BILL ANALYSIS �
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THIRD READING
Bill No: SB 1292
Author: Hueso (D)
Amended: As introduced
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 4-2, 4/30/14
AYES: Gaines, Fuller, Hancock, Leno
NOES: Hill, Jackson
NO VOTE RECORDED: Pavley
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/14
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Safe Drinking Water State Revolving Fund
SOURCE : Author
DIGEST : This bill increases the maximum award for a
construction grant from the Safe Drinking Water State Revolving
Fund (SDWSRF) from $3 million to $5 million if that project
serves a severely disadvantaged community.
ANALYSIS : Existing law, pursuant to the SDWSRF Law of 1997:
1.Provides funding for public water systems through the SDWSRF
to correct deficiencies and problems that pose public health
risks and to meet safe drinking water standards.
2.Establishes the SDWSRF and requires the Department of Public
Health (DPH) to administer the SDWSRF.
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3.Requires the DPH to establish criteria for eligibility of the
SDWSRF funding consideration.
4.Requires the DPH to establish a priority list of proposed
projects to be considered for the SDWSRF funding and requires
priority be given to projects that meet specified criteria.
5.Authorizes up to 30% of the total amount of funds deposited in
the SDWSRF be expended for grants to serve disadvantaged
communities.
6.Provides specified maximum amounts for grant and loan funding
and authorizes up to 100% grant funding for eligible costs to
a small community water system or nontransient noncommunity
water system that serves severely disadvantaged communities.
7.Sets the maximum grant to each participating public water
system for its share of the costs of the construction at $3
million.
8.Provides that the DPH may increase the amount of the
construction grant award to $10 million if specified findings
of need are made by the DPH.
This bill:
1.Increases the maximum amount of a construction grant award to
$5 million for a water system serving severely disadvantaged
communities. The water system remains eligible to receive up
to $10 million in a grant if it meets existing criteria .
2.Makes an appropriation by authorizing the increased
expenditure of monies in a continuously appropriated fund.
Background
SDWSRF . Congress established the federal Drinking Water State
Revolving Fund (DWSRF) as part of the 1996 Safe Drinking Water
Act Amendments to better enable public water systems to comply
with national primary drinking water standards and to protect
public health. The DWSRF provides financial assistance in the
form of capitalization grants to states to provide low-interest
loans and other assistance to public water systems. In order to
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receive these funds, states must provide a state match equal to
20% of the federal capitalization grants and must create a DWSRF
program for public water system infrastructure needs and other
drinking water related activities. In response, California
established the SDWSRF through SB 1307 (Costa, Chapter 734,
Statutes of 1997) to help fund the state's drinking water needs.
The SDWSRF provides public water systems the opportunity to use
subsidized funding to correct infrastructure problems, assess
and protect source water, and improve technical, managerial, and
financial capability.
The United States Environmental Protection Agency (US EPA)
allocates federal DWSRF funds to the states according to a
formula that reflects their proportional share of needs
identified in the most recent Drinking Water Infrastructure
Needs Survey. California annually receives approximately $86
million in the DWSRF capitalization grant money while the state
matches with approximately $17 million.
Stretching the SDWSRF . The US EPA has estimated that California
will need more than $40 billion dollars in drinking water
infrastructure improvements over the next 20 years. There are
many severely disadvantaged communities across California that
are in need of state assistance.
Raising the cap for grants will provide greater assistance for
some of these communities, but that does not mean that there
will be more money available. It just means the limited funds
in the SDWSRF will be concentrated in fewer communities. By
taking a larger piece of this limited funding for some
communities, this may very well mean that some communities in
need that would have otherwise received state assistance would
now receive none.
Additionally, existing law already allows for higher grant
awards if the DPH makes specified findings of need. This
provision of existing law ensures that the higher awards are
made to those communities with the greatest need while still
providing assistance to other communities.
Changes to the Drinking Water Program (Program) . Over the last
five years, the Senate Environmental Quality Committee has
considered numerous bills making changes to the administration
of the Program.
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In 2013, the Senate Environmental Quality Committee heard AB 145
(Perea) that would have transferred, during the 2014-15 fiscal
year, the duties and responsibilities related to the regulation
and oversight of drinking water, including the authority to
administer SDWSRF from DPH to the State Water Resources Control
Board (SWRCB). In that hearing, the Committee heard testimony
over DPH's non-compliance with federal regulation of the
administration of SDWSRF. The Committee contemplated various
solutions and ultimately concluded that a comprehensive change
to the SDWSRF was necessary to effectively fix this funding
program. The Committee passed AB 145, however the bill was held
in the Senate Appropriations Committee.
In January 2014, Governor Brown proposed to transfer the Program
from the DPH to the SWRCB on July 1, 2014, as part of the state
Budget. Both the Assembly and Senate Budget Committees have
considered this proposal and the item has been left open as part
of the final budget discussion.
If this Program is going to be transferred to a new
administering agency in July, it would be prudent for the
Legislature to hold off on any additional changes to the Program
and the allocation of funds from this Program until that
transfer has been completed. Once the transfer has been
completed, the SWRCB will combine the administration of SDWSRF
with the Clean Water State Revolving Fund and would likely make
or recommend comprehensive changes that would help California's
most disadvantaged communities.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, unknown
increased cost pressures, likely in the millions of dollars, on
the SDWSRF (special) for assistance issued as grants.
SUPPORT : (Verified 5/20/14)
California Municipal Utilities Association
California Special Districts Association
California Water Association
Heber Public Utility District
Rural County Representatives of California
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ARGUMENTS IN SUPPORT : The California Municipal Utilities
Association (CMUA) states that this bill "will make it easier
for severely disadvantaged communities to fund clean drinking
water projects. Specifically, the measure would increase the
maximum amount awarded from $3 million to $5 million for the
construction of a single project from the [SDWSRF] for water
systems serving severely disadvantaged communities. There are
many water quality and
infrastructure problems plaguing disadvantaged rural and urban
communities. CMUA supports expediting funding for these projects
through grant monies and loans, when appropriate."
RM:k:d 5/23/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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