The Santa Barbara desalination plant was actually finished. See here . However, it is kept on stand-by status until there is some emergency or another severe drought. As has been mentioned, it is very expensive to operate and has potential environmental impacts, however, this facility is designed to operate on a long-term basis, if needed. Unlike the LA/Orange County or San Diego metro areas, Santa Barabara doesn't have access to major sources of imported water like from Northern Cal or the Colorado.

Orange County started operating a water reclamation plant a few years ago. Treated waste water is highly processed (further filtration, UV, ozonation, etc.) and then pumped underground to recharge the aquifer. Being so highly processed, I would drink that water, but politically, I don't think most folks would appreciate the water they flush down their toilets making a direct loop back to their kitchen faucets, so the water just goes back to the aquifer.

My city here in Orange County uses recycled water for all municipal landscape irrigation. Our city relies on 100% imported water. My neighbor works for the water utility and he says that local backup supply for our city would last a month if we stopped all irrigation use, so that's fairly reassuring. There are interconnections and agreements with neighboring water districts that have ground water supplies, so even if an earthquake cut us off from the Colorado River or Northern Cal, we'd still be able to limp along for some time.