Analysis of the 2008-09 Budget Bill: Resources

Wildlife Conservation Board (3640)

The Wildlife Conservation Board (WCB) acquires property in order to protect and preserve wildlife and provide fishing, hunting, and recreational access facilities. The budget proposes $4.3 million for support of the board’s state operations in 2008–09, essentially the same level of expenditure as in the current year. The WCB’s support funding comes from a number of fund sources, including the General Fund, the Wildlife Restoration Fund, the Habitat Conservation Fund (HCF), the Environmental License Plate Fund, and bond funds. The budget also proposes $58 million for capital outlay expenditures—including $21 million from the General Fund (transferred to HCF) and $35 million from Proposition 84. This is a decrease of $813 million (or 93 percent) from estimated current–year expenditures. The decrease reflects the drawing down of Proposition 50 and Proposition 84 bond funds available to WCB in prior years. (Much of these bond funds are continuously appropriated. The budget displays them as being expended in the current year, but in fact they will be spent over a number of years.)

Use Special and Bond Funds Instead of General Fund for HCF

The budget proposes to transfer $20.8 million from the General Fund to the Habitat Conservation Fund, pursuant to a statutory requirement. We find that there are available special and bond funds that could be used in lieu of the General Fund. We recommend the Legislature appropriate $10.9 million from the Natural Resources Infrastructure Fund and $9.9 million in Proposition 1E bond funds to replace the proposed General Fund transfer. (Eliminate General Fund transfer to the Habitat Conservation Fund in the amount of $20.8 million. Add Item 3640–311–0383 in the amount of $10.9 million. Add Item 3640–311–6052 in the amount of $9.9 million.)

The Habitat Conservation Fund. The California Wildlife Protection Act of 1990 (Proposition 117), was enacted by the voters in 1990. Among other provisions, Proposition 117 requires an annual transfer of $30 million of specified state funds to HCF until 2020. Proposition 117 allocates HCF funds to various agencies—including $21 million to WCB—for specific programmatic goals (listed below) divided between Northern and Southern California:

Under Proposition 117, funds to be transferred to HCF come from the General Fund unless other, eligible funds are transferred. Eligible fund sources for HCF include the Cigarette and Tobacco Products Surtax Fund (Proposition 99), the Environmental License Plate Fund, the Wildlife Restoration Fund, and any bond funds authorized after 1990, for which the allowed uses match the purposes of Proposition 117. In previous years, Proposition 50 bond funds were used to fulfill Proposition 117’s requirements, reducing the General Fund transfer amount. Under the Governor’s budget proposal, $8 million comes from Proposition 99 funds, $20.8 million comes from the General Fund, and $1 million comes from Proposition 50.

Using Special and Bond Funds to Replace the General Fund Obligation to HCF. Based on our analysis, there are available special and bond funds that could be used to replace the General Fund obligation to HCF in the budget year and future years. We therefore recommend that the Legislature eliminate the General Fund transfer to HCF in the budget year and replace those funds with specified special and bond funds, thereby saving the General Fund $20.8 million in the budget year and like amounts in future years.

Using the Fund Balance in the Natural Resources Infrastructure Fund. Under previous statute since repealed, revenues from the production

of oil on state lands or in tidal waters (known as tidelands oil revenues) were—in part—deposited in the state’s Natural Resource Infrastructure Fund (Infrastructure Fund). Monies in this fund were used—under the previous statute—for environmental review, land acquisition, pollution control, and other natural resource–related activities. In 2006, statute was amended to direct all future tideland oil revenues into the General Fund. This statutory change also deleted the parameters that governed the use of the Infrastructure Fund. Currently, the Infrastructure Fund has a balance of $10.9 million, with no foreseeable draw on these funds. We recommend that the Legislature appropriate $10.9 million from the Infrastructure Fund to HCF, to partially offset the General Fund obligation in the budget year. Because there are no longer any statutory requirements for the use of the Infrastructure Fund, we believe that WCB can allocate them to any of the allowed uses for HCF funds.

Using Proposition 1E Bond Funds. In 2006, the voters enacted Proposition 1E, which provides $4.1 billion for flood control and prevention projects. The Department of Water Resources (DWR) has begun using Proposition 1E funds to repair flood control levees and will ultimately use some of the approved bond funds to purchase land for flood bypasses as a flood control mechanism.

Proposition 1E does not include any funds specifically allocated for wildlife habitat acquisition or restoration. However, as part of most levee repair, replacement, or new construction projects, DWR is required under current law to perform wildlife habitat mitigation. The DWR is still preparing estimates of the total cost for mitigation from its planned flood control projects. However, a review of a sample of DWR’s levee restoration projects found that environmental mitigation costs ranged from 20 percent to 50 percent of project costs. A conservative estimate that environmental mitigation costs will comprise 10 percent of future project costs yields total mitigation costs of $300 million for Proposition 1E–funded flood control projects in the Central Valley and Delta regions.

Based on the allowed uses of HCF and the availability of environmental mitigation funds from Proposition 1E, we believe that the Legislature can appropriate funds from Proposition 1E to HCF—satisfying the requirements of Proposition 117. Therefore, we recommend that the Legislature appropriate $9.9 million from Proposition 1E to HCF in the budget year and about $21 million per year thereafter. Also, we recommend the Legislature adopt budget bill language directing WCB to spend those funds in a manner that both provides mitigation for DWR’s flood control projects and meets the criteria of Proposition 117.

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