Democrats Propose Mandatory Flood Insurance, Development Limits

January 27, 2006

Citing the risks exposed by Hurricane Katrina, a group of California Assembly Democrats unveiled legislation that could block some development in flood-prone areas and require homeowners living on flood plains to have flood insurance.

Meanwhile, Assembly Republicans proposed a pay-as-you-go alternative to Gov. Arnold Schwarzenegger’s plan to borrow $68 billion for public works projects, including levee improvements.

The announcements came as lawmakers continued a long series of committee hearings on Schwarzenegger’s infrastructure proposals.

A half dozen Democrats, including Assembly Speaker Fabian Nunez, D-Los Angeles, outlined a flood protection package that would use up to $6 billion in bonds plus property owner fees to pay for levee improvements and maintenance.

The legislation, some of it still in the drafting stages, would also require that before local governments approved new developments, they certify the developments have 200-year flood protection, or a one-in-200 chance of being flooded in any given year. Homeowners living in flood-prone areas without 200-year protection would be required to have flood insurance.

“We all know we need more money for flood protection,” said Assemblywoman Lois Wolk, D-Davis. “However, money is only one piece of the puzzle. We must invest that money wisely, supporting any bonds that we do with good policy.”

But Tim Coyle, senior vice president of the California Building Industry Association, said most of the Democratic legislation amounted to “the same old anti-growth policies that ignore the realities of this state and the needs of our current residents.”

The GOP proposal, a constitutional amendment by Assembly Minority Leader Kevin McCarthy, R-Bakersfield, would earmark part of the annual state budget for highway and transit construction, flood control projects and university facilities.

McCarthy said it could generate at least $35.8 billion over the next 10 years and reduce the need for the state to borrow — and pay interest– by selling bonds to cover infrastructure improvements.

“When you look at it in a nutshell, you will build more, you will build now and you will pay less,” he said. “In 10 years we will have $35 billion spent on infrastructure. That’s half of what the governor wants, and we don’t have to pay anything back.”

The McCarthy legislation would require the state to set aside 1 percent of its general fund — an estimated $950 million — for transportation, flood control and new public university facilities in the fiscal year starting July 1, 2007.

The amount set aside for those public works projects would increase by half a percentage point or $750 million, whichever was less, in any subsequent fiscal year that the state general fund revenue increased by at least $5 billion and minimum school funding requirements were met.

A spokesman for Schwarzenegger, H.D. Palmer, said McCarthy’s proposal could be considered “complementary” to Schwarzenegger’s plan “because it’s also premised on committing the state to an ongoing investment in many of our infrastructure needs.”

“The governor encouraged both Republicans and Democrats to bring their ideas to the table, and this measure is part of the process,” he said. “We don’t consider it to be a criticism. We consider it part of the ongoing dialogue the governor put in motion.”

Nunez said he hadn’t looked at McCarthy’s proposal, but he said Schwarzenegger was seeking too much in bonds.

“I am concerned about the impact this could have on the general fund, if you don’t have any other sources of revenue to help pay for the bond indebtedness,” he said.

Topics Legislation Flood Politics

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