Are we not able to desalinate water? No doubt some special interests are preventing us from solving this problem. Access to plentiful, cheap water has not been a first world problem in a very long time. Just authorize the building permits and a contract to buy water sufficient to make it profitable, and this problem will be solved quickly.
Not refuting your point, but it's not quite that simple. Current desalination techniques are very energy costly, and the state has actually decreased its energy capacity in the past few years. For example, the San Onofre nuclear station went offline permanently in 2012 because of a botched repair job by, a little ironically, the Japanese (Mitsubishi). Neither ConEd or the state have announced any plans to replace the lost capacity (~10% of the state's total energy capacity) = higher energy costs.
San Diego county is currently building a billion dollar desal facility off the coast of Carlsbad, but it hasn't been easy or cheap. And even with the state in dire conditions, this project has faced opposition for various reasons - e.g. environmental concerns about desal runoff (apparently the salt water byproduct is very bad for marine life and has to be treated before being released back into the ocean).
Even when it's completed and producing at full capacity of 50 million gallons per day, this will be a literal drop in the bucket compared to the 38 billion galls of water per day that are used by the state overall (2010 USGS estimate). With population projections having the state grow 40% by 2060, things are not looking good and nobody seems to be addressing the longer-term impacts.
