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Other Budget Issues

Last Updated: 5/20/2011
Budget Issue: Proposed elimination of the Salton Sea Restoration Council
Program: Salton Sea Restoration Council
Finding or Recommendation: The Governor’s May Revision proposal to eliminate the council affords the Legislature the opportunity to consider whether Salton Sea restoration remains a fiscal and policy priority. If considered not to be a priority, then the Governor's proposal should be approved. If considered to be a priority, there are alternative governance structures to the Salton Sea Restoration Council that could be explored. Whatever form restoration efforts move forward in, a viable funding plan should be required.
Further Detail

Governor's May Revision Proposal.  The Governor’s May Revision proposes eliminating the Salton Sea Restoration Council, citing concerns over the lack of a viable funding plan for Salton Sea restoration and potential inefficiencies resulting from the creation of a new state agency for an effort that is limited in duration. (We note, however, that restoration efforts are anticipated to take place over 75 years.)

Council Was Created in 2010 Legislation. The Salton Sea Restoration Council was created by Chapter 303, Statutes of 2010 (SB 51, Ducheny), following several years of discussion over the governance structure that would guide any Salton Sea restoration efforts.  Several committees are to be established under the council: an executive committee that would function as the governing body, a science committee, a local government forum, and a stakeholder forum.  As such, the council is required to receive significant input from non-state organizations and provides a venue for public participation.  The council is charged with evaluating the range of restoration plans previously developed by the Secretary of Natural Resources, as well as any additional plans it deems necessary.  The council is then required to recommend a plan to the Legislature by June 30, 2013, taking into consideration the impacts of the restoration plan on air quality, fish and wildlife habitat, water quality, as well as the technical and financial feasibility of the restoration plan.  Finally, the council is directed to oversee the implementation of the selected restoration plan, and to that end, Chapter 303 divides responsibility for specific categories of restoration actions between the Department of Water Resources (DWR) and the Department of Fish and Game (DFG). As of the writing of this analysis (May 2011), the Administration has not yet taken action to set up the council, nor has it submitted a budget request to provide for its funding support.

Legislature Should Consider Fiscal and Policy Priority of Salton Sea Restoration. The Governor’s proposal to eliminate the council offers the Legislature an opportunity to consider whether Salton Sea restoration continues to be a state fiscal and policy priority. This consideration should be made in light of the potentially substantial costs of the restoration effort--as high as $9 billion by some estimates (the cost to implement the Secretary for Natural Resources' previously developed preferred alternative)--and given that no viable funding plan for the restoration effort exists. If the Legislature were to decide that Salton Sea restoration is not a priority, then it may wish to approve the Governor's proposal to eliminate the council.

Funding Will Still Be Needed Even if Restoration Not a Priority. We note, however, that even if the Legislature decides that Salton Sea restoration is not a fiscal and policy priority and did not proceed with the development of plans to restore the Salton Sea, the state could continue to have financial exposure related to legally required mitigation activities connected with the implementation of the Quantification Settlement Agreement (QSA). These mitigation efforts involve multiple stage agencies, including DWR and DFG, and we are not aware of there being a coordinated long-term mitigation plan or a funding plan on how to pay for it. (The total cost of these legally-required mitigation actions is substantial. An estimate from several years ago projected the cost to be $800 million over 75 years). As such, the state will need to identify a stable funding source for the mitigation efforts, potentially requiring the amendment of statute to provide recovery of costs from parties directly benefiting from, or causing the need for the, mitigation activity. 

Multiple Governance Options Exist If Decide to Proceed With Restoration. If the Legislature wishes to move forward with Salton Sea restoration above and beyond the required mitigation actions discussed above, multiple options for governance structures exist, of which establishing a Salton Sea Council as specified in Chapter 303 is one. In our 2008 report (predating Chapter 303), “Restoring the Salton Sea,” we described various outcomes that should be achieved by the governance structure for the restoration effort. (In the report, we recommended that DWR be designated as the lead implementing entity and decision-maker for Salton Sea restoration. However, we note that there are trade-offs with such a governance structure. For example, the council structure under Chapter 303 would potentially provide more openness and opportunities for public participation in the decision-making process, while a structure with DWR as the lead would potentially be more administratively efficient. It is a policy call for the Legislature to weigh these trade-offs.) Regardless of which governance structure is chosen (whether it be the structure established by Chapter 303 or some other structure), we think that it is important for it to be clear who is "in charge" of the restoration effort and can accordingly be held accountable for its performance. 

Legislature's Policy Guidance Needed for the Adoption of Any Restoration Plan.  We continue to recommend that the Legislature formally adopt a restoration plan if it wishes to proceed with the restoration effort. Chapter 303 offers guidance on the considerations the council is to weigh when selecting a plan and delineates the roles of DWR and DFG in any restoration. This guidance is beneficial and should be retained, and perhaps even expanded, even if the council were eliminated and an alternative governance structure put in place. (For example, an existing state agency, such as DWR, could be designated as the lead agency to consider restoration alternatives and recommend a restoration plan.) As we recommended in our 2008 report, we think that it is important for the Legislature to clearly express its priorities for restoration, keeping in mind that viable funding sources may not be available to fund all possible restoration activities.

Financing and Restoration Plans Should Be Developed Concurrently.  In our view, the selection of a restoration plan and a financing plan are highly related and should therefore be developed concurrently.  The feasibility and stability of funding for restoration efforts informs the scope and the selection of a restoration plan, and the scope of the restoration efforts determines what magnitude of funding is required and therefore what steps are necessary to secure it.  Therefore, if restoration is a priority, whatever body is given authority over Salton Sea restoration should be tasked with recommending a viable financing plan in conjunction with a restoration plan. Furthermore, no restoration plan should be adopted by the Legislature without such a funding plan.  To the degree possible, the funding plan should adhere to the beneficiary pays and polluter pays principles. 

Limited Timeframe for Action. Finally, we note that there are some limits on the Legislature’s ability to defer the decision about pursuing restoration to a later time.  In 2017, local water agencies will cease delivering water into the Salton Sea as they currently are doing under the QSA. The DWR has stated that any restoration effort will be much more challenging and costly if no restoration measures are already in place at that time.  Thus, the Legislature’s re-evaluation of the priority of any degree of Salton Sea restoration should be completed soon enough to allow adequate time to ensure that the necessary early-action restoration efforts are in place by 2017.