Legislative Analyst's Office

Analysis of the 2000-01 Budget Bill

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Overview

The budget proposes moderately lower state expenditures for resources
and environmental protection programs in 2000-01 compared to the estimated current-year level. The reduction primarily reflects the elimination of many one-time expenditures, including state park deferred maintenance, and state and local park capital improvements.

Expenditures for resources and environmental protection programs from the General Fund and various special funds are proposed to total $3 billion in 2000-01, which is 3.6 percent of all state-funded expenditures proposed for 2000-01. This level is a decrease of about $270 million, or 8.2 percent, below estimated expenditures for the current year. Of the total state funding for resources and environmental protection programs, the budget proposes that 54 percent ($1.6 billion) come from special funds, including the Environmental License Plate Fund, Fish and Game Preservation Fund, Natural Resources Infrastructure Fund, funds generated by beverage container recycling deposits and fees, and an "insurance fund" for the cleanup of leaking underground storage tanks. The General Fund will support the remaining 46 percent of these expenditures.

Figure 1 (see next page) shows that state expenditures for resources and environmental protection programs increased by about $1.2 billion since 1993-94, representing an average annual increase of 7.1 percent. The increase includes about $720 million in General Fund expenditures and the remainder in special fund expenditures. When adjusted for inflation, these expenditures increased at an average annual rate of 4.6 percent. General Fund expenditures increased at an average annual rate of about 11 percent over this period. When adjusted for inflation, General Fund expenditures increased at an average annual rate of 8.4 percent. The increase in General Fund expenditures is mainly the result of improved state fiscal condition in recent years. Through the early 1990s, due to the state's fiscal condition, General Fund expenditures for resources and environmental protection programs were greatly curtailed. Since 1998-99, with improvement of the state's fiscal condition, the trend was reversed and General Fund support for these programs has significantly increased.

Spending by Major Program

Figure 2 shows spending for major resources programsthat is, those programs within the jurisdiction of the Secretary for Resources.

Figure 3 (see page 10) shows similar information for major environmental protection programsthose programs within the jurisdiction of the Secretary for Environmental Protection and the California Environmental Protection Agency.

Spending for Resources Programs. Figure 2 shows that the General Fund provides a relatively small proportion of total expenditures for resources programs, except in the case of the California Department of Forestry and Fire Protection (CDFFP) and the Department of Parks and Recreation (DPR). For 2000-01, the budget proposes that 74 percent ($442 million) of CDFFP's expenditures come from the General Fund. For DPR, the General Fund will constitute about one-third ($82.9 million) of the department's expenditures in 2000-01.

Figure 2
Resources Budget Summary Selected Funding Sources
1998-99 Through 2000-01 (Dollars in Millions)
Department	Actual 1998-99	Estimated 1999-00	Proposed 2000-01	Change From 1999-00
				Amount	Percent
Conservation
General Fund	$15.7	$28.6	$26.1	-$2.5	-0.9%
Recycling funds	363.0	415.7	460.7	45.0	10.8
Other funds	16.6	27.2	19.9	-7.3	-26.8
Totals	$395.3	$471.5	$506.7	$35.2	7.5%
Forestry and Fire Protection
General Fund	$348.4	$463.1	$442.0	-$21.1	-4.5%
Forest Resources Fund	6.6	18.1	19.3	1.2	6.6
Other funds	119.7	179.6	134.9	-44.7	-24.9
Totals	$474.7	$660.8	$596.2	-$64.6	-9.8%
Fish and Game
General Fund	$29.3	$37.0	$37.7	$0.7	1.9%
Fish and Game Fund	72.0	82.4	79.9	-2.5	-3.0
Oil Spill Prevention Fund	17.1	16.2	16.3	0.1	0.6
Environmental License Plate Fund	11.5	15.5	15.3	-0.2	-1.3
Other funds	67.8	72.0	80.5	8.5	11.8
Totals	$197.7	$223.1	$229.7	$6.6	2.9%
Parks and Recreation
General Fund	$119.7	$329.9	$82.9	-$247.0	-74.9%
Parks and Recreation Fund	80.0	82.1	83.0	0.9	1.1
Off-Highway Vehicle Fund	27.7	55.0	42.3	-12.7	-23.1
Other funds	39.4	72.3	42.5	-29.8	-41.2
Totals	$266.8	$539.3	$250.7	-$288.6	-53.5%
Water Resources
General Fund	$167.6	$151.5	$177.4	$25.9	17.1%
State Water Project funds	639.1	716.8	730.6	13.8	1.9
Other funds	22.3	134.9	122.7	-12.2	-7.4
Totals	$829.0	$1,003.2	$1,030.7	$27.5	2.7%

Figure 2 also shows that for 2000-01, the budget proposes a reduction in both DPR and CDFFP expenditures. Specifically, the budget proposes a significant reduction in DPR expenditures of $288.6 million, or 54 percent less than the current-year estimated expenditure level. The reduction includes (1) a drop of about $150 million in departmental support, mainly due to the elimination of one-time expenditures for parks deferred maintenance; (2) about $79 million less for local park development; and (3) about $59 million less in state park capital improvements. For CDFFP, the budget proposes 9.8 percent less in expenditures for 2000-01, compared to the estimated current-year level. The reduction reflects the extraordinarily high level of expenditures ($92 million) for emergency fire suppression in the current year.

For both the Department of Fish and Game (DFG) and the Department of Water Resources (DWR), the budget proposes relatively small changes in total departmental expenditures in 2000-01. For the Department of Conservation (DOC), the budget proposes increases of about $35.2 million, mainly to implement an expanded Beverage Container Recycling Program.

Spending for Environmental Protection Programs. As Figure 3 shows, the budget proposes increases in most of the major environmental protection programs. In particular, the expenditure level for the Air Resources Board (ARB) is proposed to increase significantly by about 33 percent, compared to the current-year expenditure level. The increase is mainly due to a proposed $50 million increase in General Fund expenditures to replace high polluting school buses. For the Office of Environmental Health Hazard Assessment (OEHHA), the budget proposes a 23 percent increase over the estimated current-year level. The increase, mainly to address children's health issues, will be funded from the General Fund.

The budget also proposes sizeable increases in General Fund expenditures for the State Water Resources Control Board (SWRCB) and the Department of Toxic Substances Control (DTSC). In the case of SWRCB, increases over current-year expenditures totaling about $15 million from the General Fund are proposed mainly to monitor and assess water quality, remediate impaired water bodies, address groundwater quality issues, and increase enforcement. For DTSC, the budget proposes an additional $8.7 million in General Fund support, an increase of about 22 percent over the current-year level. The increase reflects mainly a shift to the General Fund from various special fund sources, including the Hazardous Waste Control and the Toxic Substance Control Accounts, to support the department. The budget also includes increases in reimbursements for DTSC to oversee hazardous material removal and remedial actions at school sites.

The budget proposes to reduce expenditures of the Integrated Waste Management Board by about 22 percent in 2000-01. The reduction primarily reflects a decrease in local assistance grants for used oil recycling.

Major Budget Changes

Figures 4 and 5 (see pages 13 and 14) present the major budget changes in resources and environmental protection programs, respectively.

Resources Programs. As Figure 4 shows, the budget proposes increases totaling $8.2 million spread among various departments to assess watersheds in the North Coast and to support local watershed protection efforts. These activities will be carried out by DOC, DFG, and CDFFP.

For DOC, the budget also proposes an increase of $45 million in refund payments and departmental costs to administer an expanded Beverage Container Recycling program.

For CDFFP, the budget proposes to augment funding for emergency fire suppression by $35 million. This will bring total available funding to $55 million, a level more in line with actual expenditure experience. In addition, the budget proposes an increase of $2.4 million to improve state forests.

For DFG, the budget proposes an increase of $3.4 million for additional staff mainly to (1) administer grants to protect and restore salmon and steelhead trout habitat and (2) implement salmon restoration projects in coordination with the CALFED Bay-Delta Program. This is in addition to the $2 million proposed for the department to assess North Coast watersheds, as indicated above.

For DPR, the budget proposes an increase of $3 million for ongoing, routine maintenance for state parks. The budget does not propose any funds for deferred maintenance because the department will be continuing to expend the $157 million provided in the current year. The budget also proposes significantly less expenditures in 2000-01 for state and local park development. This reduction reflects the elimination of one-time expenditures for capital improvements on state and local parks.

For DWR, the budget proposes $20 million from the General Fund to study water storage alternatives. The budget also includes $24 million in federal funds to support the CALFED Bay-Delta Program.

Figure 4
Resources Programs Proposed Major Changes for 2000-01
	Conservation	Requested:	$506.7 million
		Increase:	$35.2 million	(+7.5%)
	+ $45 million for expanded beverage container recycling program
	+ $4.9 million for North Coast watershed assessment and to support local watershed protection
	Forestry and Fire Protection	Requested:	$596.2 million
		Decrease:	$64.6 million	(-9.8%)
	+ $35 million for emergency fire funding
	+ $2.4 million for improvements of state forests
	+ $1.3 million for North Coast watershed assessment
	Fish and Game	Requested:	$229.7 million
		Increase:	$6.6 million	(+2.9%)
	+ $3.4 million for salmon and steelhead habitat restoration
	+ $2 million for North Coast watershed assessment
	Parks and Recreation	Requested:	$250.7 million
		Decrease:	$288.6 million	(-53.5%)
	+ $3 million for routine maintenance of state parks
	-- $157 million in one-time deferred maintenance expenditures
	-- $138 million in state and local park improvements
	Water Resources	Requested:	$1,030.7 million
		Increase:	$27.5 million	(+2.7%)
	+ $20 million to study water storage alternatives
	+ $24 million for CALFED Bay-Delta program
	+ $10 million for water management and transfer programs

Figure 5
Environmental Protection Programs Proposed Major Changes for 2000-01
	Air Resources Board	Requested:	$187.2 million
		Increase:	$46 million	(+32.7%)
	+ $50 million to replace high-polluting older school buses
	+ $5.2 million to demonstrate fuel cell transit buses
	+ $4 million to review health impacts of toxic air pollutants
	+ $1.9 million to address children's health issues
	Water Resources Control Board	Requested:	$542.6 million
		Increase:	$25.3 million	(+4.9%)
	+ $53 million to tank owners for tank cleanup
	+ $7.1 million to reduce permit backlogs and increase inspections
	+ $6.8 million for ambient water quality monitoring
	Toxic Substances Control	Requested:	$149.7 million
		Increase:	$13.4 million	(+9.9%)
	+ $3.3 million to assess and oversee cleanup of contamination at school sites
	+ $2.9 million for enforcement
	Environmental Health Hazard Assessment	Requested:	$17.1 million
		Increase:	$3.2 million	(+23%)
	+ $1.5 million to address children's health issues

Environmental Protection Programs. Regarding these programs, Figure 5 shows that the budget proposes various increases to address children's health issues and to increase enforcement activities. Specifically, the budget proposes (1) $50 million to the ARB for a grant program to replace older school buses to reduce children's exposure to toxic pollution; (2) $3.3 million for DTSC to assess and oversee the cleanup of contaminated school sites; and (3) a total of $3.5 million for ARB and OEHHA to address other children's health issues. For enforcement, the budget proposes an increase of $2.9 million in DTSC for civil and criminal enforcement.

For SWRCB, the budget proposes to continue a one-time expenditure in the current year of $7.1 million to reduce permit backlogs and increase inspections. Additionally, the budget proposes an increase of $6.8 million for ambient water quality monitoring. This increases the funding devoted to this activity from about $2.8 million to $9.6 millionan increase of over 200 percent. Finally, Figure 5 shows a $53 million one-time increase in SWRCB's baseline expenditure authority to reimburse tank owners for the cost of cleaning up underground storage tanks. Since the current-year budget also includes a one-time increase for this purpose, the budget-year expenditure would only be about $20 million higher than in the current year.