BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 30 (Perea) - Water Quality
Amended: May 24, 2013 Policy Vote: EQ 9-0
Urgency: No Mandate: No
Hearing Date: June 24, 2013 Consultant:
Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 30 would remove restrictions on the State Water
Resources Control Board's (SWRCB) authority to collect an in
lieu surcharge on loans from the Clean Water State Revolving
Fund (CWSRF) in order to fund grants to small communities for
wastewater management.
Fiscal Impact: Ongoing costs in the tens of millions of dollars
to the CWSRF (special) for lost interest payments that are
instead deposited into the Small Communities Grant (SCG) Fund.
Background: The CWSRF is created under the federal Clean Water
Act to provide funding for water quality protection projects for
wastewater treatment, nonpoint source pollution control, and
watershed and estuary management. The California Porter-Cologne
Water Quality Control Act authorizes the SWRCB to administer the
CWSRF.
Until January 1, 2014, the SWRCB is authorized to assess an
annual surcharge on loans issued from the CWSRF in lieu of
interest on the loans. This surcharge is required to be
deposited into the SCG Fund for the purpose of providing grants
to small communities for the construction of wastewater
collection, treatment, or disposal projects. No more than $50
million in surcharges may be collected. Projects that serve
severely disadvantaged communities have priority for grants from
the SCG Fund. The surcharge may be authorized at any time during
the loan repayment schedule, but once the surcharge is applied,
it must remain unchanged unless the SWRCB is ceasing collection
of the surcharge.
Proposed Law: This bill would remove the $50 million dollar cap
on deposits to the SCG Fund and allow the SWRCB to continue to
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assess an in lieu surcharge beyond 2014.
This bill would also give SWRCB the ability to adjust the
surcharge if an adjustment is necessary to avoid a negative
impact on the board's ability to fund projects.
Related Legislation: AB 2356 (Arambula) Chapter 609/2008
authorized the SWRCB to assess the annual surcharge in order to
fund the SCG Fund.
Staff Comments: To date, the SWRCB has collected approximately
$15.7 million to the SCG Fund and anticipates collecting
approximately a total of $30 million by December 31, 2014. By
removing the sunset date and cap on the SWRCB's authorization to
assess an annual surcharge in lieu of interest payments, this
bill would create an ongoing loss of revenue to the CWSRF,
thereby limiting future financial assistance that may be issued
from that fund. However, the losses to the CWSRF are partially
offset by deposits to the SCG Fund, which makes monies
accessible to small and economically-disadvantaged communities
that may be unable to use loans from the CWSRF to finance
critical wastewater projects.
A sizable reserve has been building in the SCG Fund. At the end
of FY 2011-12, there was a balance of approximately $10.5
million after a $4 million loan to the General Fund. Also, there
have been minimal expenditures from the grant in the past two
budget years. In each FY 2010-11 and FY 2011-12, only one $1
million grant agreement was issued. Staff notes that there is a
minimal record of program performance on which to judge whether
it is desirable to lift the sunset date and the fiscal cap.
According to the SWRCB, the fund has built a large reserve and
has had minimal expenditures because the SWRCB has been focused
on distributing monies made available through the American
Recovery and Reinvestment Act (ARRA) for similar purposes. Now
that the ARRA funding has wound down, the SWRCB anticipates
significantly increasing expenditures from the SCG Fund. In
fact, the 2013-14 budget, as approved by the Legislature,
included a $12 million augmentation from the SCG Fund. Once the
fund is drawn down to a reasonable reserve, the SWRCB
anticipates issuing between $8 and $10 million annually in
grants. The bill's provision that gives SWRCB flexibility in
adjusting deposits to the SCG Fund will help prevent a future
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reserve buildup.
The SCG Fund is administered together with the CWSRF Program and
monies from the two funds are often used in conjunction to fund
wastewater projects. Administrative costs for both programs are
funded from the CWSRF.