Analysis of the 2005-06 Budget Bill
Legislative Analyst's Office
The Air Resources Board (ARB), along with 35 local air pollution control and air quality management districts, protects the state's air quality. The local air districts regulate stationary sources of pollution and prepare local implementation plans to achieve compliance with federal and state standards. The ARB is responsible primarily for the regulation of mobile sources of pollution and for the review of local district programs and plans. The ARB also establishes air quality standards for certain pollutants, administers air pollution research studies, and identifies and controls toxic air pollutants.
The budget proposes $236.8 million from various funds, primarily special funds, for support of ARB in 2005-06. This is an increase of $69.6 million, or 42 percent, from estimated 2004-05 expenditures. This increase is largely a result of the first-time receipt of a full year of fee revenues related to the Carl Moyer Program (diesel emission reduction incentives). The increase also results from the availability of new tire fee revenues to fund programs and projects that mitigate or remediate air pollution caused by tires. In addition, the budget proposes increases of $8.6 million (special funds) to reduce exposure to fine particulate matter and $7.3 million (special funds) for various mobile source compliance and enforcement-related activities.
The budget does not reflect current-year revenue from a recent increase in the tire fee that is to be used for air quality programs. We recommend the Governor's May Revision proposal include an expenditure plan for these revenues.
Increase in Tire Fee for Air Pollution Programs. For several years, the California Integrated Waste Management Board has assessed a $1.00 tire fee on every purchase of a tire in California. This fee is for prescribed purposes related to the disposal and use of used tires, and supports programs to encourage the recycling of waste tires and to foster markets for recycled tires. Chapter 707, Statutes of 2004 (AB 923, Firebaugh), increased this fee (from $1.00) to $1.75 per tire from January 1, 2005 until December 31, 2006 and $1.50 per tire from January 1, 2007 until December 31, 2014. Chapter 707 also required that revenues generated by this increase in fee be deposited into the Air Pollution Control Fund (APCF) for use by ARB and the local air districts to fund programs and projects that mitigate or remediate air pollution caused by tires in the state.
Budget Does Not Reflect Current-Year Revenue From Increase in Tire Fee. The budget proposes expenditures of $25 million from the tire fee revenues deposited in APCF in the budget year. Our review finds that the budget does not account for the receipt of a projected $12 million of tire fee revenues that will be deposited in APCF from January through June of this year (the tire fee increase is effective January 1, 2005). Accordingly, resources available from the tire fee for air quality programs in the budget year are $12 million higher than shown in the Governor's budget display. The board advises that there will not be expenditures of these revenues in the current year.
Governor's May Revision Should Include an Expenditure Plan. We recommend that the Governor's May Revision include a plan for expenditure of the $12 million of current-year revenues unaccounted for in the January proposal. This will give the Legislature the opportunity to evaluate the complete expenditure proposal for tire fee revenues at budget hearings.