BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1438 (Conway)
Hearing Date: 08/17/2009 Amended: 07/13/2009
Consultant: Brendan McCarthy Policy Vote: EQ 7-0
AB 1438 (Conway)
Page 2
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BILL SUMMARY: This bill makes several changes to the statutes
governing the administration of the Safe Drinking Water State
Revolving Fund. In particular, the bill expands the Department
of Public Health's authority to provide funding through grants,
primarily for projects in disadvantaged communities.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Dept. of Public Health $80 $154 $154 Federal
implementation
Cost pressures on federal Unknown, potentially in the
millions Federal
funds
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense file.
Under federal law, the U.S. Environmental Protection Agency
provides funding to the states to ensure safe drinking water is
available to the public. In recent years, the federal government
has provided about $70 million per year to the state. The
American Recovery and Reinvestment Act of 2009 (ARRA) provides
about $160 million in additional funding to California for
projects to develop drinking water infrastructure.
Under current law, the Department of Public Health regulates
drinking water and also provides funding to local governments
for projects to protect and provide safe drinking water. The
Safe Drinking Water State Revolving Fund (Revolving Fund) is
continuously appropriated to the Department to provide grants
and loans for the design and construction of public water system
projects. The Revolving Fund is supported by federal funds and
repayment of previous loans. Current law limits the amount that
the Department may provide as a grant to $1,000,000.
This bill makes several changes to the operation of the
Revolving Fund. Specifically, the bill adds fire flow as a
AB 1438 (Conway)
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criterion that must be considered by the Department when
evaluating the reasonable rate of growth for a proposed project.
The bill requires the Department to establish a specific
wellhead protection account within the Revolving Fund, pursuant
to federal law.
More significantly, the bill specifies that the maximum amount
for a planning grant (which can be used to pay for planning,
engineering studies, environmental documentation, and design)
shall be no more than $500,000. The bill also requires that the
maximum construction grant amount shall be no more than
$3,000,000 unless the maximum amount is increased
administratively by the Department. However, the bill provides
that the Department may approve a construction grant up to
$10,000,000 if it finds that: 1) a disadvantaged community has a
need for a project grant that exceeds $3,000,000; 2) the
disadvantaged community has been bypassed in at least one
previous funding cycle due to a lack of funds; 3) the
disadvantaged community meets all eligibility criteria; and 4)
the project represents the highest public health risk amongst
unfunded projects.
The Department indicates that it will need one additional
position to oversee the implementation of the requirements of
the bill. In addition, because the bill increases the amount of
funding that the Department can provide through grants, the bill
may put cost pressure on existing funds available for other
projects. (Less funding may be available for grants for other
projects. Also less funding may be used for loans that will
ultimately be repaid to the state.) The amount of this cost
pressure is unknown.