South Coast Water District races for $50m desal loan amid state budget crisis

South Coast Water District races for $50m desal loan amid state budget crisisLobbyists warn that California’s projected $18–30 billion annual deficits are squeezing water infrastructure funding, making federal leverage critical for the Doheny Desalination Project.

California faces projected budget deficits of $18–30 billion annually for the next three years, pressuring infrastructure funding.

South Coast Water District is seeking a $50 million State Revolving Fund (SRF) loan for the Doheny Desalination Project.

Lobbyists advised the district that competition for remaining state funds is "fierce" but coastal desalination remains a regulatory priority.

The district is leveraging secured federal WIFIA and USBR funding to improve its competitiveness for state loans.

South Coast Water District (SCWD) is accelerating efforts to secure a $50 million State Revolving Fund (SRF) loan for its Doheny Desalination Project as California’s worsening fiscal outlook threatens available infrastructure capital. During a legislative update at the Administration & Finance Committee meeting on February 17, 2026, representatives from The Gualco Group, a California lobbying and consulting firm, presented a stark financial forecast. Bob Gore, a representative for the firm, reported that the state budget is projected to run deficits between $18 billion and $30 billion annually for at least the next three years. This shortfall has intensified pressure on traditional funding vehicles, including Proposition 4, the Greenhouse Gas Reduction Fund, and the SRF. "It intensifies competition for the $50 million loan we're seeking for Doheny," Gore told the committee. "It’s a critical situation that merits moving forward with all due deliberate speed." Despite the fiscal constraints, consultants emphasized that the regulatory environment remains favorable for the project. Gore noted that the coastal desalination sector is currently "populated by one project," referring to Doheny, which differentiates SCWD from other applicants. "That keeps you head and shoulders in the competition," Gore said. Committee members discussed the strategic necessity of federal funding to unlock state dollars. Committee Member Rick Arkaneff highlighted the "strong nexus" between the SRF application and the district's pursuit of federal WIFIA financing. The district applied for SRF funding contingent on receiving WIFIA support to enhance its competitiveness. Gore confirmed that the State Water Board views federal leverage as "essential" rather than a penalty. To mitigate the risk of stalling, the committee and consultants agreed on an aggressive schedule. "Every penny counts," Gore stated, noting that district representatives are scheduled to visit Washington, D.C. the following week to discuss WIFIA and US Bureau of Reclamation funding.