SACRAMENTO — A monumental effort to remake California's water system — decades in the dreaming and months in the works — finally emerged from an exhausted Legislature early Wednesday morning, defying historically long odds and regional squabbles to become the signature accomplishment in a year mostly lamented for budget cuts.

The water package has a significant impact in the Coachella Valley, as the State Water Project — through a water transfer deal — helps recharge the desert's aquifer. It also includes $100million for Salton Sea efforts and $20 million for the New River.

Applause erupted in the Senate chamber just before 6 a.m., when lawmakers gave final approval to the last in a series of six bills that supporters hope will one day rebuild aging water infrastructure and deliver the state from chronic water shortages.

“This Legislature and state government demonstrated that we can take on the most difficult divisions and get something done,” said Senate President Pro Tem Darrell Steinberg, D-Sacramento, among the lawmakers leading the push to deliver the elusive breakthrough. “That's exactly what people expect of us.”

The overwhelmingly bipartisan reform effort — which Gov. Arnold Schwarzenegger had long pushed and has signaled he would approve — firmly nudges the state into changing the way it both uses and manages its precious water supplies.

“Democrats and Republicans came together and tackled one of the most complicated issues in our state's history,” said a statement from the governor, who helped goose the effort last month by calling a special session and threatening to veto hundreds of bills if talks didn't advance. “This comprehensive water package is a historic achievement,” he said.

The ramifications of the water legislation will be far-reaching:

More than $11 billion in bond money, pending voter approval, would be set aside for new dams, reservoirs and other water projects.

Water use statewide will now be reduced, with city residents to cut back 20 percent by 2020.

Groundwater supplies will be measured all across the state for the first time.

Fundamental changes also were promised for the Sacramento-San Joaquin River Delta, a source of drinking water for two-thirds of the state's population.

Hundreds of millions will be spent shoring up the Delta's temblor-susceptible levees and a new governing structure also has been created to manage the area's sensitive ecosystem.

That structure, however, also spells out an arduous environmental path for one of the most contentious pieces of the state's decades-old water debate: a non-taxpayer-funded “peripheral” canal that would divert water around the delta to drought-stricken farms and water districts in the central and southern parts of the state.

Steve Robbins, general manager-chief engineer of the Coachella Valley Water District, called the final package “a good deal” and a “good balance between everything that needs to be done.”

Thought the bond is “expensive,” Robbins said it could cost California far more to do nothing.

He also said the desert is well-positioned to meet the state's new conservation goals.

“I think that we can do the 20 percent without a lot of changes in lifestyle.”

Dave Luker, general manager and chief engineer of the Desert Water Agency, said communicating the new goals will be key.

“It's going to be incumbent to the water industry to get that message out in a strong fashion, in something that people understand.” he said. “It's very important to the entire state.”

In keeping with the checkered history of water reform, this latest effort — a high-wire compromise among Republicans and Democrats, water districts, some environmental groups, and others — still almost unraveled at the 11th hour.

To make those hopes a reality, legislative leaders early Wednesday morning had to sacrifice one of the bills they had planned to put forward, on illegal water diversions and state adjudication of water rights, after it became clear that it wouldn't achieve the needed support in either house.

Language cracking down on water theft was folded into another bill, and even then the penalties for theft were reduced dramatically from $5,000 a day to $1,000.

“That is extremely disappointing,” said Cynthia Koehler with the Environmental Defense Fund. “But overall, that doesn't detract from the really very incredible benefits from some of the pieces of this package.”

Battles also erupted over the size of the bond included in the package, which at its current size could add hundreds of millions in debt payments to the state's already-bleeding general fund each year. Money for debt payments comes at the expense of other programs, such as social services, parks and education.

“It is a little bit of a Catch-22,” said Senate President Pro Tem Darrell Steinberg, D-Sacramento. “We did go into this thinking it would do better if we kept the financing piece smaller and yet, as we moved toward the finish line, I think we recognized there's a whole lot of unmet need.”

Though expensive, Sen. John Benoit, R-Bermuda Dunes, said he does not think the bond would be a hard sell to voters, especially in the hard-hit areas of the Central Valley that are facing high unemployment.

“It was a historic piece of legislation and I'm glad it is done,” said Benoit, who was appointed Riverside County supervisor just hours after the voting was complete.

Assemblyman V. Manuel Pérez said in a statement that supporting such a large bond “is not something I take lightly” but voted for it in order to “revitalize our delta for the greater good of having a safe and stable water supply for the entire state.

“Without a doubt the state benefits from a comprehensive approach for the long-term sustainability of the delta system,” the Coachella Democrat said in a statement Wednesday. “We need to ensure that the state has a sustainable flow of water that provides for our residents, for our agricultural needs, for commercial uses, for recreation and culture, and for the environment.”

Assemblyman Brian Nestande also expressed reservations about the cost of the water bond, and how it includes projects not directly related to moving and storing water. But he ultimately voted for it.

“I came to the conclusion that I think other people have come to: This was not pretty, as far as the bond, but it was no doubt the only chance we were going to get to get a water deal and chance to cure some of these decade-long problems,” the Palm Desert Republican said.

Denis C. Theriault of the San Jose Mercury News, Erica Felci of The Desert Sun and The Associated Press contributed to this report.