The state uses a variety of special and bond funds to support the departments, conservancies, boards, and programs that regulate and manage the state's natural resources. Of the $2.3 billion in state-funded expenditures for resources programs proposed for 2000-01, about $1.1 billion (46 percent) would be from special funds, and $144 million (6 percent) from bond funds. The remainder would be from the General Fund.
In this section, we provide a status report on selected special funds and bond funds supporting these programs. In general, the use of these special and bond funds are specified in statute. Some funds can be used for a wide variety of programs and activities, while the use of other funds are more limited. For purposes of this review, we divided the funds into three categories: (1) resources special funds, (2) park-related bond funds, and (3) bond funds for water programs.
The budget proposes to spend most of the special funds projected to be available in 2000-01 for resources protection. If the Governor's spending proposals are approved, it will leave about $29 million for legislative priorities. However, the use of most of these remaining funds are statutorily restricted to specific purposes.
Figure 1 summarizes the total amount of funds available for expenditure in 2000-01 for selected special funds, the Governor's proposed expenditures from these funds, and the balances available after the Governor's proposed expenditures. Approval of the Governor's spending proposals would leave limited funds available for legislative priorities. This is especially the case because the Legislature may wish to retain some of the projected reserves in the accounts to meet contingencies such as revenue shortfalls or unanticipated expenditures. However, this would reduce the amounts of funds available for appropriation by the Legislature in 2000-01. Furthermore, most of the remaining funds can only be used for specific purposes, as required by statute. For instance, about $11.1 million of the projected balance in the Fish and Game Preservation Fund is dedicated statutorily and can only be used for activities related to certain species. As a result, the Legislature's flexibility in expending these funds for resources projects is limited.
| Figure 1 | ||||
| Selected Special Funds
Resources Programs | ||||
| 1999-00 and 2000-01
(In Millions) | ||||
|
Special Funds |
1999-00
Expenditures |
2000-01 | ||
| Resources | Expenditures | Balance | ||
| Salmon and Steelhead
Trout Restoration Account |
-- |
$8.1 | $8.0 | $0.1 |
| Marine Life and
Reserve
Management Account |
-- |
2.2 | 2.2 |
-- |
| State Parks System
Deferred Maintenance Account |
-- |
10.0 |
-- |
10.0 |
| Natural Resources
Infrastructure Fund |
$1.2 | 4.5a | 2.9 | 1.6 |
| Environmental License
Plate Fund |
32.9 | 28.2 | 26.9 | 1.3 |
| Public Resources Account | 20.4 | 21.1 | 20.4 | 0.7 |
| Habitat Conservation Fund | 34.5 | 33.2 | 30.4 | 2.8 |
| Fish and Game
Preservation Fund |
||||
| Dedicated Accounts | 14.9 | 25.8 | 14.7 | 11.1 |
| Nondedicated | 67.5 | 66.3 | 65.2 | 1.1 |
| State Parks and
Recreation
Fund |
82.1 | 83.3 | 83.0 | 0.3 |
| a Net of transfer of $20.1 million to the Habitat Conservation Fund. | ||||
Below we discuss in greater detail the funds shown in Figure 1.
Resources Trust Fund. The Resources Trust Fund (RTF) was created by Chapter 293, Statutes of 1997 (SB 271, Thompson). Funds in RTF are to be allocated to preserve and protect the natural and recreational resources of the state. The RTF is funded from the tidelands revenues remaining after specified amounts are deposited into the General Fund and the California Housing Trust Fund. (Please see the Analysis of the 1998-99 Budget Bill, page B-17 for a graphic representation of the distribution of tidelands revenues.)
Chapter 293 split the trust fund into two separate accounts: the Salmon and Steelhead Trout Restoration Account (SSTRA) and the Natural Resources Infrastructure Fund (NRIF). Chapter 293 also required that the first $8 million from RTF be deposited into SSTRA to be appropriated to the Department of Fish and Game (DFG) for the recovery of salmon and steelhead trout. Of the $8 million, at least 87.5 percent ($7 million) must be allocated as project grants through DFG's fisheries management grant program. The grants are to be awarded for activities that improve fish habitat in coastal water utilized by salmon and anadromous trout, and are to emphasize the development of coordinated watershed improvement activities. The remaining 12.5 percent may be used for project administration costs incurred by DFG.
Chapter 326, Statutes of 1998 (AB 2784, Strom-Martin) created two additional accounts within RTF. These two accounts have higher funding priority than NRIF. First, Chapter 326 created the Marine Life and Marine Reserve Management Account (MLMRMA) and allocated $2.2 million annually through 2005-06, from RTF to the account for expenditure, upon appropriation, by DFG for marine life management. Second, Chapter 326 created the State Parks System Deferred Maintenance Account (SPSDMA) within RTF and allocated $10 million annually through 2005-06, from RTF to the account for expenditure, upon appropriation, by the Department of Parks and Recreation for deferred maintenance expenses.
The remaining RTF money will be deposited in NRIF for preserving and protecting natural and recreational resources. Chapter 293 identified four priorities for the use of NRIF. These priorities are: environmental review and monitoring by DFG, Natural Community Conservation Plan (NCCP) acquisitions, Habitat Conservation Fund (HCF) funding requirements, and expenditure for nonpoint source pollution control programs. Funds not appropriated to these priorities will be spent on natural and recreational resources.
With the recent increase in oil prices, tidelands oil revenues to the state are projected to total about $60 million in 2000-01. As a result, the budget projects that SSTRA, MLMRMA and SPSDMA would receive their respective statutory allocations in 2000-01, and NRIF would receive about $24.7 million. The budget further proposes to transfer $20.1 million of NRIF money to the HCF in order to meet the funding requirement of Proposition 117. After this transfer, the budget projects $4.5 million in resources remaining in NRIF, as shown in Figure 1.
Environmental License Plate Fund (ELPF). The ELPF derives its funding from the sale of personalized motor vehicle license plates by the Department of Motor Vehicles. Funds from ELPF can be used for the following purposes:
The budget proposes expenditures totaling $26.9 million from ELPF, a decrease of about $6 million (18 percent) below estimated current-year spending. The decrease is the result of local assistance and capital outlay expenditures being delayed from 1998-99 to 1999-00, inflating the amount of current-year expenditures. About $20.8 million (78 percent) of total proposed ELPF expenditures in 2000-01 would be for departmental support purposes, including $15.3 million for support of DFG. The remaining $6 million (22 percent) would be for local assistance and capital outlay expenditures, mainly by the California Tahoe Conservancy.
The proposed ELPF expenditures will leave a balance of $1.3 million at the end of 2000-01.
Public Resources Account, Cigarette and Tobacco Products Surtax Fund (PRA). The PRA receives 5 percent of the Cigarette and Tobacco Products Surtax Fund (C&T Fund) revenues. Generally, PRA funds must be used in equal amounts for (1) park and recreation programs at the state or local level and (2) habitat programs and projects.
The budget projects $21.1 million in PRA resources in 2000-01 and proposes expenditures from PRA for the various departments totaling $20.4 millionessentially the same as the estimated current-year expenditure level. All proposed expenditures would be for departmental support purposes. About 62 percent ($12.7 million) of the proposed expenditures would be used to support the Department of Parks and Recreation (DPR), and 25 percent ($5.1 million) would support the operations of DFG.
The budget proposes a reserve of $668,000 in PRA at the end of 2000-01.
Habitat Conservation Fund (HCF). The HCF was created by Proposition 117, the California Wildlife Protection Act of 1990. The proposition requires that the fund receive annual revenues of $30 million primarily for wildlife habitat acquisitions and improvements. To provide this funding level, Proposition 117 requires transfers of (1) 10 percent of funds from the Unallocated Account, C&T Fund, and (2) additional funds from the General Fund in order to provide a total of $30 million. Proposition 117 allows the Legislature to substitute for the General Fund the transfer of other appropriate funds.
For 2000-01, the budget proposes to transfer $9.9 million from the Unallocated Account, C&T Fund, and $20.1 million in NRIF money to HCF. These transfers, together with carryover balances, would fund proposed expenditures of $30.4 million, leaving a balance of $2.8 million at the end of the budget year.
Fish and Game Preservation Fund (FGPF). The FGPF derives most of its revenues from fishing and hunting licenses, tags and permits. Money in FGPF is used to support DFG activities to protect and preserve fish and wildlife, including the acquisition and construction of projects for these purposes. Certain revenues in the fund are restricted (or dedicated) to be used for specific purposes or species. For instance, revenues from hunting or fishing stamps for particular species can be used only for activities related to the protection of those species. The costs of commercial fishing programs are to be paid solely out of revenues from commercial fishing taxes and license fees.
For 2000-01, the budget proposes total FGPF expenditures of $80 million, almost entirely for the support of DFG. This amount is $2.6 million (or 3.2 percent) less than estimated current-year expenditures. Of the amount, $65.2 million is proposed to be spent from nondedicated funds and the remaining $14.7 million from dedicated revenues.
With the proposed expenditures, the budget projects a reserve of $12.2 million in FGPF for 2000-01, of which only $1.1 million is expected to be in nondedicated funds.
State Parks and Recreation Fund (SPRF). The SPRF is the main special fund source that supports DPR. The fund generates most of its revenues from state beach and park service fees. For 2000-01, the budget projects SPRF resources of $83.3 million. About two-third of these resources ($54.3 million) would be from beach and park fees. The budget proposes to use $83 million for the support of the Department of Parks and Recreation, leaving a balance of about $280,000 by year end.
There are virtually no park bond funds available from previously adopted bond measures.
If adopted by voters, Proposition 12, on the March 2000 ballot, would provide $2.1 billion in new bond funds for natural resource protection and for state and local park purposes.
Park development projects and land acquisitions have traditionally been funded by various bonds passed by the voters. The availability of bond funds has contributed to the Legislature's flexibility in funding its priorities in past years. This is because the Legislature has been able to free up funds in ELPF and PRA by using bond funds to the greatest extent possible to fund various projects.
The budget proposes $4.1 million in total bond funds available from prior bond measures for coastal land and access projects in 2000-01. No bond-funded expenditures are proposed for state or local park development purposes. Essentially all park bond funds have been depleted.
Bond Measure on March 2000 Ballot. Proposition 12 (the Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection Bond Act) on the March 2000 ballot, if adopted, would provide $2.1 billion for the acquisition, development and protection of recreational, cultural, and natural areas. As shown in Figure 2, about $940 million of the bond funds would be granted to local or nonprofit agencies for local recreational, cultural, and natural areas. The remaining $1.16 billion would be used by the state for similar types of areas of statewide significance.
The budget proposes expenditures of about $209 million from various water bonds for water quality, water supply, and ecosystem restoration projects. There are no bond funds available in the budget year for (1) the state's unmet share of costs for federally authorized, local flood control projects and (2) state matching funds for federal safe drinking water loans and grants. The state's share of funds for these programs, however, will be provided from the General Fund as follows: $15.4 million to match federal safe drinking water funds and $44 million for flood control subventions.
| Figure 2 | |
| Safe Neighborhood Parks, Clean Water, Clean Air,
And Coastal Protection Act Use of Bond Funds | |
| (In Millions) | |
| State Projects | |
|
$525.0 |
|
355.0 |
|
277.5 |
|
2.5 |
| Subtotal | $1,160.0 |
| Grants to local governments and nonprofit organizations | $940.0 |
| Total | $2,100.0 |
As Figure 3 (see next page) shows, the budget proposes expenditures totaling $209 million in 2000-01 from various water bonds for (1) safe drinking water; (2) water supply, including water conservation, water recycling, and groundwater recharge; (3) wastewater treatment and other water quality projects; and (4) Bay-Delta improvements, including fish and wildlife restoration and delta levee rehabilitation. This is an increase of $18.7 million, or about 10 percent, above estimated current-year expenditures from bonds for these purposes. About 80 percent of the proposed expenditures are from Proposition 204 bond funds. Proposition 204the Safe, Clean, Reliable Water Supply Act of 1996provided $995 million for various water-related purposes, including habitat restoration in the Bay-Delta, wastewater treatment, water recycling and conservation, and local flood control and prevention.
Safe Drinking Water. The budget projects total expenditures of $11.7 million in 2000-01, leaving a balance of $42.9 million at the end of 2000-01. There are pending grant applications that would spend much of this balance in future years.
Over the next five years, about $415 million in federal loans and grants will be available to public water systems in the state for upgrades to meet safe drinking water standards if matched by a 20 percent state contribution. However, the state is not authorized to use existing safe drinking water bond funds as the match for these federal funds. Given this limitation, the administration is proposing a state match of $15.4 million from the General Fund in order to draw down $77.1 million of federal funds in 2000-01. Our review finds that an additional $87.6 million of federal funds would be available in 2000-01 if the state were to provide an additional $17.5 million in matching funds. We discuss this issue in greater detail in our write-up under Item 4260, the Department of Health Services.
| Figure 3 | |||
| Selected Water Bond Fundsa | |||
| 2000-01
(In Millions) | |||
| Resources | Expenditures | Balances | |
| Safe drinking water | |||
| 1986 California Safe Drinking Water Fund | $25.3 | $3.8 | $21.5 |
| 1988 California Safe Drinking Water Fund | 29.3 | 7.9 | 21.4 |
| Subtotals | ($54.6) | ($11.7) | ($42.9) |
| Water supply/water recycling | |||
| 1986 Water Conservation and
Water Quality Fund |
$16.7 | $14.8 | $1.9 |
| 1988 Clean Water and
Water Reclamation Fund |
1.5 | 1.2 | 0.3 |
| 1988 Water Conservation Fund | 21.7 | 9.1 | 12.6 |
| Safe, Clean, Reliable Water Supply Fundb | 86.3 | 50.7 | 35.6 |
| Subtotals | ($126.2) | ($75.8) | ($50.4) |
| Wastewater treatment/water quality | |||
| 1984 State Clean Water Fund | $25.3 | $6.9 | $18.4 |
| Safe, Clean, Reliable Water Supply Fundb | 100.0 | 37.2 | 62.8 |
| Subtotals | ($125.3) | ($44.1) | ($81.2) |
| Bay-Delta improvements | |||
| Safe, Clean, Reliable Water Supply Fundb | $437.5 | $77.4 | $360.1 |
| Flood control and prevention | |||
| Safe, Clean, Reliable Water Supply Fundb |
--c |
-- | -- |
| Totals | $743.6 | $209.0 | $534.6 |
| a Based on Governor's budget. | |||
| b Proposition 204. | |||
| c Funds in Proposition 204 sub-account depleted at end of 1997-98. | |||
Water Supply and Water Recycling. The budget projects total expenditures of $75.8 million, including $50.7 million from Proposition 204 funds, for water supply and recycling projects. This leaves a balance of $50.4 million, mainly for new projects.
Wastewater Treatment and Other Water Quality Projects. The budget proposes $44.1 million in expenditures to fund wastewater treatment, agricultural drainage treatment, seawater intrusion control, and other water quality projects in 2000-01. This leaves a balance of $81.2 million. Pending grant and loan applications for wastewater treatment projects would spend much of this balance in future years.
Bay-Delta Improvements. Proposition 204 bond funds provide a total of $583 million for projects specifically related to the Bay-Delta, mainly for ecosystem restoration. The budget proposes expenditures of $77.4 million in 2000-01, leaving a balance of $360.1 million. Of the proposed expenditure, $51.5 million is contingent upon federal and state approval of environmental impact reports being developed by the "CALFED" Bay-Delta Program. Such approval is expected this summer.
Flood Control and Prevention. The costs of federally authorized, locally sponsored flood control projects are shared by the federal government (50 to 75 percent), state government (17.5 to 35 percent), and local government (7.5 to 15 percent). Due to the state's budget condition in recent years, however, the state has been unable to pay its full share of costs for these projects. Proposition 204 provided $60 million to pay some of the arrearages owing to local agencies; however, these funds were depleted by the end of 1997-98.
According to the Department of Water Resources (DWR), the unpaid amount on the state's share of costs will be about $102.9 million at the end of 1999-00, after the expenditure of $45 million provided for this purpose in the current-year budget. The budget provides no additional funding for local flood control subventions beyond the $44 million appropriated for this purpose for each of 2000-01 and 2001-02 by Chapter 326, Statutes of 1998 (AB 2784, Strom-Martin). The DWR projects the arrearages to stand at $127.3 million at the end of the budget year. According to DWR, the lack of state funds (to pay for the state share) has caused construction to stop on a number of flood control projects.
A $1.97 billion water bond measure is on the March 2000 ballot. Under the measure, funds would be available for safe drinking water, flood control, Bay-Delta restoration, watershed protection, and various water quality and supply projects.
Despite past expenditures of bonds, there remain significant water-related funding demands. For example, according to the U.S. EPA, upgrading the state's local public water systems to meet current and anticipated federal regulations will cost $18 billion. There are also significant funding demands in other areas such as flood control, watershed protection, water quality, and water supply.
A $1.97 billion water bond measure on the March 2000 ballot would address a number of these needs. Under this measure, funds are provided for the following purposes: