical process by which cement is produced requires the generation of about one ton of carbon dioxide for every ton of cement.  But carbon dioxide – the same stuff we all exhale with every breath – has now been classified as a toxic pollutant and will be severely restricted at both the state level through AB 32, and at the federal level through EPA edicts.

What exactly do you think that’s going to do to the price and availability of cement – and therefore the price and feasibility of future water projects?

Here is my fourth concern: the outrageous decision by the State Water Resources Control Board to withdrawal the federal development rights for the Auburn Dam.  If we are to take the position that the Auburn Dam will never be completed – the footing for which was constructed more than three decades ago – then it is clear there will be no new dams of any significance. 

The Auburn Dam promises 2.3 million acre feet of water storage, 800 megawatts of hydroelectricity – again, the cleanest and cheapest electricity it is possible to produce – and 400 year flood protection for the Sacramento Delta.  As long as the Auburn Dam sits uncompleted, promises of any significant new dam construction in the future ring utterly hollow.

Fifth and finally is my concern over the abandonment of sound financing principles for future water projects. 

 It should be painfully obvious to everyone that over the last decade, we have squandered billions of dollars that were supposed to be used for lasting water systems but instead were frittered away on countless local environmental hobbies instead.

In the last ten years, voters have approved six bond measures totaling almost $17 billion that all promised to enhance California’s water supply.

 Compare that to the Burns-Porter Act that financed construction of the entire state water project.  It was a total of $1.75 billion approved in 1960.  That’s the equivalent of $12.3 billion in today’s money.  $12.3 billion.  That’s substantially less than the water bonds we’ve approved during the last ten years and just slightly more than the water bonds ALREADY APPROVED just in the last five years.   It is about the size of the bond pending voter approval.

 The Burns-Porter Act paid for the entire State Water Project.  In the last ten years we’ve approved a significantly LARGER sum of money, promising the public it would solve our water needs.  So where’s this generation’s State Water Project?

 We went wrong by making a series of utterly foolish mistakes.  Let me list four lessons we need to re-learn about responsible borrowing and public works.

 The first lesson is: PROJECT FIRST – THEN FINANCING.  A generation ago, the legislature and governor would first agree on a project, commission the engineering, obtain the bids – and ONLY THEN borrow just what was necessary to finance that project.

You don’t go to a banker and say, “I’d like to buy a nice house or something.  Please lend me lots of money.”  No, you select a house, negotiate a price and THEN obtain a loan.

When we borrow billions of dollars for vague notions like “water” or “parks” or “stem cell research” or “economic recovery,” with no specific projects in mind, we simply create a gigantic grab bag of money for pork projects. 
 The second lesson is: DON’T ROB ST. PETERSBURG TO PAY ST. PAUL.  If a project exclusively benefits a local community – it should be exclusively paid for by that local community.  State bonds and federal funds should only be used for projects that benefit the entire state or regions.  And those funds should be repaid by the users. 

 The third lesson is: DON’T ROB OUR CHILDREN.  Whatever is purchased with a 30-year bond ought to be there 30 years from now when our children are still paying off that debt.  And yet the bonds adopted in recent years include billions of dollars for cleanup and conservation projects that will be obsolete long before these bonds are repaid.  Our children are going to have their own pollution to clean up and conservation programs to promote without paying for programs from 30 years ago.

 The fourth lesson is: WHEN A PROJECT BENEFITS A DISTINCT CLASS OF USERS, THE DEBT SHOULD BE PAID BY THOSE USERS IN PROPORTION TO THEIR USE.   Water projects should be repaid by the users of the water and electricity – and, by the way, that principle should extend to government’s use of water as well.  Nearly half of our water supply is now being used to satisfy various environmental mandates imposed by government.  That water should be paid for by government – just like any other user.  That would give policy-makers some rational price-signal to determine if these mandates make any sense.

Overall, unless it’s a self-liquidating general obligation bond like those used in the Burns-Porter Act, there’s no excuse for using a G.O. bond for a water project – it should be a revenue bond repaid by the ACTUAL users of the ACTUAL water and electricity produced by the ACTUAL project. 

It should be painfully obvious that the policies of the last 30 years have failed and failed miserably to meet this generation’s needs – let alone beginning to meet the needs of future generations. 

It is time that we restored a little common sense to our water policy:

We don’t build water projects so that we can dump the water into the ocean.

We can’t create abundance by wantonly destroying our existing infrastructure.

We can’t build water projects without cement.

We won’t build more dams as long as we won’t complete the dams we’ve already started.

We can’t produce projects of the magnitude of the Burns-Porter Act by squandering billions of dollars on open grab-bags for local projects.

We need a sharp and dramatic change from the folly of these policies.  I want to pledge to you everything I can do in my new capacity as ranking member of the Water and Power Sub-Committee, and ask that you – the representatives of California’s Water Agencies to take a leading and visible role in this fight.  After all, if not now, when? And if not you, who?

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