BILL ANALYSIS �
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THIRD READING
Bill No: AB 2529
Author: Wieckowski (D) and Beall (D)
Amended: 8/6/12 in Senate
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 5-1, 7/2/12
AYES: Simitian, Strickland, Hancock, Kehoe, Lowenthal
NOES: Blakeslee
NO VOTE RECORDED: Pavley
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/16/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 78-0, 5/30/12 - See last page for vote
SUBJECT : Safe Drinking Water: Revolving Fund
SOURCE : Department of Public Health
DIGEST : This bill makes a variety of changes to the laws
governing the Safe Drinking Water State Revolving Fund
(SDWSRF), under which the Department of Public Health (DPH)
makes grants and loans for drinking water projects.
ANALYSIS : Congress established the SDWSRF as part of the
Safe Drinking Water Act (SDWA) Amendments of 1996 to better
enable public water systems to comply with national primary
drinking water standards and to protect public health. The
SDWSRF provides financial assistance in the form of
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capitalization grants to states to provide low interest
loans and other assistance to public water systems. In
order to receive these funds, states must provide a state
match equal to 20 percent of the federal capitalization
grants and must create a drinking water state revolving
fund program for public water system infrastructure needs
and other drinking water-related activities. In response
to this opportunity, California established the SDWSRF
through SB 1307 (Costa and Thompson), Chapter 734, Statutes
of 1997, to help fund projects to address the state's
drinking water needs. DPH, which administers the SDWSRF,
maintains that this bill will better enable them to
efficiently and effectively administer the SDWSRF.
This bill makes a variety of changes to the statutes
governing the SDWSRF. Specifically, this bill:
1. Deems that a small community water system serving a
severely disadvantaged community has no ability to repay
a loan (and therefore is eligible for grants).
2. Limits the amount of grant funding to 30 percent of the
annual federal capitalization grant (current law limits
grant to 30 percent of the Fund balance).
3. Authorizes DPH to provide loans up to the full cost of a
construction project.
4. Makes a variety of technical and definitional changes to
the governing code sections.
Comments
This bill is sponsored by the DPH, which contends, "The
SDWSRF is largely federally funded and subject to extensive
federal law and regulations?.. Since the SDWSRF was
implemented in 1997, changes have occurred in federal and
state laws that affect the infrastructure needs of public
water systems, the systems targeted for financial
assistance and the amount of funding available. To address
these changes, it is necessary that DPH have greater
flexibility in its rulemaking process in order to be more
responsive to changes in federal laws and more responsive
to the needs of the regulated utilities (public water
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systems) and the communities they serve. This bill
modifies SDWSRF statutes to provide DPH with the
flexibility necessary to assist the neediest water systems
with SDWSRF funding, while still complying with the SDWSRF
federal requirements.
Related Legislation
AB 2208 (Perea, 2012) authorizes DPH to combine proposed
projects from multiple applicants for funding from SDWSRF.
The bill is on the Senate Inactive File.
AB 2238 (Perea, 2012) requires DPH to review certain
information from local agency formation commissions when
reviewing SDWSRF applications. The bill is on the Senate
Third Reading File.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, this bill
will have several fiscal impacts on the Safe Drinking Water
State Revolving Fund:
1. By authorizing DPH to provide loans up to the full
amount of a project's costs, the bill increases the risk
of investment loss to SDWSRF. Under current regulation,
DPH can loan up to $20 million for a project. DPH
indicates that there are a small number of potential
projects that could be funded at considerably higher
levels under the bill. DPH has never experienced the
default of a lender. However, increasing the size of
potential loans makes any potential future default more
costly to the SDWSRF.
2. By limiting grant funding to 30 percent of the federal
capitalization grant received each year, this bill
reduces the number of grants made and increase the
number of loans. In recent years, SDWSRF has had fund
balance of between $150 million and $250 million,
whereas the federal capitalization grant has been about
$80 million per year. Reducing the amount of funding
available for grants to 30 percent of the federal
capitalization grant means that tens of millions per
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year in loans will ultimately return to SDWSRF, to fund
additional projects.
3. Other changes in this bill are expected to lead to
minor cost savings.
SUPPORT : (Verified 8/17/12)
Department of Public Health (source)
Association of California Water Agencies
California Rural Legal Assistance Foundation
Clean Water Action California
Community Water Center
Eastern Municipal Water District
Regional Council of Rural Counties
Upper San Gabriel Valley Municipal Water District
ASSEMBLY FLOOR : 78-0, 5/30/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel P�rez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Wagner, Wieckowski, Williams, Yamada, John A.
P�rez
NO VOTE RECORDED: Fletcher, Valadao
DLW:d 8/21/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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