Analysis of the 2005-06 Budget Bill Legislative Analyst's Office February 2005

State Water Resources Control Board (3940)

The State Water Resources Control Board (board), in conjunction with nine semiautonomous regional boards, regulates water quality in the state. The regional boards—which are funded by the state board and are under the state board's oversight—implement water quality programs in accordance with policies, plans, and standards developed by the state board.

The board carries out its water quality responsibilities by (1) establishing wastewater discharge policies and standards; (2) implementing programs to ensure that the waters of the state are not contaminated by underground or aboveground tanks; and (3) administering state and federal loans and grants to local governments for the construction of wastewater treatment, water reclamation, and storm drainage facilities. Waste discharge permits are issued and enforced mainly by the regional boards, although the state board issues some permits and initiates enforcement actions when deemed necessary.

The state board also administers water rights in the state. It does this by issuing and reviewing permits and licenses to applicants who wish to take water from the state's streams, rivers, and lakes.

Proposed Funding. The budget proposes expenditures of $729 million from various funds for support of the board in 2005-06. This amount is a decrease of $305 million, or about 30 percent, below estimated current-year expenditures. Most of this decrease reflects a reduction in bond-funded expenditures, mainly for loans and grants for local water quality and water recycling projects. Despite this overall spending reduction, the budget does propose some increases in programs. These proposals include $1.5 million for contaminated site cleanups, $48 million ($33 million ongoing) to accelerate the reimbursement of private parties for the cleanup of leaking underground storage tanks, and $12 million to fund grants to test underground storage tanks for leaks.

Legislatively Required Report Overdue

The administration has failed to submit a legislatively required report on funding opportunities to address the environmental impacts of agriculture. Pending the submittal of the report, we recommend denial of the budget request for 5.5 new positions and $523,000 to administer Proposition 50 grant funds related to agricultural and dairy water quality. (Reduce Item 3940-001-6031 by $523,000.)

The Supplemental Report of the 2004 Budget Act requires the board to report to the Legislature by December 31, 2004 on its recommendations for legislative action to identify and maximize state and federal funding opportunities to address adverse environmental impacts of agricultural activities, including dairy operations. The Supplemental Report also requires our office to provide an analysis of the report and make recommendations to the Legislature in our Analysis of the 2005-06 Budget Bill. However, at the time the Analysis was prepared, the administration had not yet submitted the report. We will provide our analysis of the report and related recommendations at budget hearings, assuming the required report has been submitted by that time.

The budget proposes an increase of 4.5 positions (1.5 ongoing) in the Agriculture Water Quality program and 1 position in the Dairy Water Quality program, at a total cost of about $523,000 (Proposition 50 bond funds). These positions are proposed to administer $29.5 million in grants in the board's Agriculture Water Quality program and $5 million in grants in the Dairy Water Quality program. In general, these programs are intended to mitigate the adverse impacts of agriculture and dairy activities on water quality. Funding for these grants was provided in a current-year appropriation, available for expenditure through 2006-07.

The information required by the overdue report would assist the Legislature in its evaluation of the budget request for these grant programs. Specifically, it would permit the Legislature to determine whether the requested level of staffing is appropriate for the potential size of the program if the state were to maximize all funding sources for these grant programs. Because the administration has not provided the Legislature with recommendations regarding funding opportunities in this area, we believe that adding the requested level of positions is premature. We therefore recommend denying the request for these new positions and $523,000, pending submittal and legislative evaluation of the report.