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Implementation of AB 32—Global Warming Solutions Act of 2006

April 14, 2010 - The state's major climate change legislation—commonly referred to as "AB 32"—is approaching a crossroads in its implementation. The state's AB 32 activities, currently carried out mainly by the Air Resources Board (ARB) but also by eleven other state agencies, will be shifting from the development of plans and regulations to program implementation and enforcement. Legislative oversight of the overall size and components of the AB 32 program budget is very important, particularly given this upcoming shift in the program's focus. In this budget-focused brief, we provide details of the Governor's AB 32 budget proposal and ARB's plan to pay for most of the AB 32 program administrative activities from a new fee. We also offer recommendations to ensure that (1) sufficient resources are devoted to economic analysis of AB 32 measures and (2) future AB 32 expenditures and fees are justified and set at appropriate levels.

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Liquid Assets: Improving Management of the State's Groundwater Resources

March 24, 2010 - California’s water system is facing a series of challenges affecting water availability, reliability, and delivery. Reevaluating how groundwater is managed is necessary if it is to achieve its full potential as a reliable source of water. In this report, we present the Legislature with a series of actions that would be phased in over a period of time to address current and emerging groundwater management issues, including bringing science and law together to accurately reflect the physical interconnection of surface water and groundwater.

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The 2010-11 Budget: Funding and Policy Options for the Beverage Container Recycling Program

March 18, 2010 - Since July 2009, the Beverage Container Recycling Program has faced severe cuts, necessitated by a projected $157 million fund deficit for 2009‑10 in its primary funding source—the Beverage Container Recycling Fund (BCRF). In February 2010, the Legislature enacted a number of measures in the special session to begin addressing the funding challenges in this program. In this report, we review the Governor’s budget and policy proposals to address the deficit, recap the enacted special session changes to the program in both the current year and the budget year, and offer our recommendations for additional budget-year actions, including long-term changes to the program.

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The 2010-11 Budget: Resources and Environmental Protection

March 8, 2010 - In reviewing the Governor's budget proposal, we uncovered current actions and proposals of the administration that either circumvent the Legislature's authority, make it difficult for the Legislature to oversee the administration's spending, or limit the Legislature's flexibility in making decisions. We found that the administration is: developing new renewable energy procurement requirements that circumvent legislative policy as reflected in current state law (known as the renewables portfolio standard); using an Emergency Fund--intended to pay for large-incident wildland firefighting costs--to cover some day-to-day departmental expenditures that are more appropriately made subject to legislative budget review; proposing a somewhat similar emergency fund for flood management that would be structured to allow the administration to augment it at its discretion without notifying the Legislature; and proposing again to fund recreation activities at State Water Project facilities in a way that escapes legislative budgetary review for all the spending. Finally, we recommend rejection of the Governor’s proposal to dedicate the ongoing Tranquillon Ridge oil lease revenues to support state parks, because it limits the Legislature's future decision making.

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Reforming Davis-Dolwig: Funding Recreation in the State Water Project

March 19, 2009 - The Davis-Dolwig Act is a 47-year-old state law that specifies that the state, not water ratepayers, should fund the recreation component of the the State Water Project (SWP). The budget proposes a number of statutory reforms to the act, in part to provide a dedicated funding source for its implementation. We find that the Governor’s proposal does not address a number of major problems with the implementation of the act and that the administration’s approach improperly limits the Legislature’s oversight role. We also find that, over many years, the Department of Water Resources has been allocating costs to the state under Davis-Dolwig that are significantly in excess of the direct costs to SWP for recreation. In our report, we offer the Legislature a package of statutory reforms to address problems that we have identified with the implementation of Davis-Dolwig. These include clarifying the role of public funding for recreation in SWP. We also recommend that the state evaluate the potential to divest itself of SWP reservoirs that are used mainly for recreation.

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2009-10 Budget Analysis Series: Resources and Environmental Protection

February 3, 2009 - The Governor’s budget proposes only one significant budget-balancing solution in the resources and environmental protection areas—$350 million of loans from various special funds to the General Fund. We offer a number of recommendations for achieving General Fund savings beyond the Governor's proposal, including shifting funding for various programs from the General Fund to new or increased fees. Fees are an appropriate funding source in these cases, in our view, because the state is either providing a service directly to beneficiaries or administering a pollution control program that should be funded on a “polluter pays” basis. Our fee proposals relate to: (1) wildland fire protection, (2) fish and game regulation, (3) water quality regulation, and (4) scientific activities of the Office of Environmental Health Hazard Assessment that support regulatory programs. We also recommend program reductions and/or expenditure deferrals in CalFire and the CALFED Bay-Delta Program to create additional General Fund savings. In addition, we assess the administration’s approach in evaluating alternatives to the way water is currently conveyed through the Delta as a key component of solving Delta water problems. We find that the analysis being conducted by the administration is too narrow to fully inform the Legislature of the costs, benefits, risks, and trade-offs of the various conveyance alternatives.

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LAO Recommended Legislation

December 1, 2008 - The role of the Legislative Analyst's Office is to review state programs and make recommendations to the Legislature as to how the state can operate more effectively and efficiently. This report summarizes various changes to law that we have recommended in recent years. Recommendations in this report include, among many others: (a) Simplify and Consolidate K-12 General Purpose Funding, (b) Promote the Adoption of Health Information Technology in California, (c) Fund Inmate Education Programs Based on Actual Attendance, and (d) Increase and Index the State Gas Tax.

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California’s Water: An LAO Primer

October 20, 2008 - California’s water delivery system is facing a series of challenges due in part to a combination of increasingly variable weather conditions, legal requirements, and system operation and conveyance constraints. These challenges affect water availability, reliability, and delivery. Recent public and private efforts have sought ways to address these challenges. These measures include proposals to increase water through groundwater storage, surface storage, infrastructure changes, and system operation improvements, among others. This report provides, through a “quick reference” document relying heavily on charts to present information, a snapshot of water in California, including: (1) An Overview of California’s Water Governance; (2) Water Supply, Source, and Delivery; (3) How Do We Finance Water Projects? (4) What Drives the Cost of Water?, and (5) Issues for Legislative Consideration

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Analysis of the 2008-09 Budget Bill, Resources Chapter

February 20, 2008 - Analysis of the 2008-09 Budget Bill, Resources Chapter

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State Park Fees

February 20, 2008 - We recommend that user fees in state parks be increased to avoid park closures as proposed by the Governor and to provide additional funding for state park maintenance.

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Governor’s Hydrogen Highway Initiative

February 20, 2008 - We recommend that $6 million proposed for the Governor’s Hydrogen Highway initiative be rejected, because sufficient funding remains available from prior appropriations in light of the relatively little program progress to date. We also find that the Legislature is in a position to set its own hydrogen policy priorities before approving additional funding.

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Funding Timber Harvest Plan Review and Enforcement

February 20, 2008 - We recommend the enactment of legislation to create a fee on timber operators to fully fund the review and enforcement of timber harvest plans by several state agencies, thereby creating General Fund savings of $21.2 million. Our recommendation is based on the application of the "beneficiary pays" funding principle.

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Funding Water Quality and Water Rights Programs

February 20, 2008 - We recommend applying the "polluter pays" funding principle more fully to the State Water Resources Control Board’s core water quality and water rights programs by (1) increasing existing fees to fully cover regulatory program costs, and (2) enacting a new broad-based fee to fully fund water quality management programs. Adopting our recommendations would create General Fund savings of $30.6 million.

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Funding Wildland Fire Protection

February 20, 2008 - The Governor’s proposed surcharge on commercial and residential insurance policies statewide to partially pay for wildland firefighting should be rejected in favor of a fee on property owners in "state responsibility areas" because these individuals directly benefit from the state’s firefighting services.

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Funding Flood Management

February 20, 2008 - We recommend the enactment of legislation to establish a fee to cover the department’s flood management expenditures that provide a direct benefit to property owners in flood zones statewide and those protected by the state Central Valley flood control system, thereby creating General Fund savings of about $40 million.