California infrastructure stressed by storms as chunk of state's $7 billion water bond money goes unspent
David McNew | Getty Images · CNBC

The latest storms hitting California have caused flooding, levee breaks, sinkholes and concerns about the state's dam safety.

Rain continued in some areas Tuesday even as a new storm was forecast to bring more rain next weekend.

The storms were the result of what's known as atmospheric rivers, which produced floods up and down the state and heavy winds that led to several weather-related deaths. There also have been broken levees and other stresses to the state's aging flood-control systems.

"You've got some levee breaks here and there but you always have those when you get heavy flooding," said Doug Carlson, a spokesman for the California Department of Water Resources. "The infrastructure itself is not compromised in a significant way, except for the Oroville [Dam spillway] problem."

Even so, money that could have been used to modernize the state's water infrastructure and build more water storage has been held up due to red tape at the state level that requires a lengthy regulatory and bidding process.

In 2014, California voters approved a water bond (known as Proposition One) that authorized about $7.45 billion in spending, but as of this week $7.39 billion had not been issued, the state Treasurer's office told CNBC on Tuesday. (The state clarified late Tuesday it is relying on commercial paper notes to get cash for Proposition One projects until a decision is made to sell bonds to pay off the notes.)

The state is still finalizing regulations for the water storage portion of the Proposition One state water funds and there's no firm date for when the first projects will be completed since several additional hurdles remain.

"It is a long process to go through," concedes Joe Yun, interim manager of the California Water Commission's water storage investment program. "The regulations had to include a lot of different things."

The state water commission has control specifically over about $2.7 billion worth of Proposition One funds, or what's known as Chapter 8 money for water storage projects that improve the operation of the state water system. Regulations were adopted in December 2016 for the Chapter 8 money and currently those rules are going through a review process before the state solicits applications for water projects.

Some lawmakers have been critical of the delays in putting the water bond money to work.

"Incredibly, the 2014 Water Bond was passed three years ago but there still isn't a single project listed on the state website to use the funds," said State Assemblyman Travis Allen (R-Huntington Beach, California). "It has been over two months since Proposition One money could be spent and still not one project is shovel ready."