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california Water Today 123 California even higher, at $5 billion.) For water, these levels of spending reflect increases in real per capita spending since the early 1980s, and for wastewater, a relatively stable rate of spending since the mid-1970s (Figure 2.15). Although utilities have benefited from state bond funding as well as some property tax receipts, utility revenue comes predominately from ratepayers.56 Compared with their own estimates of needs, water and wastewater utili- ties generally appear to have sufficient flexibility to raise rates to fund capital improvements in their systems, although they now face greater procedural requirements arising from Propositions 218. Moreover, water and wastewater rates in California generally fall well within the range considered “affordable” by federal guidelines (less than 4 percent of household income) (Table 2.4).57 Although raising rates is never easy politically, the ability to raise rates, while Figure 2.15 Real per capita investments have been rising for water and holding steady for wastewater sOURcEs: census of Governments; de Alth and Rueben (2005). NOTE: Nominal values were converted to 2008 dollars using the Engineering News Record construc- tion cost index. 56. In 2007, grants and equity contributions from federal and state sources accounted for less than 2 percent of revenues and contributed capital for all publicly owned local and regional urban and agricultural water agencies and wastewater utilities. Property taxes accounted for 5 percent of urban and agricultural water district revenues and 8 percent of waste- water district revenues; and voter-approved assessments accounted for 6 percent and 2 percent of revenues, respectively (comparable information on the share of tax revenues is not available for city-owned utilities) (authors’ calculations using data from the State Controller’s Office files). 57. See Hanak and Barbour (2005) for a discussion of affordability guidelines. Wastewater Water 100 Per capita capital outlays (2008 $)19921977197219671957 200219621987 19971982 2007 120 80 60 40 20 140 0