BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 983 (Perea)
Hearing Date: 07/11/2011 Amended: 07/01/2011
Consultant: Brendan McCarthy Policy Vote: EQ 6-0
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BILL SUMMARY: AB 983 makes several changes to the laws governing
the state's program for providing grants and loans for safe
drinking water projects, including allowing certain
disadvantaged communities to receive grants for up to 100
percent of project costs.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Grant implementation and Absorbable within existing
resources Special *
payment processing
Cost pressure due to Unknown, likely in the hundreds of
Special *
increased grant amounts thousands per year
* Safe Drinking Water State Revolving Fund.
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Under current law, the Department of Public Health provides
grants and loans to fund safe drinking water projects from the
Safe Drinking Water State Revolving Fund (Revolving Fund). The
Revolving Fund is supported with federal funds, repayment of
prior loans, state funds and other fund sources. Current law
requires the Department to give priority for funding to projects
that serve disadvantaged communities, authorizes grants for up
to 80 percent of total project costs, and requires that between
15 percent and 30 percent of program funds be used for grants.
The Department provides about $200 to $300 million per year in
grants and loans under the program.
AB 983 (Perea)
Page 1
AB 983 makes several changes to the operation of the Revolving
Fund program. The bill requires the Department to process
payment requests and make payments within 30 days. The bill
requires the Department to give priority to projects that
include consolidation with a small community water system to
improve drinking water quality. The bill authorizes the
Department to provide up to 100 percent of project costs through
grants (rather than loans) to small community water systems that
serve disadvantaged communities. Finally, the bill authorizes
the Department to extend loan terms to 30 years for
disadvantaged communities.
According to the Department, the administrative costs to
expedite payments and comply with the other requirements of the
bill can be absorbed within existing resources.
This bill will likely result in cost pressures on the Revolving
Fund, because additional funds will be provided as grants rather
than loans. This will reduce the amount of funds available to
other loan applicants and in the long-run will reduce loan
repayment revenues into the Revolving Fund. The extent of this
cost pressure is unknown and will depend on particular project
applications. Based on the number and size of loans made to
disadvantaged communities in past years, the shift in funding
from loans to grants may be in the hundreds of thousands per
year, with commensurate cost pressures on the fund.