Overview & Background

Below you will find a brief background on California stormwater funding that includes an introduction to Proposition 218, and an overview of Senate Bill 231. An expanded summary of funding barriers and opportunities can be found in the 2017 CASQA white paper entitled, ‘Stormwater Funding Barriers and Opportunities’.

In addition, we have a summary matrix of various funding mechanisms and strategies. Many of the options are discussed in more detail on this website.

California Stormwater Funding Background

The current state of stormwater funding in California is driven by two forces: 1) Revisions to the federal Clean Water Act in 1987 that compelled municipalities to take responsibility for controlling pollutants in stormwater runoff, and 2) Proposition 218 (approved by voters in 1996) and subsequent case law that require municipalities to seek voter approval before establishing or increasing fees for stormwater services. These forces act as the two jaws on a vice:

  • Meeting unsurpassed demands for service
  • Dealing with significant barriers to funding those services.

California communities underwent a massive growth spurt after World War II – a period when much of the public drainage infrastructure was built. This system is now approaching the end of its useful life creating a demand for capital infrastructure improvements while clean water requirements (NPDES) and a heightened sense of environmental stewardship are driving demand for new approaches to stormwater management. But Proposition 218 has essentially frozen funding for stormwater management at 1996 levels (which is zero for most municipalities in the State). As result, most municipal stormwater programs rely almost entirely on a municipal’s general fund, which is typically already over-pledged for general community services. This predicament is similar to being laid off from work just as you were preparing to replace your old, worn out car. You no longer have the income to make payments on a new car, but your old car isn’t reliable enough to carry you through an extended career shift. You can only ask for assistance from your retired (i.e. fixed income) parents.

Stormwater managers have recently begun to integrate the three disparate functions of stormwater: flood control, urban storm drainage, and water quality (the newcomer). With this integration comes the realization that stormwater should be thought of as a municipal utility on par with the old standbys of water and sewer. However, water and sewer funding enjoy an exemption from the voter approval requirements of Proposition 218, so “on par” is hardly the appropriate term. This is becoming increasingly confusing and difficult to reconcile as “one water” and “green infrastructure” approaches are blurring the lines around stormwater management.

Finally, it is worth noting that this predicament is unique to California. No other states have a Proposition 218 to contend with; municipalities can typically form a utility (or enterprise fund) and the governing board can adopt rates as needed (already a politically daunting task). Asking for voter approval for each new step of a stormwater fee raises the hurdle for California municipalities to an almost unattainable height.

Senate Bill 231

The voter requirement disparity between stormwater funding and other utility funding has been seen as unfair and harmful to best stormwater practices. In response the State legislature passed Senate Bill 231 in August 2017 and the Governor signed it into law on October 6th. SB 231 adds a definition to the Proposition 218 Omnibus Act that clarifies one primary element: Sewer (which is exempt from the voter approval requirement) includes storm drainage as well. This would enable municipalities to establish and increase stormwater fees by an action of the governing board (city council or board of supervisors).

At face value, this appears to change the entire landscape of stormwater funding, creating parity with water and sewer utilities. However, the authors and proponents of Proposition 218 (Howard Jarvis Taxpayers Association) consider the new law to be unconstitutional and has promised to sue any agencies that move forward without voter approval. This has had a chilling effect on the initial enthusiasm surrounding SB 231, and Senator Hertzberg (the bill’s author) has created a working group to develop strategies to move this effort forward, a path that will likely lead through the courts as a test case. Any agency considering following the SB 231 path is urged to contact Sean Bothwell, the lead contact for the SB 231 Working Group, to coordinate efforts and collaborate on strategies.