Speak, Elfie, of cost/benefit analysis on water projects

Who needs a cost-benefit analysis? Not Southern California
By Lloyd G. Carter

When Assembly Member Alyson Huber of El Dorado Hills failed to get an economic feasibility analysis bill on the controversial proposed peripheral canal out of committee recently, she was probably unaware that a similar challenge had been made to the finances of the State Water Project in 1960 by the late George “Elfie” Ballis, a legendary figure in Central California water and farmworker politics.
Huber’s bill (AB 550) would have required express approval of the Legislature for any “conveyance facility, an honest cost-benefit analysis of a peripheral canal or tunnel around the Delta” (which proponents claim would help the Delta) and prohibit any diminishing or negative impact on Delta water supplies, water rights, or water users. It failed to clear the Assembly Committee on Water, Parks and Wildlife on a 7-5 vote. But the vote was not along party lines. It was based on geography. North State legislators, including committee chairman Jared Huffman voted for it. The Southern California Committee members voted against it.
Metropolitan Water District of Southern California, the Westlands Water District, and a host of development interests in the Southland argued in a January 4, 2012 letter to Huber that her bill would “undermine water supply reliability throughout California and will threaten jobs and the economic health of three quarters of the state’s population residing south of the Delta.” (TRANSLATION: We have the votes and we don’t give a damn if you can show the Delta and its residents will be harmed.) Not much changes in a half century in California’s Machiavellian water world.
Ballis, who died September 24, 2010 at the age of 85, wrote a memo in January of 1960 noting that the 1957 general session of the state legislature had passed a resolution “assigning to a joint committee on water problems certain economic and financial questions on water projects.” The resolution read, in part, that the joint committee was to “study the problems involved in establishing policies to be used by the state of California in evaluating economic and financial feasibility of the Feather River project and other units of the California Water Plan and to recommend appropriate policies to the Legislature for adoption . . .”
On August 5, 1959, the joint committee issued a report entitled: “A study of Economic and Financial Policies for State Water Projects.” One key paragraph stated: “It has been recognized that a project can be faulty on an economic or financial basis, with just as serious consequences to orderly progress and a successful state water development program as when legal and engineering deficiencies exist and that a project cannot be regarded as sound unless all these factors and their related problems are considered and resolved.”
However, in 1959, no legislation was enacted pursuant to the joint committee’s study. Instead the Legislature enacted several water bills, the most important being SB 1106, the $1.75 billion water bond act, which would eke out a very narrow victory in November of 1960. Ten months before that election, Ballis pointed out in his memo that the bill would, in effect, “authorize the Governor’s office to build or buy any number of a group of projects. The bill contains no economic or financial standards, no policies on pricing of water and power, no policies on repayment of costs and no policies on distribution of water and power.”
Ballis said spokesmen for small farmers, labor interests and liberal Democratic groups had concluded that SB1106 was a “blank check” and that approval of the measure “would simply be playing into the hands of the large landowners in [the] Central Valley and private utilities” and that it should be defeated as written. Those interest groups had been calling on Gov. Edmund G. “Pat” Brown to call a special session of the Legislature before the November 1960 election to “iron out” the problems but as 1959 ended and 1960 began Brown showed no interest in such a proposal and never did pursue a cost-benefit analysis.
Ballis noted SB1106 proponents had argued the Legislature would be unable to reach any policy decisions, resulting in defeat of the bond measure, and that it would be better to “pass the bond act now and settle these side issues later.” A cost-benefit analysis is a side issue?
Ballis said this argument was counted by three points: “(1) If you can’t pass any sound financial, pricing and distribution standards through the Legislature with the lever of the projects, you don’t stand a ghost of a chance once you lose control of the purse strings; (2) If the program lacks any financial, pricing and distribution policies, we don’t know whether we have sound projects or not, and the water bonds deserve to be defeated; and, (3) delaying action on policy questions simply plays into the hands of the special interests which in the past have been able to stall the Legislature and pressure both state and federal agencies into granting concessions.”
Ballis also noted that of the nearly four million acres of western San Joaquin Valley land that would be irrigated by the State Water Project, nearly two-thirds were in private holdings in excess of 1,000 acres for each owner. Kern County Land Co. Was the biggest with 348,678 acres, followed by Standard Oil at 218,485 acres, other oil companies combined at 264,485 acres, Southern Pacific Railroad at 201,851 acres, Tejon Ranch at 168,531 acres and Boston Ranch (J.G. Boswell) at 37,555 acres. Ballis pointed out that Southern Pacific Railroad had received its land on the promise of building a railroad along the west side of the San Joaquin Valley, which it never built.
But, of course, Pat Brown and southerners in the Legislature ignored Ballis’s call for a cost-benefit analysis of the State Water Project and the problem has been beset by financial problems ever since, delivering half the water promised and costing twice as much as advertised, with many billions of dollars more need to actually finish it.
Ballis went on to found National Land for People in the 1970s, which tried, again without success, to break up the huge landholdings in the Westlands Water District, where Southern Pacific Railroad alone owned 106,000 acres. He then spent many years in the cause of farmworkers and small farmers, becoming a renowned photographer and videographer. Now, Assembly Member Huber has found out the true costs and benefits of Peripheral Canal, which could cost $12 billion to $20 billion, are the last thing proponents want. Pat Brown’s son, current Governor Edmund G. “Jerry” Brown seems determined to follow in his father’s footsteps and has made no public call for an honest cost-benefit analysis. Hey, it’s a “side issue,” with details to be worked out after the Peripheral Canal is built.
George Ballis must be rolling over in his grave