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1000’s Out of Work Due to California's Sudden Bond Funding Freeze

In the December 18 letter issued by DOF, this directive was expanded to “Cease authorizing any new grants or obligations for bond projects, including new phases for existing projects” and the freeze all disbursements on AB 55 loans.

This decision has created an historic and unprecedented crisis for California. Since 1986, the AB 55 program has been the cornerstone of financial reliability for all types of infrastructure projects that depend upon stable financing for project design and completion. Further, this decision is dangerously compounding the national economic crisis and could cause California to spiral into a worse economic situation than the rest of the country.

“It’s ironic in a time when stimulating the economy through ‘shovel ready’ green jobs is all the buzz, our legislators just ripped the green shovels out of ‘shovel happening’ projects,” said Joan Clayburgh, Executive Director of the Sierra Nevada Alliance. “In the Sierra’s rural communities, these were great full time jobs with benefits. This is only the tip of the iceberg. A number of groups indicated they plan to lay off more workers next month if the freeze on state contracts continues.”

The suspension of bond funding has resulted in non-profit organizations laying off skilled, talented and committed experts. Not only does this have an impact on the state’s economy, this talent may be lost forever. These non-profits, who are most affected by the Stop Work order and payment freeze, are contracting implementers for the federal, state and local governments that no longer employ field personnel as regular staff. Thus, the Stop Work order has resulted in the termination of one of the highest productivity forces in California. Projects that were under construction will have to be re-submitted with change orders to respond to the damages from abandoned work sites (and perhaps even go through the re-bid process) wasting significant time and money when we can least afford it.

“The 23-year old Feather River CRM had to lay off all 6 staff members effective January 2nd,” reported Jim Wilcox, restoration specialist with the Feather River CRM. “This halts work on 9 watershed projects affecting 22 miles of stream channel and 1800 acres of floodplain restoration.”

In addition, past work performed under state contracts is not being reimbursed. Some groups have shared stories describing past invoices they were owed money on that dated back to July 2008. This action jeopardizes the financial sustainability of small conservation organizations because many such organizations were depending on their contract’s regular payments to cover operating costs such as salaries and rent.

Rob Hutsel of the San Diego River Park Foundation reports that two critical projects serving one of the most urban areas of San Diego are now at risk. Each of these projects are more than 50% completed. Work for more than 40 people has already been stopped. This project is in the community's only public park.

Nancy Steele of the Los Angeles and San Gabriel Rivers Watershed Council has two projects that were stopped - both were feasibility studies for restoration projects: restoration of the earthen bottom portion of the Compton Creek and a stream daylighting study in Watts. Both of these projects will benefit low income communities of color, if they can be completed. “We have almost $240,000 in bills for work completed as of 12/17/08 that has not been paid by the state.”

The cash flow cutoff cripples the capacity of hundreds of community-based non-profit groups and resource conservation districts who are doing the lions share of the flood damage reduction, fire remediation, water quality protection and habitat restoration projects in all corners of California.

This action has caused enormous impacts and financial disruption among our state’s hard-working resource conservation districts, community-based non-profits, and municipalities who are the front line stewards for conserving California’s most precious natural resources and provide the foundation for the multitude of projects that relate to environmental protection, clean water, flood protection, open-space and agricultural land conservation, and climate change adaptation. Our arena of work—enhancing and maintaining California’s land, air and water assets and improving energy efficiency and land use practices from the ground up—is the basis of California’s future green economy and a powerful engine for recovery from today’s economic malaise. Yet that work is beyond jeopardy due to the work stop order and payment freeze.

For the most part, the state’s investment in environmental protection, land and water conservation and pollution prevention is “serviced” by a unique network of organizations working exclusively or primarily from bond-funded accounts. They survive on good faith through billing in arrears for work implemented under contract to the State, leaving little or no cushion with which to survive if funding is suddenly shut off, as it now has been. Even if an entity had other private funding that could be used to continue project work, those funds would not be reimbursed, based on guidelines provided by the granting agencies.

The California Watershed Coalition joins the hundreds of other organizations in urging the Administration and Legislature to immediately restore funding for these projects from the bond accounts that the people of California voted to enact.

Further information is available at http://stopworkimpact.ning.com/ as well as the California Watershed Coalition member’s websites.

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