Rainy days and state budgets, part 1
This article is the first in a series by longtime water researcher and activist, Patrick Porgans, on the opposite and contradictory polls of the "500-year California drought," the state's growing gross dtate product (GDP) and its growing budget. Porgans asks a number of questions about water and finances in California: Did the drought really affect agricultural profits? Where did the water really go? Why don't the data support the claims of drought-driven economic ruin? Why do urban citizens have to subsidize agribusiness, which exports so much produce grown with subsidized irrigation water? The article is dense with facts and figures and requires reading several times to get their full impact. It can't be boiled down into either a TV sound-byte or a wire-service news story.
Enjoy the results of real sustained research on matters vital to the health of the state. -- blj
Grape and nut glut drying up Golden State: Part I
California water officials and mainstream media assertions this epic drought wrought a socioeconomic and financial disaster to the state’s economy is not supported by the facts published in government reports.
Three years into the drought and the Golden State Gross Domestic Product (GDP) reached a record of $2.31 trillion, agricultural revenues higher than ever, statewide building permits doubled, and more water-guzzling permanent crops planted, mandatory urban cutbacks n water use, and agriculture exempted from the mandatory cutbacks. (Latest published GDP figures.)
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Californians inundated by a plethora of mainstream-media bytes predicting Draconian consequence from this "epic drought" water experts and public-relations firms branded the worst in 500-years are perplexed by drought-flood news accounts aired simultaneously.
http://www.huffingtonpost.com/2014/01/30/california-drought-effects-500-years_n_4647539.html Meanwhile government officials, water contractors, and mainstream media, whine about the dire impacts of the so-called worst drought in California since the 1500s, the record, show they are reaping windfall profits.
Public records attest that the Golden State's economy, tax revenue stream, and Gross Domestic Product (GDP) reached all-time highs during four years of drought. In the third year of the drought, the state's GDP was a record-breaker.
“In 2014, the State’s GDP was ranked as the 7th or 8th largest economy in the world, based on traditional measurements [just below France and above Brazil]. On June 10 , the U.S. Bureau of Economic Analysis released its preliminary estimates of state gross domestic product (GDP) for 2014, as we described in a blog post last week. California's 2014 GDP— the value of all goods and services produced here—was estimated at $2.31 trillion. There are different estimates of countries' GDP.” http://www.lao.ca.gov/LAOEconTax/Article/Detail/90 That number is the latest number published by the government (www.bea.gov)
Epic drought generates the largest budget in State’s history: Last month, Governor Jerry Brown proposed the largest budget in California's history; $170 billion, of which, $120 billion comes from the State's General Fund revenue stream; with additional billions earmarked by Brown to the "Rainy Day" fund. This surplus of funds is collected tax revenue; almost 70 percent of the $120 billion is derived from personal income tax. Today, the Rainy Day Fund is at 37 percent of its constitutional target (10 percent of General Fund tax revenues) amounts to $12 billion to be held in reserve! The Budget proposes to bring the Rainy Day Fund to a balance of 65 percent. http://ebudget.ca.gov/FullBudgetSummary.pdf
Government and water industry officials responded to the good news, in March, by extending mandatory water cutback! California’s economy has expanded during the past seven years.
Governor’s Budget Summary 2016-2017, Introduction. “The economy is finishing its seventh year of expansion, already two years longer than the average recovery. While the timing is uncertain, the next recession is getting closer, and the state must begin to plan for it. If new ongoing commitments are made now, then the severity of the cuts will be far greater – even devastating – when the recession begins. Without question, the best way to protect against future cuts is to build up the state’s Rainy Day Fund,” according to Gov. Brown.
Californians face a multi-dimensional conundrum; an extended drought, which imposed first-time ever statewide mandatory water cutbacks while portions of the state are under siege from flooding resulting from the remnant of a fading El Nino. Factors compounded by a massive appeal by the water industry requesting State Water Resources Control Board (SWRCB) members to end the drought. In the interim, the Brown Administration recently reinstituted signage posted on California highways stating: Extreme Drought – Conserve water!
Water condition above average: The truth about the state's water conditions is immersed in a stupor of shifting forecasts, as is the winter weather, unpredictable and changing. On 1 February a report depicting statewide precipitation at 115 percent and 120 percent for the North Coast Region for this time of year, according to Department of Water Resources (DWR) personnel. The very next day 2 February the SWRCB voted to extend drought emergency regulation, purportedly to ensure mandatory water conservation through October 2016. http://saveourwater.com/blog-posts/conservation-extended/
In early March through April Californians were stunned as officials dumped floodwaters from Folsom Dam, on the American River, which had received 120 percent of average precipitation. Water was also being dumped at other major reservoirs in the north state. http://www.sacbee.com/news/state/california/water-and-drought/article67772672.html It is estimated that more than one million acre-feet of water were dumped from state reservoirs, enough to provide half of the water needs of those 19 million customers receive annually from the Metropolitan Water District of Southern California.
The March snow survey, conducted by DWR personnel showed snowpack at locations ranged from low 90s to over 100 percent of average. http://www.water.ca.gov/waterconditions/waterconditions.cfm
Findings contained in a Forensic Accounting based on the public record and direct intercommunication with water officials and regulatory personnel, most of whom putatively accepted the 500-year conjecture, in the absences of verifiable peer-reviewed data. If the intrinsic shortcomings of those assertions were even theoretically plausible, assuming that this is the worst drought in California, it might have possibly occurred in central and southern California; however, the public record does not support those assertions in the water-rich north state. http://www.theterranews.com/content/?p=66539 Forensic Accounts of previous drought events are the subject of a series of article that prompted responses from the California Farm Water Coalition.
The California Farm Water Coalition has this response to Patrick Porgans & Lloyd Carter’s post, Wolf Cries – Howling About Drought – All Wet – No More Doubts Officials Exaggerated Severity of Drought: “Coalition viewpoint…These numbers provide a clear picture of the effect that governmental regulations and the drought, during the past four years, had on water users who rely on deliveries of water through the Delta. As indicated by the bloggers, the water years in the Sacramento Valley from 2006-2009 averaged 16.39 million acre-feet (MAF), which is a 60% increase, or 6 MAF more than during 1989-1992.” http://www.farmwater.org/Current-News/
Ironically, the doomsday public-relations campaign precipitated an astonishing downpour of wealth to state and federal water contractors that already receive publicly-subsidized water. Water districts and land-gentry billionaires reaped an abundant harvest of public give-away funds. Unfortunately, their profits come at the expense and to the demise of urban water users; taxpayers, the state General Fund, and Public Trust Resources (water, fish, and wildlife).
Abundant Harvest: Contrary to mainstream media reports, agricultural profits reached all-time high in the fourth year of drought. “Even though the 2014 crop year coincides with the third consecutive year of unprecedented drought, the innovation and resilience of California’s agricultural community continue to ensure the State’s agricultural abundance. Despite the tremendous challenges in 2014, the farmgate value of the state’s 76,400 farms and ranches was a record $54 billion. Of the $54 billion, over $21 billion was attributed to California’s agricultural exports.” http://cdec.water.ca.gov/cgi-progs/iodir?s=b120
Building permits doubled: In the second and third year of the drought, building permits doubled statewide.
The Governor's Proclamation and the Emergency Drought Regulations relieve government water project operators of their obligation to comply with the provisions of the California Environmental Quality Act (CEQA). It also sanctions the reduction or suspension of water quality standards and objectives contained in the San Francisco Bay- Sacramento-San Joaquin Delta Estuary Water Quality Control Plan; enacted to protect Delta farmers, water diverters, and aquatic, avian and terrestrial species.
The SWRCB issued emergency drought regulation that targets mandatory cutbacks by urban-residential users, while subversively exempting the agricultural industry that reportedly applies an estimated 80 percent of the state's developed water supply annually. Instead, the Board left it up to the agricultural industry to reduce and conserve water.
Gross agricultural revenues represent about two (2) percent of the State's GDP. Additional revenue is generated by the processing and distribution of the products produced. Thus for every dollar of value added in that sector, there is an additional $1.27 added to the state economy. http://aic.ucdavis.edu/publications/moca/moca_current/moca09/moca09chapter5.pdf
During this current drought, it is estimated that $3 billion of borrowed public funds have already been given away for drought "relief" programs. That money comes from the sale of State issued General Obligation (G.O.) bonds, their repayment backed by the full-faith and credit of California. A list of General Obligation Bonds authorized and issued by the state can be found here. http://www.treasurer.ca.gov/bonds/debt/04/authorized.pdf
For every dollar of G.O. bonds sold, it cost a dollar in interest; it will cost $6 billion to repay, with revenues derived the State's General Fund. "It must never be forgotten, however, that 69.5 percent of our General Fund revenues come from the volatile personal income tax which, as history shows us, drops precipitously in time of recession — an event not too far off given the historic pattern of the ten recessions that have occurred since 1945. During a moderate recession, revenue losses to the General Fund will easily total $55 billion over three years"; Gov.'s Budget Summary 2016-2017.11 [Note: Rainy Day Fund is used to assure bond investors G.O. debt is covered. http://www.latimes.com/politics/la-pol-sac-jerry-brown-releases-state-budget-20160107-story.html
California land of fruits and nuts exporting water to foreign markets: “California, which produces much of the country's water-guzzling fruits [nuts] and vegetables, is in year four of a major drought, and almonds, its No. 1 export, have become a symbol of the state's heavy water consumption. Mature almond trees in the Southern Sacramento Valley use 41 to 44 inches of water on average per year, according to the University of California at Davis. Trees in drier southern San Joaquin Valley use 50 to 54 inches. In California, an acre supports about 124 almond trees. Last year, and acre produced around 2,270 pounds of almonds, for a ratio of about 502 gallons of water per pound of nuts.” (The math works out to equals 3.49 acre-feet of water per acre of almonds planted.) Total amount of water applied averages out to 3.55 MAF annually. www.wsj.com/articles/the-numbers-behind -agricultural-water-use-1434726353
The amount of water required to sustain the growth of these almonds is 1.4 MAF more than the 2.1 MAF the Metropolitan Water District (MWD) of Southern California provides annually. (One acre-foot equals about 325,700 gallons; an average California household uses between one-half and one acre-foot of water per year for indoor and outdoor use.) http://www.watereducation.org/general-information/whats-acre-foot
Almond crop bonanza – money grows on trees: In the year 2000, there was 610,000 acre of almond planted, valued at $666,487,000 for the crop. California's 2014 almond acreage is estimated at 1,020,000 acres, up 5 percent from the 2013 acreage of 970,000, according to a recent survey conducted by the National Agricultural Statistics Service. Of the total acreage for 2014, 870,000 acres were bearing, and 150,000 acres were nonbearing, crop valued at $6,464,500,000.
“The subjective production for the 2015 almond crop is 1.85 billion pounds, according to a survey conducted by the National Statistic Service.” https://www.nass.usda.gov/Statistics_by_State/California/Publications/FruitSave our water_and_Nuts/201505almpd.pdf
CBS and Fox News "erred" scenes of almond orchards ripped out due to a lack of water while other experts predicted California would run out of water in 2016. Public records do not support their assertions and the orchard depicted in their stories failed to "air" the scene where those same drought-stricken lands were replanted with a new variety of almonds. http://www.cbsnews.com/news/depleting-the-water As indicated by USDA's Graph California Almond Bearing Acreage has continued to expand before and since the onset of this drought, in 2011.
The SWRCB was advised of almond acreage expansion years ago; it took no action to curtail the use of the public's water, and growers went nuts.
There was so much of a glut in the almond market that the price of almonds dropped precipitously. After prices for almonds climbed to a record $4 per pound in 2014, farmers across California began replacing their cheaper crops with the nut, causing a huge increase in supply. Now, the bubble has popped. Since late 2014, according to The Washington Post, almond prices have fallen by around 25%.
More grapes and other permanent crops also planted while building permits doubled statewide in 2013-2014.
A major challenge facings taxpaying Californians, is if they can afford to export water in the form of surplus fruits and nuts to countries such as China, which is not required to pay an import tax. In the interim, the California dream appears to be fading into the midst impairing their quality of life and cost of living as the forces behind water exploitation usurp others water and property rights.
Part II: Water officials usurp property and water rights, and Part III: California’s water management crisis - why it pays
About the author: Patrick Porgans is a Solutionist, and for the past 40 years serving clients and as a de facto public trustee, assisting and or compelling government officials to perform their functions in a manner consistent with the law. Porgans authored more than 80 Fact-Finding reports on water- and water-related issues in the West. He contributed to Mark Reisner's Cadillac Desert publication. He is the author of "Truth De-Code-It", which provides insight on how wealthy land-gentry billionaires are using the tax base, the state's credit rating, General Fund, General Obligation Bonds, and publicly-owned natural resources to amass and sustain ill-gain fortunes. (Truth De-Code-It focuses on ways to mutually coexist and to empower ourselves to make change, one person, one day at a time. The FACT SHEET can be viewed at www.planetarysolutionaries.org or by emailing email@example.com This report was made possible by the joint commitment of New-Old Worlds Wholistically Emerging (NOWWE) and Patrick Porgans/Associates as a public service. For more articles and FACT SHEETS, Google Patrick Porgans water.
 California Department of Water Resources, Bulletin 120, Water Conditions in California, February 1, 2016, p. 2.
 State Water Resource Control Board’s Fact Sheet, Extending the Emergency Water Conservation Regulation, 9 February 2016.
 Joseph L. Sax, The Public Trust Doctrine In Natural Resource Law: Effective Judicial Intervention, The Historical Background, Michigan Law Review, [Vol. 68:471]