REPORT:

Three-Year Budget Forecast

SYNOPSIS:

State law requires the AQMD to prepare and submit annually to the state board a three-year budget forecast based upon existing programs and rules and new programs or rules to be adopted. This is the seventh annual Three-Year Budget Forecast.

COMMITTEE:

Administrative, December 20, 1996, Recommended for Approval

RECOMMENDED ACTION:

Receive and file this report.

James M. Lents, Ph.D.
Executive Officer

Background

At Board direction, the AQMD instituted a three-year budget forecast process beginning with FY 1990-91 based on the AQMP and new authorities derived from state and federal law. In January, 1991 this process was formalized by the state with the addition of Health and Safety Code Section 40452 which requires the AQMD to annually forecast budget and staff increases proposed for the following FY and projected for the next two FYs. Beginning in January, 1995, with the addition of Health and Safety Code Section 40721, the AQMD now is required to submit by February 1 of each year its three-year budget forecast to the state board for its review.

Both regulated and voluntary emission reductions and actions to minimize fee increases on businesses have resulted in less revenues to support the clean air program. Over the next three years, the AQMD will continue its efforts to reduce its budget as fee revenues decline through its commitment to the Regulatory Reform Initiatives, the implementation of market incentives, permit streamlining, source education, business assistance, and technology advancement.

AQMD forecasts continued reductions in staffing through attrition, if possible, of approximately 4 percent annually along with reductions in contracting related to implementing Rule 2202. Despite reductions in expenditures of approximately $7.5 million over the next three years, AQMD projects across-the-board CPI fee increases of 2.0% in FY 1997-98, 2.5% in FY 1998-99, and 2.5% in FY 1999-2000 and the use of $4 to 5 million annually from reserves to make up for revenue shortfalls.