(07-11) 04:00 PDT Sacramento - --

Gov. Arnold Schwarzenegger and Sen. Dianne Feinstein unveiled a sweeping $9.3 billion bond proposal on Thursday to overhaul California's ailing water infrastructure by expanding water storage, protecting the fragile Sacramento-San Joaquin River Delta and promoting conservation projects across the state.

The proposal, which is planned to be on the November ballot, was put together after Democrats in the state Legislature balked last year at the governor's proposal for a $9 billon overhaul of the state water system that focused primarily on building three dams.

But administration officials say Schwarzenegger believes the new proposal contains enough significant changes to garner the two-thirds majority in both houses of the Democrat-controlled Legislature necessary to send it to voters.

The new plan includes money for water storage, but the amount is $3 billion rather than the $5.1 billion the governor had in his earlier plan. And the money wouldn't necessarily be used for dam projects - it could be spent for other projects, including groundwater storage.

The plan also includes funds to help preserve the Sacramento-San Joaquin River Delta by fixing levees; to make seismic retrofits of the water infrastructure; to protect and restore native fish and wildlife in the area; and to pay for projects to cut greenhouse gas emissions from exposed delta soils.

Schwarzenegger and Feinstein's proposal would spend the $9.3 billion in six areas:

-- $3 billion on water-storage projects.

-- $2 billion for regional water supply and conservation projects.

-- $1.9 billion for Sacramento-San Joaquin River Delta sustainability projects, such as levee repair, as well as improving the ecosystem.

-- $1.3 billion to protect ecosystems and watersheds, to remove invasive species and to restore watersheds damaged by fire. Funds also would be used to remove dams, including one on the Klamath River.

-- $800 million to improve water quality, groundwater protection and small-community wastewater treatment.

-- $250 million for grants and loans for water recycling projects.

Money from the bond would be doled out by the California Water Commission, a panel created by Gov. Edmund G. Brown in the 1960s that has been dormant for years. The governor would appoint nine new members, who would need to be confirmed by the state Senate.

"The goal of this plan is to break the long-standing stalemate over water," Feinstein, D-Calif., said in a statement.

Feinstein, who has long supported fixing the state's water infrastructure, jumped into the water debate last year when she began talking to the governor and state legislators. In February, she visited Sacramento to urge lawmakers to negotiate a bond deal.

Schwarzenegger's chief of staff, Susan Kennedy, said she believes the state's current drought has persuaded Californians to support the state's need to invest in its water infrastructure.

"We think now is the perfect time to do this," she said. "People in California absolutely recognize the need for this."

Some environmentalists and Democrats were skeptical of the plan, saying it is ill-timed and that the state has yet to spend money from a previous infrastructure bond. Republicans and business groups applauded the measure.

The backing of Feinstein and Schwarzenegger could be the key to success for the bond measure, said Barbara O'Connor, director of the Institute for the Study of Politics and the Media at Sacramento State University.

Feinstein is "the most popular politician in California, by far," she said. "It's a post-partisan support. You have a Democrat and a Republican. You couldn't ask for two better poster children."

Allan Zaremberg, president and chief executive officer of the California Chamber of Commerce, also said it's "great the governor and Sen. Feinstein have taken the leadership on this."

"We're moving the discussion forward because it is really essential for the long-term vitality of California's economy and citizens' quality of life that we get this done," he said.

Senate Republican leader Dave Cogdill from Modesto said the plan is a good bipartisan proposal.

But Senate President Pro Tem Don Perata, D-Oakland, said the state should first spend the billions that voters approved in 2006 for infrastructure projects before asking for more funds.

Perata said the governor and lawmakers' first priority should be to successfully negotiate a state budget that closes the $17.2 billion budget gap.

"Once we do that, we'll sit down with the governor and Republicans to draft a bond measure to secure the state's long-term water supply," Perata said in a written statement.

Richard Stapler, a spokesman for Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), declined to comment, saying her staff has not had a chance to review the details of the governor's proposal.

Jim Metropulos, senior advocate for Sierra Club California, called the plan ill-timed.

"We already have a crowded November ballot. Why, in a time when we're fighting a $17 billion (budget) deficit, are they coming up with a divisive proposal?" he said.

Chronicle staff writer Samantha Sondag contributed to this report. E-mail Matthew Yi at myi@sfchronicle.com.