Lawmakers approved a momentous overhaul of California's ailing water system early this morning, but approval came only after Senate President Pro Tem Darrell Steinberg agreed to strip a $10 million earmark for a Sacramento project he personally has championed.

The five-bill package, including an $11 billion bond measure, ended months of tense negotiations involving scores of interest groups over how to bolster supply, improve delivery and solve environmental problems plaguing the water system.

"This vote will be remembered years from now," Assembly Republican leader Sam Blakeslee said after an all-night session that ended shortly before 6 a.m. today.

"This Legislature has been able to accomplish something that no Legislature has been able to accomplish in decades," Steinberg said. "We all know that people ask, 'Can this Legislature actually take on the biggest, most intractable problems, and find solutions?' The answer is yes."

A nearly 90-minute impasse in the Assembly, with the proposed $11 billion bond measure lacking a handful of votes for approval, ended minutes after Steinberg agreed to drop from the bill a $10 million earmark for a nonprofit tolerance center in Sacramento.

"I have worked my heart out to get this water package passed, and the last thing that I would ever want to do is to jeopardize this incredibly important work," he said of removing the earmark.

Steinberg, D-Sacramento, had requested the $10 million earmark for a tolerance center that he has championed for years and has assisted in raising millions for its construction.

The tolerance center is proposed for construction on the site of the old Sacramento City Unified School District headquarters at 16th and N streets.

The project is envisioned as a "statewide hub" to teach tolerance to students and encourage "collaborative problem-solving," according to its Web site.

Language in the bond bill stipulated only that the $10 million "shall be available for capital improvements to nonprofit facilities that provide watershed, environmental justice and urban greening education programs to students in the Sacramento City Unified School District and the surrounding area."

Steinberg, who has been the driving force behind the Legislature's efforts to revamp the state's creaking water system, defended inclusion in the bond bill of a project seemingly unrelated to the state's water problems.

"Frankly, if I have the opportunity to use the power I have to further civil rights and to further California history in any way, I'm going to do that," he said late Tuesday afternoon.

Dennis Mangers, a senior adviser to Steinberg and chairman of the Capital Unity Council, which is overseeing the project, said the proposed center's connection to water was that the center would include an aquarium, a botanical garden and other exhibits dealing with the vital role that water issues have played in the history of California.

The "water education component" would educate visitors about the role water systems play in encouraging successful communities and in triggering conflict.

Mangers said the council, which was created in 1999 in the wake of a series of hate crimes in Northern California, was about halfway to its fundraising goal of $30 million to build the center.

Mangers said the water education element was included as part of the center's plans long before the bond measure was drafted.

Steinberg's $10 million earmark for a project he personally has led sparked controversy shortly after midnight when a story by The Bee was published on its Web site and word began circulating among lawmakers of both houses.

Gov. Arnold Schwarzenegger hailed the the approval as "an historic achievement" and singled out Steinberg as "a tireless leader, a relentless advocate for the environment and a true statesman."

In the wee hours of the morning, it became clear that controversy over Steinberg's multimillion-dollar earmark was delaying Assembly passage of the water package's proposed $11 billion bond.

Call The Bee's Jim sanders, (916) 326-5538.