SAN FRANCISCO - California Gov. Arnold Schwarzenegger desperately wants a bill to fund an overhaul of the state's water system -- so much so he is hinting he may veto more than 700 bills awaiting his signature by midnight Sunday if top lawmakers fail agree to one.

The Republican governor's hardball politics may be what is needed to force the Democrat-led legislature to agree to a water bill, likely including billions of dollars of state bonds for infrastructure projects, analysts said on Wednesday.

It will probably speed things up, said Bob Stern of the Los Angeles-based Center for Governmental Studies.

Schwarzenegger has Democratic lawmakers crying foul, charging him with extortion and complaining he is pursuing political theatrics at the expense of substantive negotiation over the state's water needs and ways to meet them.

But Schwarzenegger has very little to risk with a shakedown now and may actually be doing Democrats in the legislature a favor by demanding they focus their attention on a water bill, said Allan Hoffenblum, publisher of the California Target Book, which tracks state political races.

Nothing else is working, said Hoffenblum, adding that Democrats in the legislature may not appreciate the backlash forming over water shortages in some parts of the state as do Democrats outside the legislature.

TANGLE OF WATER WOES

Attempts to craft a water bill in recent years have faltered because Democrats and Republicans in the legislature have split over competing visions of water infrastructure.

Democrats, influenced by environmentalists, want water conservation measures and a focus on recycling water and its underground storage.

The Republican minority, backed by farm interests, wants new dams and some are calling for a new canal to bypass the state's Sacramento-San Joaquin Delta east of San Francisco, which is the hub of the state's fresh-water supply.

Complicating matters for lawmakers are efforts by the federal judiciary to protect fish in the delta that have restricted its water supplies to farmers.

They say less water is not only hurting their business but is also worsening unemployment among farm workers -- in a state with a jobless rate already in double digits.

Their complaints have not garnered much sympathy with Democrats in the legislature, but California's U.S. senators, Dianne Feinstein and Barbara Boxer, have taken notice.

The two Democrats on Wednesday introduced a measure to allow new federal water transfers in California's Central Valley -- with less environmental red tape.

'FISH BEFORE JOBS'

Feinstein said the measure is a reasonable and timely solution to the water crisis that would streamline the environmental review process and cut out unnecessary delays.
The measure falls on the heels of former California Assembly Speaker Willie Brown warning on Sunday in the San Francisco Chronicle that a political earthquake is rumbling in the Central Valley over water.

Voters there are beginning to link Democrats and environmentalists to water shortages, said Brown, a Democrat and former mayor of San Francisco.

Anger over putting fish before jobs in these lean times is running as strong as any anti-war, anti-Enron feeling we had up here in the (San Francisco) Bay Area during the Bush years, Brown said.

That should serve as an incentive for lawmakers, especially Democrats, to heed Schwarzenegger's demands for a water bill, said Sacramento, California-based Republican media consultant Wayne Johnson.

This legislature better have something positive to point to even if it's something they don't love, Johnson said. To do something substantive about a major infrastructure issue is hugely beneficial to the institution and all its members.

(Editing by James Dalgleish)

California Water