The cost of the boondoggle Delta Conveyance Project to burden taxpayers during a budget deficit

For Immediate Release:

May 10, 2024 


Alexandra Nagy,, 818-633-0865

Sacramento, CA – Despite a Superior Court ruling that sets limits on the Department of Water Resources’ ability to sell water bonds, a potential $27.6 billion budget deficit that will impact workers, healthcare, and education, and reversals toland-water restoration investments to mitigate climate change impacts, the Department of Water Resources will be releasing a Delta Conveyance finance planning documents in the near future. 

Although Governor Newsom stated in his press conference on the budget that there would be no impact on advancing the Delta Conveyance Project, what he described as the state’s “number one climate resiliency program,” the potential financial impacts on future state bond repayments should not be ignored, as well as the Governor’s climate resiliency claims.

The Department of Water Resources (DWR) says that revenue bonds will be used to fund the project in a recent public information sheet. However, there continue to be several reasons to question the financial viability of the DCP. First, construction costs continue to inflate since the initial $15.9 billion cost estimate for the DCP in 2020. The California Department of General Services Construction Cost Index estimates that construction cost inflation has averaged 10.7% annually since 2020. This would bring an updated estimate to $22 billion given all other factors remain constant. Additionally, realignment of the project to a new terminal location at Bethany Reservoir will likely add further construction costs.

Secondly, the bonds that would finance the project would be subject to the high interest rates we are currently experiencing, adding to the likely cost inflation. The planning phase of the DCP saw low interest rates that ended in 2022 and interest rates are not expected to return to the pandemic-era rates that characterized that period. It is also questionable if water districts can afford to pay back DWR for the revenue bonds purchased because water demand is down, fixed costs for current operations have risen, and water conservation/recycling projects which are the first priority to protect drinking water during drought need immediate investment at the local level. 

Revenue bonds are ultimately guaranteed by the taxpayers of California, and a recent Superior Court ruling has set limits on how DWR can go about selling revenue bonds for the project. Any attempts through budget trailer bills to change bonding capabilities for DWR would be a clear indicator of the fragile economics of the project. If the project needs “a fix” to become financially feasible, then it is not based on proper financing and accounting standards. 

Lastly, the Newsom administration continues to tout Delta Conveyance as a climate change project. Yet the DCP is the complete opposite. According to DWR, operation of the DCP will reduce the monthly average flow to the Delta in nearly all months, especially in drought, and even in wet years. Given current insufficient flows have led to an ecological crisis, further water flow reduction will cause inevitable and unreasonable harm to fish and wildlife and to other beneficial uses that impact communities throughout Northern California. Reducing freshwater flows and further starving the estuary is not the backbone of a climate project rooted in equity.

Restore the Delta’s Executive Director Barbara Barrigan-Parrilla notes, “If the Newsom Administration continues to hoist the Delta Conveyance Project on California taxpayers during a budget deficit crisis, this is a clear indication that the project fails to meet the test of environmental and budgetary laws. Burdening urban water ratepayers with 40-years of debt for a project that will not meet climate challenges is unjust, especially for disadvantaged communities.”

California voters first officially rejected a past iteration of the DCP in 1982 when it was proposed as the peripheral canal. During the Brown administration, DWR leadership made multiple public statements and arguments that single tunnel alternatives were not cost-effective. 

According to Barrigan-Parrilla, “The California legislature over decades has already set the standards for proper governance of large infrastructure projects. If the Delta Conveyance project could stand on its own merits, it would withstand the test of our economic and environmental laws and science. It fails in terms of water operations and economics. Why does the Newsom Administration continue to advance a project that will not stand up to a volatile climate or California’s volatile revenue stream?”


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