On behalf of our members, the undersigned groups urge you to exercise fiscal responsibility as the Bureau of Reclamation (USBR) completes Central Valley Project (CVP) water contract renewals. USBR is negotiating on behalf of federal taxpayers and must draft contracts that are in the best interests of taxpayers. The agency has a chance to break with the heavily subsidized past and demonstrate a modicum of fiscal responsibility by implementing essential pricing reforms found in the Central Valley Project Improvement Act (CVPIA) of 1992. By following both the spirit and the letter of this law, the USBR can protect taxpayers and ensure repayment of project capital costs in at least 41 long-term contracts now being negotiated. Sidestepping these required reforms would guarantee that federal taxpayers are stuck with the vast majority of the project’s $3.6 billion tab.

We urge the Bureau of Reclamation to draft Central Valley Project water contracts that:

1. are short-term and must be fully renegotiated prior to any renewals;

2. bring water prices more in line with the open market;

3. create an effective rate structure to meet the legally-required 2030 date of

complete project repayment;

4. realistically assess the water available in the system when promising water

contract amounts, therefore ensuring that tiered pricing reforms included in the

CVPIA go into effect.

5. set a good precedent for fiscal responsibility in federal water contracts throughout

the West.

The Central Valley Project, originally intended to help destitute farmers recover from the Great Depression, has become the largest federal water project in the United States serving approximately 3 million acres of farmland and 2 million urban residents in the Central Valley. The CVP distributes more than 7 million acre feet of water a year, 90% of which goes to farmers. CVP contractors pay only a small fraction of the market rate for water due to federal price fixing. As a result of ridiculously cheap water rates, farmers use water lavishly in the Central Valley, including growing crops such as cotton, alfalfa, and rice in the California desert.

The Bureau of Reclamation should implement common sense pricing reforms that would save taxpayers millions of dollars, help encourage responsible water use in the west, and set a good precedent for future negotiations of more than 1800 water service contractors throughout the West. We urge you to implement CVPIA reforms to end the wasteful and unnecessary spending in the Central Valley Project.

Given skyrocketing budget deficits, we cannot afford to continue policies that waste taxpayer dollars. We urge you to implement rational reforms that will protect taxpayers. We would be happy to answer any questions you might have regarding this matter. Please contact Aileen Roder at Taxpayers for Common Sense at (202) 546-8500 x130 or email for more information.

Sincerely,

Jill Lancelot

President

Taxpayers for Common Sense

John Berthoud

President

National Taxpayers Union