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Other Budget Issues

Last Updated: 1/13/2011
Budget Issue: Fee-based funding for water quality and water rights regulation
Program: State Water Resources Control Board
Finding or Recommendation: Approve Governor's January budget proposal to shift funding for $13.6 million of the board's core regulatory program expenditures from the General Fund to the Waste Discharge Permit Fund (WDPF) and Water Rights Fund (WRF), on the basis that regulatory activities are appropriately funded from regulatory fees.
Further Detail

Governor's Proposal. The Governor's budget proposes to shift $13.6 million in funding for core regulatory activities in the State Water Resources Control Board (SWRCB) from the General Fund to two fee-based special funds--the WDPF (for water quality regulatory activities) and the WRF (for water rights regulatory activities). This proposal parallels the prior administration's proposal in the January 2010-11 budget to fully fund the core regulatory programs of SWRCB from fees. The specific regulatory-related activities that the administration proposes to fund with increased regulatory fees are:

  • $1.4 million for the National Pollutant Discharge Elimination System (NPDES) Wastewater program.
  • $1.8 million for the Irrigated Lands Regulatory Program.
  • $3.6 million for the Water Rights Program. 
  • $6.8 million for the Basin Planning and Standards Programs.

LAO Recommendation. We concur that the core regulatory activities listed above are appropriately funded through regulatory fees, based on the "polluter pays" and "beneficiary pays" funding principles, and we therefore recommend that the Legislature approve this budget solution. The polluter pays principle provides that private individuals or businesses that use or degrade a public resource (such as water) should pay for the social costs imposed by their use of the resource. The beneficiary pays principle provides that the cost of a program or project should, to the extent possible, be paid by its direct beneficiaries. 

The LAO has previously analyzed the policy case for funding SWRCB regulatory activities through fees.  As discussed in our Analysis of the 2003-2004 Budget Bill, water rights regulation is appropriately funded through fees because those regulatory activities benefit both water rights permit applicants and current water rights holders.  Furthermore,  in our 2008-2009 Analysis we recommended that regulatory fees fully fund the NPDES program, basin planning activities, and the agricultural waiver program, as is proposed by the Governor this year.