Audit: U.S. misuses taxpayer cash for California project

SAN FRANCISCO — The U.S. Interior Department improperly contributed tens of millions of dollars in taxpayer money to help California and politically powerful state water districts plan for a massive project to ship the state’s water from north to south, a new federal audit said Friday.

Federal officials contributed $85 million to help finance the water districts’ plan, backed by Democratic Gov. Jerry Brown, to build two giant water tunnels to re-engineer the state’s water system, according to the audit by the inspector general’s office of the U.S. Interior Department obtained by The Associated Press.

By California law and by an agreement by the water districts, California water districts and not taxpayers are supposed to bear the costs of the $16 billion project, the audit said. Brown and the then-secretary of the Interior Department affirmed that in a joint 2011 public statement supporting the tunnels plan.

The proposed tunnels are part of Brown’s decades-long push for a project that would more readily carry water from green Northern California south, mainly for use by cities and farms in central and Southern California. Voters rejected an early version of the proposal in a statewide vote in the 1980s.

California water districts are making final decisions on whether to go ahead with the controversial project.

Federal authorities did not fully disclose to Congress or the public that it was supplying $84.8 million for the project planning, and waived reimbursement for $50 million of it, the audit said. The federal Reclamation Bureau did not disclose the arrangement in its certified financial reports, the audit said.

“USBR could not provide us with a rationale for its decision to subsidize [California] water contractors, other than the water contractors asked USBR to pay,” the audit noted.

The actions by the Bureau of Reclamation, which is part of the Interior Department, mean that federal taxpayers paid a third of the cost of the project’s planning up to 2016, the audit said.

Meanwhile, Central Valley water districts that were supposed to pay 50 percent of the tunnels’ planning costs contributed only 18 percent, the audit found.

California officials have consistently said no taxpayer money was being spent on the project.

Asked if auditors wanted contractors to repay the money, Interior spokeswoman Nancy DiPaolo said, “We certainly hope so.”

That decision was up to California, she said.

Thomas Birmingham, general manager of the sprawling Central Valley rural water district Westlands, which received one of the largest shares of the federal money, said he knew of nothing about the arrangement that was “inconsistent with either state or federal law.”

“The state was aware of it,” Birmingham said of the federal payments. “No one indicated this was somehow a violation of the letter or spirit of the agreement” guiding the costs of the project.

Under federal law, Birmingham said, water districts would be responsible for reimbursing the federal money only if the project went forward and benefited those districts.

Spokespeople for the Bureau of Reclamation, Brown’s office and the state Department of Water Resources either had no immediate comment Friday or did not respond to requests for comment.