Governor’s Reorganization Proposals

As mentioned previously in the “Background” section, the Governor has stated his intent to submit five legislative proposals to reorganize programs in the resources and environmental protection area to improve governmental efficiency. (These are in addition to the proposal, reflected in the budget plan, to eliminate and realign the CCC.) In the following section, we summarize these proposals and provide our initial comments on them. We note that, at the time this analysis was prepared, the administration had provided only limited information to the Legislature about these reorganization proposals.

State Energy Agencies

Current Structure of State’s Energy Agencies. The formulation of energy policy, the regulation of energy markets, and the implementation of energy–related programs are spread across several state commissions, boards, departments, and an independent nonprofit entity. In the past, we have found that this system of governance has created problems for the formulation and execution of state energy policy. For example, energy policy–making is diffused throughout state government, impeding accountability to the Governor and the Legislature.

Governor’s Proposal. The administration has indicated its intent to pursue a reorganization of the various state agencies with energy–related responsibilities. Under the Governor’s proposal, a consolidated Department of Energy would be created which would assume many of the energy–related responsibilities of nine existing state agencies—including certain regulatory powers currently held by the California Public Utilities Commission (CPUC) related to permitting of large renewable generation and transmission infrastructure. The California Energy Commission (CEC) would be eliminated, with all of its current functions assumed by the proposed consolidated department.

LAO Comments. We have previously recommended that the state reorganize its various energy–related agencies to improve accountability and reduce redundancies. For a detailed discussion of our reorganization proposal, please see The 2006–07 Budget: Perspectives and Issues, page 199.

As with the Governor’s broadly outlined proposal, we recommend the creation of a consolidated Department of Energy that would be headed by a single department head or cabinet secretary. The new department would perform the duties of the CEC as well as certain programs currently operated by other state agencies. Such a department would have responsibility for policy–making, some regulatory functions, and the implementation of energy–related programs. Under our proposal, electricity ratemaking functions would remain with CPUC. While there would be some administrative cost savings from our reorganization proposal, the purpose is largely to improve the state’s formulation and implementation of energy policy and accountability for such policy–making.

Waste and Recycling Functions

Current Structure of the State’s Waste and Recycling Functions. The following departments have responsibility for the state’s recycling and waste functions:

• CIWMB—for reduction, recycling (non–beverage container), and reuse of solid waste generated in the state.
• The DOC’s Division of Recycling—for beverage container recycling.
• DTSC—for regulation of the generation, treatment, and disposal of hazardous waste.

Governor’s Proposal. The administration has indicated its intent to pursue a reorganization of the various state agencies with waste and recycling–related responsibilities. Under the Governor’s proposal, the Division of Recycling within DOC would assume responsibility for the recycling of all materials, DTSC would assume responsibility for the remaining (nonrecyling) solid waste management functions of CIWMB, and CIWMB would be eliminated. The Governor estimates ongoing, annual savings of between about $2 million to $3 million from this proposal.

LAO Comments. We have previously recommended that the state reorganize its recycling and waste management functions (see our Analysis of the 2005–06 Budget Bill, page B–17), including eliminating CIWMB and combining recycling functions within a single department. As such, we believe that the general concept proposed by the Governor has merit. However, two issues with the Governor’s proposal warrant further consideration by the Legislature:

• Location of Waste Management and Recycling Functions. The Governor’s proposal splits recycling and waste management functions between the Natural Resources Agency (recycling) and Cal–EPA (waste management). As recycling is closely related to other waste prevention functions, we have previously stated that there are benefits from having a single agency responsible for both recycling and waste management. Thus, we have recommended that Cal–EPA would be the most appropriate location for both waste management and recycling functions—the current location for the bulk of these two functions.
• Should There Be a DOC? The Governor’s proposal expands the scope of DOC by adding additional recycling–related responsibilities. However, we have previously recommended that recycling program consolidation be achieved by moving the recycling function from DOC to a Cal–EPA department. We think that this would open the door to an evaluation of the role for a DOC in state government and whether its functions could be assumed by other state entities. As noted in our previous analysis, DOC currently has several roles and responsibilities that overlap with a number of other state agencies, including the State Lands Commission. Prior to expanding the scope of DOC through consolidation of recycling efforts, we recommend that the Legislature consider the overall role for DOC and opportunities to transfer various components of DOC to other state agencies to improve program effectiveness and efficiency.

Department of Boating and Waterways and Department of Parks and Recreation

Current Role of DBW. The DBW funds, plans, and develops boating facilities on waterways (both public and private facilities), provides financial aid and training to local law enforcement, and licenses yacht and ship brokers. Other activities include a wave and ocean data program, weed eradication in the Delta, and beach erosion and replacement programs. The budget proposes $71 million in expenditures for 2009–10, mainly from special funds and federal funds for state operations, local assistance, and capital outlay.

Governor’s Proposal. The administration has indicated its intent to pursue the elimination of DBW and consolidate its functions into DPR, allowing for better coordination and management of projects and grants relating to boating access and safety programs. The Governor estimates ongoing, annual savings of $600,000 from this proposal.

LAO Comments. The administration has indicated that the overall goal of its proposal is to eliminate redundancy and reduce costs. We concur that opportunities for efficiencies and savings exist from reorganizing DBW’s current functions. We see no reason why another agency, such as DPR, would not be capable of administering DBW’s ongoing grant and loan programs and overseeing its capital outlay activity. By coordinating such activities with similar activities in another agency, efficiencies should result. As such, we think the Governor’s proposal has merit and recommend in principle that it be adopted. However, as discussed below, we think that the Legislature could go further than the Governor’s proposal, creating additional savings.

In 1996, the administration proposed a similar elimination of DBW, with the majority of programs to be shifted to DPR. The proposal also included the elimination of certain DBW programs, with no other state agency assuming them. We think that this aspect of the 1996 proposal has merit, and we recommend that the Legislature, in evaluating the Governor’s proposal, consider going further to eliminate unnecessary or lower priority state programs currently implemented by DBW, including:

• Licensing of Yacht and Ship Brokers. In past years, we have recommended eliminating various licensing boards and commissions based on criteria to assess whether the state should license a particular occupation to include: (1) potential risk to public health and safety, (2) risk of financial harm to consumers, and (3) federal mandate requirements. Based on these criteria, ending the state’s role (currently implemented by DBW) in licensing yacht brokers appears to have merit.
• Private Marina and Small Craft Harbor Loan Programs. These loans have typically been made for the planning, design, and construction of public small craft harbors facilities and private recreational marina facilities. Eliminating these programs would leave the lending function to the private sector. We recommend that the Legislature consider whether these loan programs continue to be a state funding priority.

Board for Geologists and Geophysicists And State Mining and Geology Board

Governor’s Proposal. The administration has indicated its intent to pursue consolidation of the Board for Geologists and Geophysicists (the licensing and regulatory body for geologists and geophysicists), currently under the Department of Consumer Affairs (DCA), with the State Mining and Geology Board, an entity currently under DOC. The Governor estimates ongoing, annual savings of up to $714,000 from this proposal.

LAO Comments. As we discuss in our 2009–10 Budget Analysis Series General Government document, we have concluded that the Governor’s proposal to pursue the elimination of a number of DCA boards, bureaus, and committees through program consolidations and eliminations has merit and should be adopted.

However, prior to consolidating the two particular boards in question here, we recommend the Legislature consider potential opportunities to go further than the Governor’s proposal. Specifically, we note that the Governor’s proposal would retain the licensing and certification of geologists and geophysicists with a state board. We recommend the Legislature consider whether licensing of these professionals by the state is a necessary state function. We also question whether a state board structure is the most appropriate and cost–effective way to oversee mining and geology within the state.

California Accidental Release Prevention Program

Roles of the CalARP Program and DTSC. The California Accidental Release Prevention Program (CalARP) currently resides within CalEMA (formerly Office of Emergency Services). The program encompasses planning activities related to the prevention of accidental releases of hazardous substances and cleanup activities should a spill occur. The DTSC regulates hazardous waste management, oversees contaminated hazardous substance site cleanups, and implements pollution prevention programs.

Governor’s Proposal. The administration has indicated its intent to move CalARP from CalEMA to DTSC, for purposes of improving consistency and efficiency.

LAO Comments. This proposal appears consistent with past legislative action to consolidate the implementation of various hazardous materials management programs previously administered by multiple state and local entities. This action has reduced fragmentation in program implementation and improved program effectiveness. We find that the proposal has merit and recommend that it be adopted.