$30 Million at Risk in MWD’s Latest Water War With the State

By HOWARD FINE

Staff Reporter

In the latest round of the region’s never-ending water wars, two key water deals that would benefit the Metropolitan Water District of Southern California are threatening to unravel.

Gov. Gray Davis and the MWD are in a high-stakes standoff over a plan to use state water bond monies to aid a key water transfer deal. If the standoff is not resolved soon, the MWD could lose up to $30 million in state funding.

Separately, state legislators grappling with the record $38 billion budget deficit have moved to cut up to $235 million in subsidies that the San Diego Water District would use to pay the MWD for the use of its pipelines.

Unless funding is restored, it could endanger an agreement reached four years ago between the MWD and San Diego. That deal has never been implemented, held up by a series of other disagreements between the various parties involved in California water distribution.

In March, Davis proposed spending $200 million in Proposition 50 funds to help alleviate environmental damage from the transfer of water from the Imperial Valley to San Diego. The Imperial Irrigation District had objected to the water transfer, citing millions of dollars in potential environmental mitigation costs, primarily for the upkeep of the Salton Sea.

Davis hoped his plan would break this logjam, and the Imperial Irrigation District agreed to it. But the MWD has objected, claiming it would divert Proposition 50 funds meant for projects of other MWD member agencies.

The Davis plan would have paved the way for the transfer of water between the Imperial Valley and San Diego, which in turn is supposed to be the linchpin in the state’s plan to wean itself off of surplus water from the Colorado River.

Last Dec. 31, U.S. Secretary of the Interior Gale Norton cut off the flow of surplus Colorado River water to Southern California because no agreement had been finalized between all of California’s water interests. Negotiations now taking place are an attempt to finalize that agreement and reverse the federal government’s water cutoff.

Former Assembly Speaker Robert Hertzberg, who brokered an earlier deal last fall, said the Davis proposal is “too rich.”

“They gave up an awful lot in the hopes of putting this behind them,” he said. “Now Davis is coming in and asking for more.”

The MWD’s foot-dragging has prompted the Davis administration to begin withholding funds from the agency. So far, the state has withheld about $600,000, primarily from its Hayfield underground water storage reservoir in Riverside County. Under an agreement reached in 2001, the state committed to funding $35 million towards the project; to date, it has funded about $5 million.

If the MWD does not agree to the Davis plan soon, administration officials have said they intend to withhold the remainder.

The funds are being held up because the Hayfield project would store surplus water from the Colorado River, said former state Assemblyman Richard Katz, Davis’ point man for the negotiations. Without a settlement agreement on water transfer, there would be no surplus to store, he said.

Katz accused the MWD of doing a poor job in briefing its member agencies on the issue.

But the MWD spokesman Adan Ortega said the district had substantive concerns that go well beyond the immediate issue of the diversion of funds.

Meantime, the MWD has another concern. Late last month, the State Assembly axed $177 million of the $235 million former Gov. Pete Wilson had agreed to set aside for water subsidies for the San Diego Water District. The Senate removed all $235 million from the budget. The matter now goes before a conference committee.

Ortega is not hopeful the money would be restored, especially in this tight budget year.

The only good news comes from a perverse irony. With a four-year drought gripping the Colorado River basin, little surplus water will be available over the next several years for Southern California to claim, even if the federal government were to allow it. So the stakes are lower for the MWD and other California water agencies than they would be in normal rainfall years.