BILL ANALYSIS Ó SB 103 Page 1 ( Without Reference to File ) SENATE THIRD READING SB 103 (Budget and Fiscal Review Committee) As Amended February 25, 2014 Majority vote. Budget Bill Appropriation Takes Effect Immediately SENATE VOTE :Vote not relevant Original Committee Reference: BUDGET SUMMARY : Amends the 2013-14 Budget Act to include new appropriations to address the state's urgent drought needs. This bill, along with the companion trailer bill, SB 104, proposes $687.4 million expenditures for drought related activities. The Senate amendments delete the Assembly version of this bill, and instead: 1)Accelerate the appropriation of $77 million (Proposition 84, 1E funds and reimbursements) to the Department of Water Resources (DWR) for Central Valley, multi-benefit flood projects, including water supply, water storage, water quality improvements and ecosystem benefits. 2)Appropriate $15 million (General Fund) to the Department of Public Health (DPH) for emergency drinking water assistance for drought-impacted areas. Eligible projects include, alternate water supplies, improvements to existing water systems to prevent contamination or provide other sources of safe drinking water, and establishing connections to an adjacent water system. These funds are to be used after all eligible federal funds made available for the drought are utilized. 3)Provide expenditure authority of $25.3 million (General Fund) to the Department of Social Services (DSS) for food assistance programs for persons affected by the drought. Specifies that these funds be structured to maximize the potential federal drought assistance. 4)Allocate $11 million (federal funds) to the Department of SB 103 Page 2 Housing and Community Development (HCD) for rental assistance related to the drought. 5)Appropriate $4 million (State Water Pollution Cleanup and Abatement Account) to the State Water Resources Control Board (SWRCB) to secure emergency drinking water supplies for disadvantaged communities with contaminated drinking water supplies, including needs exacerbated by drought. Specify that these funds be available for expenditure until June 30, 2017. 6)Accelerate the appropriation of $7 million (State Water Pollution Control Revolving Fund Small Community Grant Fund) to SWRCB for grants to small and severely disadvantaged communities to comply with water quality regulations, protect surface and groundwater quality, and reduce threats to public health and safety. Specify that these funds be available for expenditure until June 30, 2015. 7)Appropriate $2.5 million (General Fund) to SWRCB for extra costs associated with and caused by the drought in the Water Rights Program such as extra surveillance and monitoring of water diversions, predictive modeling to identify priority locations, and potentially implementing water curtailments and taking enforcement actions. 8)Allocate $2 million (General Fund) to the Employment Training Panel in the Employment Development Department for job training related to drought related job losses. 9)Direct $1.8 million (General Fund) to the Office of Emergency Services (OES) for disaster recovery assistance to communities. 10)Appropriate $30 million, Greenhouse Gas Reduction Fund (GGRF), to DWR for local water use efficiency programs which reduce GHG emissions. Of this amount, $20 million is for local assistance and $10 million is to be used for state water efficiency projects. Require that funding for GHG emission reduction programs be subject to a 30-day Joint Legislative Budget Committee (JLBC) notification prior to expenditure. Specify that the notification must include a description of proposed expenditures, how it will further the regulatory purposes of AB 32 (Núñez), Chapter 488, Statutes of 2006, the SB 103 Page 3 Global Warming Solutions Act of 2006, how it will achieve specified GHG emission reductions, and how the agency will document expenditure results. 11)Allocate $10 million (GGRF) to the California Department of Food and Agriculture (CDFA) for agricultural water efficiency projects that reduce greenhouse gas emissions. Specify that funding will be subject to legislative notification prior to expenditure. 12)Accelerate the appropriation of $1.2 million (Waste Discharge Permit Fund) to SWRCB for groundwater quality monitoring (Groundwater Ambient Monitoring and Assessment Program). 13)Appropriate $800,000 (General Fund) to SWRCB to accelerate implementation of a proposal to protect and ensure the sustainability of groundwater resources in critically overdrafted basins. 14)Appropriate $1 million (General Fund) to DWR for groundwater monitoring and reporting efforts, including a new well-completion report submission system. 15)Allow an existing $1 million (General Fund) appropriation to DWR for flood emergency response to be used for the Save Our Water Campaign to expand drought-related education and outreach. 16)Direct $2.3 million (General Fund) to the Department of Fish and Wildlife for urgent fish, stream, and conservation activities related to the extreme drought conditions. 17)Appropriate $13 million (General Fund) to the California Conservation Corp (CCC) for water conservation and drought response projects, water efficiency education and outreach activities, and local assistance grants to certified community conservation corps. Specify that, to the extent feasible, the CCC and the local conservation corps shall employ veterans and unemployed young adults in the corps member teams to construct and implement these projects. 18)Specify that this legislation is contingent on the enactment of SB 104. SB 103 Page 4 19)Contain an appropriation allowing this bill to take effect immediately upon enactment. COMMENTS : California is experiencing its worst drought in modern history. The purpose of this urgency drought relief package is to provide immediate funding to help communities deal with the devastating dry conditions affecting the state and to increase local water supplies. This bill accelerates many proposals in the Governor's Budget that begin implementing the Administration's Water Action Plan (WAP) aimed at improving the state's water supply and storage through infrastructure investments, improving the management of groundwater, and addressing water quality issues, particularly in disadvantaged communities. This bill also includes emergency funding for drinking water supplies for disadvantaged communities, food assistance, job training, conservation education and outreach activities, and urgent fish and stream needs related to the drought. This bill has four main components: 1)Infrastructure Investments to Improve Water Supply. The bill accelerates the appropriation of $77 million to DWR for Central Valley flood protection projects, through the FloodSAFE Program, that provide additional public benefits, including water supply and water quality improvements. The FloodSAFE Program is a long-term strategic initiative developed to reduce flood risk in California. Additionally, the funds will be used to improve flood emergency response throughout California, including response and recovery time from a catastrophic levee failure event in the Delta, and support statewide flood management planning. The Budget also proposes to continue various existing flood control projects and feasibility studies, including the Folsom Dam Modifications Project. 2)Emergency Drinking Water, Water Supply and Water Quality. The bill also accelerates funding for clean drinking water for poor and disadvantaged communities. There are state and federal clean drinking water funds available to spend to provide clean drinking water for hard hit communities like farmworker communities in the Central Valley. This bill appropriates those funds and consolidates their deployment under the SWRCB. SB 103 Page 5 3)Water and Energy Efficiency for Urban and Agricultural Communities. The bill appropriates $30 million from cap-and-trade auction revenue to DWR for programs that provide a reduction of GHG emissions and also deliver state and local water use efficiency. Of this amount, $20 million is directed to local assistance for water/energy efficiency upgrades in residential, commercial, and institutional sectors. Projects could include installation of water saving devices, low-flow toilets and showerheads, and water capture and water recycling/reuse systems. The remaining $10 million will be used for efficiency upgrades at two State Water Project (SWP) facilities at the Hyatt and Thermalito power generation sites near Oroville. The bill also allocates $10 million from cap-and-trade auction revenue to CDFA for agricultural water efficiency projects that reduce greenhouse gas emissions. This new program will be based on the Air Resources Board's successful Carl Moyer Program and invest in water irrigation treatment and distribution systems that reduce water and energy use, augment supply, and increase water and energy efficiency in agricultural applications. Incentives will be ranked and distributed based on financial need, immediacy of water supply, increased and efficiency gained to address water shortages, and reduction in water pumping or treatment that uses energy causing greenhouse gas emissions. Of the $40 million in cap-and-trade revenue proposed, $20 million is an acceleration of the Governor's Budget. The other $20 million is in addition to the $850 million proposed in the Governor's AB 32 Expenditure Plan. 4)Sustainable Groundwater Management. Groundwater basins are the state's largest reservoir, 10 times the size of all its surface reservoirs combined. In an average year, groundwater provides 30% of California's water supply and much more in dry periods. Eighty percent of Californians rely, at least in part, on groundwater for their drinking water, and some cities and rural areas rely entirely on groundwater. When managed sustainably, groundwater can provide a crucial buffer against drought. In some areas of the state, regional and local agencies manage groundwater well. In other areas, groundwater overdraft is causing subsidence, permanent reductions in SB 103 Page 6 underground storage capacity, seawater intrusion and other water quality problems, and environmental damage. This legislation requires better monitoring and management of groundwater resources by providing funding to support the continued implementation of the Statewide Groundwater Elevation Monitoring Program, to protect the sustainability of groundwater resources in critically overdrafted basins and improving monitoring and reporting efforts. This bill is an important first step in addressing urgent needs brought on by the extreme drought. It contains important funding for emergency drinking water to disadvantaged communities in immediate need of water supplies. Further, conditioning the cap-and-trade appropriations on a 30-day notice to the Legislature has merit. It would allow the Legislature to more fully vet these proposals along with other cap-and-trade proposals to ensure a consistent approach. Analysis Prepared by : Gabrielle Meindl / BUDGET / (916) 319-2099 FN: 0003048