With heavy rain finally falling on Sacramento this week, the Legislature and the governor appear to be inching closer to a water bond deal.

But several environmental groups are already lining up to oppose the potential ballot measure. If a package does make it to voters, these groups also appear to have a ripe target — the bond’s multibillion dollar cost, which could be a hard sell in the current fiscal environment.

“The bill is only moving closer to a loss for the environment,” said Charlotte Hodde, water program manager for the Planning and Conservation League, which is opposed to the package as it is currently being drafted. “The big Achilles heel for this package has been the financial mechanism.”

The Sierra Club of California joined the California Rural Legal Assistance Foundation and nearly two dozen other groups to send a letter last week to Gov. Arnold Schwarzenegger, Senate Leader Darrell Steinberg, D-Sacramento, and Assembly Speaker Karen Bass, D-Los Angeles. The 13-page document outlined numerous concerns around water rates and environmental cleanup.

As the outlines of a bill package began to take shape this week, there was already a feeling among some environmental groups that Democrats have given up too much in order to move a package forward, in areas including groundwater monitoring, water rights, conservation and monitoring illegal diversions, according to Jim Metropulos, lobbyist for the Sierra Club of California.

The package does have early support from several prominent environmental groups as well. On Oct. 9, the day after the Sierra Club sent their letter, half a dozen groups signed on to a support letter to Steinberg and Bass. This group includes the Natural Resources Defense Council, the Environmental Defense Fund, and Defenders of Wildlife.

One group that signed onto the letter, the Nature Conservancy, broke ranks with many other environmental organizations when it said it could support a peripheral canal that would divert water around most of the Delta. This idea, more than three decades old, has usually been opposed by environmental groups. The current water plan may include funding for at least two new dams, another sign environmental groups may be willing to compromise—though is does not currently contain a peripheral canal, according to sources.

The letter thanked the Democratic leaders for “your leadership and extraordinary efforts on behalf of the water package.” However, it then went on to bring up many of the same concerns about groundwater, enforcement and governance mentioned by the Sierra Club and others.

Leo Winternitz, Delta project director with the Nature Conservancy, made a distinction between the public policy portion of the package.

“The Delta policy package we really support,” Winternitz said. “It’s quite comprehensive.”

The policy portion would be a major step forward in terms of clarifying and strengthening governance of the Delta, he said. It calls for studies to determine the minimum flows needed to keep the Delta ecosystem functioning. It would create a Delta Stewardship Council to help unify actions among the 200 or so governmental entities that have some say over the Delta region. And it calls for monitoring water users’ take from the ground for the first time ever.

“California was the only state in the country that didn’t require groundwater monitoring,” Winternitz said. “It’s huge, not just with environmental groups but with many water agencies.”

He added, “What is being proposed here is really a very modest approach compared to other western states.”

Many of these proposals come out of Democrat-sponsored water bills proposed earlier this year. In particular, they draw from a pair of stalled bills by Senator Fran Pavley, D-Santa Monica, SB 229 and SB 681.

Metropulos said there was heavy behind the scenes lobbying from water agencies, utilities and agriculture groups trying to weaken many of the provisions these groups like, he said. He had another interpretation of the meaning behind the letter the Conservancy and others sent last week: “If you tinker with this package any more, we’re out.”

The weak link appears to be the bond portion. While the policy bill will only need a majority vote, the bond needed to implement it would need a two-thirds measure in both houses. This means that legislative Republicans would have a greater influence over its contents, and they are unlikely to approve of shuffling much of the cost onto agricultural users and utilities, as some environmental and progressive groups have called for.

The latest reports have the ng coming in the form of a $9.4 billion general obligation bond. On Oct. 1, Treasurer Bill Lockyer put out a report warning against adding further debt to the state general fund.

“This report makes clear that further increasing the General Fund’s debt burden, especially in the next three difficult budgets, would require cutting even deeper into crucial services already reeling from billions of dollars in reductions,” Lockyer wrote in the introduction to the “Debt Affordability Report.” “The case for user-funding for most water system improvements is compelling, both as a matter of equity and fiscal prudence.”

The plan also reportedly calls for the state to defer payments for 15 years. Metropulos said this was an attempt to hide the cost.  
“For those 15 years, the interest we’re not paying will be recapitalized and put back into the principle,” Metropulos aid. “It’s not going to be $12 billion or $15 billion, it’s going to be some huge amount. Amazingly, all those legislators will be termed out and not have to deal with the payments.”

As debt service, the bond repayments would also have a high priority in the budget, which could make it harder to future legislators to balance the budget and maintain social service spending.

“The payment of debt service has second-highest priority,” noted Tom Dresslar, Lockyer’s communications director.  “The only thing that’s higher is K-14 [education].”

“No one wants to give future legislators veto power over this package, though many current lawmakers like the idea of playing with water bond money if it suits them,” said Jeff Weir, a private consultant and former public affairs director of the Contra Costa Water District. “Backers of the bonds, dams and PC [peripheral canal] want to make sure the language guarantees ongoing funding, rather than subject these big projects to annual budget scrutiny by the Legislature, which would be tempted to raid water bond funds for other programs when in a pinch.“

Fifteen years is also about how long it would take for farmers, consumers and other ratepayers to actually see any new water out of the plan, as Weir, Metropulos and others have noted. Environmental groups are lobbying for more water conservation, better metering and other provisions that would help the state make better use of the water it already has.

But there may not be time. As of Tuesday evening, the main bond bill wasn’t even in print. Metropulos said that he’d been told the goal was to take it from a dead stop to floor votes early next week.

The Nature Conservancy’s Winternitz conceded that while his group supports the package as they currently understand it, there isn’t much “cohesion” among environmental groups over whether they would still support the package if it relies on billions in GO bonds.

“People ask can we afford that,” Winternitz said. “Well, we’re talking about the water system of our state. The other question is, can we afford not to fix the Delta ecosystem and our water system?”