BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 554 (Wolk) - Delta levee maintenance
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|Version: January 4, 2016 |Policy Vote: N.R.&W. 9 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: January 19, 2016 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 554 would make permanent the state's 75% maximum
cost share for Delta levee maintenance costs in excess of $1,000
per mile.
Fiscal
Impact: Annual cost pressures in the millions of dollars
(General Fund) to fund local projects to improve and maintain
levees
Background: The Delta Levees Maintenance Subventions Program provides
state funding to local agencies for the rehabilitation and
maintenance of levees in the Sacramento-San Joaquin Delta. In
1996, the Legislature established the reimbursement rate to be
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temporarily up to 75% of any costs incurred in excess of $1,000
per mile depending on the agency's ability to pay. This rate was
to be reduced to 50% on July 1, 2006. Legislative intent
language also suggested a $2 million annual limit on
reimbursements to each agency beginning on July 1, 2006.
However, the Legislature subsequently extended this date several
times so that the higher reimbursement rates are currently
authorized until July 1, 2018.
The sunset extensions have been made under various
justifications, including that such levee improvements are
important measures to protect the state's drinking water supply
and other infrastructure.
Proposed Law:
This bill would permanently delete the sunset date and would
instead set the upper limit on the state's cost share at 75%.
This bill would also delete the legislative intent language
regarding the 50% reimbursement rate and the $2 million annual
limit.
Staff
Comments: Funding history. The funding for the Delta Levee
Maintenance and Subventions Program has come from multiple
sources through the year, including the General Fund. Since
1997, the funding from the program has come from voter-approved
general obligation bonds (Prop 50, Prop 84, and Prop 1E), which
are repaid by the General Fund. Over the past ten years, annual
program funding has ranged between $5.7 and $16.3 million.
Reimbursements to a single agency have rarely exceeded $2
million annually.
Remaining funding. According to DWR, there is $85 million from
Proposition 84 and $70 million from Proposition 1E available for
Delta levees. Historically 40% of these funds have been spent
for the Subventions Program with the remaining amount going
towards special projects. Based on historical spending, these
bonds monies will be able to support the Subventions Program for
another 5 to 10 years.
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Staff notes that Proposition 1 provided $295 million to reduce
the risk of levee failure and flood in the Delta, of which local
assistance through the subventions program is an eligible use.
What has been the state cost share of delta levee projects
historically? According to DWR, the state has been paying
approximately 75% of eligible project costs. Ineligible project
costs include items such as salaries, non-patrol road roadway
repairs, and the first $1,000 per mile costs. When all costs are
considered, the state pays an average of 70% of the costs with
the local districts paying the remainder.
Existing law requires that Department of Water Resources (DWR)
assess the local agency's ability to pay for the levee
maintenance or improvement when determining the reimbursement
rate. In its initial assessment of program participants in
1997-98, DWR found that all local districts qualified for full
75% reimbursement given their agricultural economic base. In
2007, the Subventions Program did another full review of local
agencies' ability to pay. In a letter to the Central Valley
Flood Protection Board dated October 28, 2013, DWR states, "The
[2007] study verified that agricultural islands continue to
qualify for full 75-percent State reimbursement. The study also
revealed that non-agricultural islands may have the ability to
pay a higher share; however, with the downturn in the economy in
2008, it was determined that the non-agricultural islands should
not conduct a comprehensive ability to pay study at the time.
The economic downturn and continuing economic slump through
today have reinforced the wisdom of that decision."
The letter further states that DWR reviews annual applications
for significant changes of land use or economic conditions and
while the 2013-14 applications revealed no significant changes,
a closer look into the ability to pay may be warranted as the
economy continues to improve and local districts gain greater
financial stability.
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