BILL ANALYSIS Ó
AB 1292
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Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Bob Wieckowski, Chair
AB 1292 (Roger Hernandez) - As Amended: April 7, 2011
SUBJECT : Safe Drinking Water State Revolving Fund
SUMMARY : Authorizes the California Department of Public Health
(DPH) to sell revenue bonds to assist drinking water systems in
meeting their federal Safe Drinking Water State Revolving Fund
(SDWSRF) matching fund requirements. Specifically, this bill:
1)Authorizes the California Infrastructure and Economic
Development Bank (I-Bank) to contract with the CDPH to issue
tax exempt revenue bonds with the proceeds to be provided to
the SDWSRF.
2)Authorize the issuance of revenue bonds by the I-Bank to be
used to meet the federal matching requirements of the Safe
Drinking Water Act (SDWA).
3)Provides that tax exempt revenue bonds would be repaid from
the funds in the SDWSRF as security for revenue bonds, and to
use the interest earned from water system loans to pay
principal and interest to bond holders.
EXISTING LAW :
1)Creates the I-Bank within the Business, Transportation and
Housing Agency, to promote economic revitalization, enable
future development, and encourage a health climate for jobs in
California. Authorize the I-Bank to issue tax-exempt and
taxable revenue bonds to underwrite the costs of
infrastructure development that meets certain public purposes.
1)Establishes the California Safe Drinking Water Act (Health and
Safety Code Section 116275 et seq.), and requires DPH to
regulate drinking water, including conducting research,
studies, and demonstration programs for a dependable, safe
supply of drinking water and to enforce the federal Safe
Drinking Water Act and other regulations.
2)Establishes the Safe Drinking Water State Revolving Fund and
continuously appropriates the funds to DPH to provide grants
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or revolving fund loans for the design and construction of
projects for the public water systems that will enable
suppliers to meet safe drinking water standards.
EXISTING FEDERAL LAW :
1)Under 1996 Safe Drinking Water Act (SDWA) establishes the
Drinking Water State Revolving Fund (DWSRF) to provide states
with a financing mechanism to ensure safe drinking water to
the public.
2)Under the American Recovery and Reinvestment Act of 2009
(ARRA), provides approximately $160 million to the State
Revolving Fund for infrastructure development for California's
drinking water systems.
FISCAL EFFECT : Not Known.
COMMENTS :
Need for the bill . According the CDPH, the sponsors of this
bill, the legislation is necessary to assure that California is
able to receive the maximum amount of federal funds available in
2011, and in subsequent years, to address drinking water system
infrastructure needs. California receives annual funding from
the U.S. Environmental Protection Agency (EPA) for the Safe
Drinking Water State Revolving Fund (SDWSRF) program. The
annual funding amount has ranged from $66 million to $126
million, and is expected to continue at approximately $90
million per year for 2011 and the next several years based on
recent federal budget actions. In order for the state to
receive these federal dollars, the state must provide a 20
percent match of state funds.
With an allocation of approximately $90 million per year, the
required state match is projected to be $18 million annually;
current state match sources are not enough to provide the full
match for the 2011 federal grant or in subsequent years. This
increased allocation of federal funds requires the state to put
forth a larger match in order to draw down this critical
funding.
Repayment of bonds from the SDWSR revenue. The US Environmental
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Protection Agency provides each state with an annual federal
capitalization grant that "seeds" the State Revolving Fund
program. In order to get these funds, the state has to provide
a 20% match of state funds. The match can come from a variety of
sources, but it cannot come from repayments or interest on loans
that are made to water systems.
The state match can come from General Fund allocations or from
state bond measures (such as California has done with Prop 13,
Prop 50, and Prop 84). As an alternative to these options, EPA
allows states to sell revenue bonds to provide the state match.
States are allowed to use the moneys in the SDWSRF as security
for revenue bonds, and to use the interest earned from water
system loans to pay principal and interest to bond holders.
CDPH does not currently have statutory authority to issue or
sell revenue bonds; AB 1292 would provide such authority.
Prior Legislation:
AB 1571 (Costa) Chapter 1078, statutes of 2000, this bill
authorized the California Infrastructure and Development Bank to
issue bonds and deposit the proceeds of those bonds into the
State Water Pollution Control Revolving Fund Program for
purposes of implementing Clean Water Act projects undertaken at
the local level.
Technical Amendment :
Correction of reference to The Federal Safe Drinking Water Act.
Page 5, Line 35, Strike "300j-13(a) (2)" and insert: 300j-12(A)
(2)
(Thanks to Mr. Kennedy)
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Public Health (Sponsor)
Opposition
None on file.
AB 1292
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Analysis Prepared by : Bob Fredenburg / E.S. & T.M. / (916)
319-3965