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Other Budget Issues

Last Updated: 4/27/2011
Budget Issue: Salton Sea Restoration Funding (Reappropriations and Reimbursement Expenditure Authority)
Program: Salton Sea Restoration (Departments of Fish and Game, Water Resources)
Finding or Recommendation: Deny April Finance Letter request for reappropriation of $13 million from the Salton Sea Restoration Fund (SSRF)--which includes Proposition 84 bond funds--to Department of Fish and Game (DFG). Deny April Finance Letter request for $4.2 million in reimbursement authority for Department of Water Resources (DWR). Expenditures are not appropriate at this time because of a lack of a formally approved restoration plan and legal uncertainty surrounding the Quantification Settlement Agreement (QSA).
Further Detail

Proposal.  In an April 12, 2011 letter, the Department of Finance requests reappropriation to DFG of $13 million from the SSRF (including Proposition 84 bond funds) for expenditure on Species Conservation Habitat work to enhance fish and bird habitat in the Salton Sea. An April 13, 2011 letter from DOF also requests $4.2 million in reimbursements from DFG to the Department of Water Resources for the same purpose (these funds have already been appropriated to DFG and are separate from the reappropriation DFG is requesting). 

No Legislatively Approved Plan Exists.  We have previously recommended that the Legislature formally adopt a restoration plan (see our 2008 report “Restoring the Salton Sea”).  To that end, the Legislature passed SB 51, Ducheny (Chapter 303, Statutes of 2010), which requires the creation of a Salton Sea Restoration Council as a state agency within the Natural Resources Agency to recommend a restoration alternative by June 30, 2013 and then oversee implementation of that alternative.  The Council has not been created yet, and the Natural Resources Agency has indicated that the Council's establishment will be addressed in the 2012-13 Governor's Budget.  We therefore recommend that the Legislature deny funding for Salton Sea Restoration projects until the Council has been formed and has developed a restoration plan for the Salton Sea as required by statute. This will ensure that restoration projects will be consistent with the adopted plan.  

QSA Future Is Uncertain.  Additionally, the future of the QSA that created the state’s funding obligation to restore the Salton Sea is currently in doubt.  In December 2009, a Sacramento County Superior Court judge invalidated the QSA because it was predicated on the Legislature’s statutory promise to fund all but $133 million of the restoration efforts--a promise that the court said could not be made constitutionally by the Legislature. Although enforcement of the ruling has been stayed, the outcome is uncertain at this time.  If the invalidation of the QSA is upheld through the appeals process, it is unclear what the state’s role in restoration will be.

Uncertain Level of Urgency of Restoration Efforts.  The DWR describes the proposed actions that would be funded from the requested reappropriations and reimbursements as “no-regrets” projects that would be consistent with any plan to restore the Salton Sea, including the no-action alternative.  However, it is unclear what the need is for immediate action on these projects.  The majority of benefits of any restoration plan are likely to be realized only after the completion of the restoration many years from now, and as such, a temporary delay is unlikely to have significant negative consequences on fish and bird species.

Limited Funding Currently Available for Restoration Efforts.  Currently, the sole source of funding for Salton Sea restoration efforts is the SSRF, which consists of a $30 million payment by several participants in the QSA and $47 million from Proposition 84 bond funds.  Of that, $9 million remains unappropriated.  Because the SSRF is the sole source of funds at this time, prioritization of restoration efforts is of paramount importance.  Denial of these requests will ensure the immediate availability of funds for the activities required by SB 51 and implementation of the plan ultimately recommended by the Council.

Recommendation. Given the lack of a recommendation for a restoration alternative from the as-yet-to-be-established Council, the uncertainty around the QSA, the lack of urgency of the actions requested to be funded, and the limited funding currently available for Salton Sea restoration efforts, we recommend denial of the reappropriation and reimbursement funding requests.