Schwarzenegger urges postponing $11.1 billion water bond

SAN FRANCISCO (Reuters) - Citing California's fiscal challenges, Governor Arnold Schwarzenegger said on Tuesday he would ask lawmakers to help him postpone an $11.1 billion water infrastructure bond slate for the November ballot until 2012.

Schwarzenegger said leaders of the most populous U.S. state should focus on the state's finances instead of pressing for the general obligation bond measure, which would go before voters at a time when the state's finances are extremely strained.

California's new fiscal year begins on Thursday and analysts expect the Republican governor and leaders of the state's Democrat-led legislature may take several weeks to hammer out a budget for it. The task will difficult as they will need to close a deficit of more than $19 billion.

"After reviewing the agenda for this year, I believe our focus should be on the budget -- solving the deficit, reforming out of control pension costs and fixing our broken budget system. It's critical that the water bond pass, as it will improve California's economic growth, environmental sustainability and water supply for future generations. For that reason, I will work with the legislature to postpone the bond to 2012 and avoid jeopardizing its passage," Schwarzenegger said in a statement.

He noted that in May 2004 state leaders passed a bill to delay voting on the high-speed rail bond until November 2006. They subsequently delayed the vote again until November 2008, when voters approved the $9.95 billion bond.

California lawmakers have been mulling whether to alter the bond measure to amid criticism by environmental groups that private companies stand to benefit from projects it would fund.

Last week Sierra Club California official Jim Metropulos said in a statement that, "Wonky policy tweaks cannot change the fact that this bond asks the taxpayers to come up with an extra billion dollars a year in the middle of a massive recession to pay for projects that would do little, if anything, to increase the state's supply of clean and reliable water."

In the same statement, Tina Andolina of the Planning and Conservation League said the bond measure is flawed as it would allow "private companies to profit as taxpayers foot the bill. We will see water privatization on an even larger scale if the bond passes, and this bill does nothing to address the problem."

Republican state Senator Dave Cogdill, one of the measure's most prominent supporters, immediately backed Schwarzenegger on his proposed delay.

"I have dedicated the last four years to achieving this goal and I am committed to getting this bond passed at the ballot box," Cogdill said. "While I believe we must immediately invest in our water future, timing is everything and I'm willing to wait to bolster voter understanding of this critical measure."