Funding Mechanism Inventory and Evaluation

This document supports information contained in Chapter 4 of the California Water Plan Update 2018. The purpose of this document is to provide a description of the current and novel funding mechanisms, as well as assumptions used in the funding analysis (described in Funding Scenario Analysis supporting document). The Funding Mechanism Inventory and Evaluation supporting document evaluates the current and novel funding mechanisms available to implement water resources management actions.

Funding mechanisms need to be appropriate for the management actions being funded (i.e., have a nexus and applicability), be available when needed (i.e., have inter-annual reliability), and have political support (i.e., political viability). Many potential funding mechanisms are available for financing water resources management from State, local, federal, or private sources. Any of these could be applied for different capital and ongoing management actions. This document discusses a range of funding mechanisms and their potential use for capital or ongoing management actions. For capital management actions, the mechanisms include (1) existing, authorized funding streams, such as the State general fund or local taxes and assessments, and (2) limited-duration capital finance mechanisms, such as general obligation (GO) bonds or local bonds. Ongoing management actions are best supported by consistent reliable funding from mechanisms such as general fund, taxes, rates, or assessments.

The characteristics of each funding mechanism are detailed in this document and are important considerations for the funding analysis in Chapter 4 of the California Water Plan Update 2018. Novel mechanisms are included in the funding analysis for demonstration and are not a substitute for the studies and legislation required for creation of these mechanisms. Local and federal mechanisms also are included to provide an understanding of historical and future cost sharing potentials. For additional information on historical expenditure levels of State, local, and federal funding mechanisms, seeHistorical Expenditures and Current and Future Funding Needs supporting document.