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REPORT:

Preparation of 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 eighth annual Three-Year Budget Forecast.

COMMITTEE:

Administrative, January 23, 1998, Recommended for Approval; Submitted to Finance, February 6, 1998

RECOMMENDED ACTION:

Receive and file this report.

Barry Wallerstein, D.Env.
Acting Executive Officer

Background

At Board direction, the AQMD instituted a three-year budget forecast process beginning with FY 1990-91 based on the Air Quality Management Plan and new authorities derived from state and federal legislation. 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 fiscal year and projected for the next two fiscal years. Beginning in January 1995, with the addition of Health and Safety Code Section 40721, the AQMD is now required to submit each year its three-year budget forecast to the state Air Resources Board for their review.

Both regulated and voluntary emission reductions and actions to minimize fee increases on businesses have resulted in less revenues to support our clean air program. Over the next three years, the AQMD will continue its efforts to meet its commitment to clean air with emphasis on:

• achieving a balanced budget for future years and improving efficiency and productivity;

• implementation of the Board’s Environmental Justice Initiatives;

• continued implementation of Title V, and the development and implementation of new systems and programs to meet the requirements of Title III;

• permit registration and streamlining programs;

• an aggressive rulemaking calendar related to reaching the goals outlined in the latest revision of the AQMD; and

• implementation of PM_2.5 monitoring.

The AQMD is forecasting no change to its workforce for FY 1998-99 with staffing reductions in FYs 1999-2000 and 2000-2001 of approximately five to seven percent annually along with expenditure reductions necessary to offset the 1.5 million dollar transfer to the Regional Transportation Agencies Coalition (RTAC). The forecasted break from the cycle of staff downsizing is necessary to give the agency time to assess where downsizing continues to be appropriate to reach maximum efficiency and still meet our clean air mandates. In addition to implementing recommendations from the soon-to-be-completed Performance Audit, the AQMD will be initiating two independent evaluations aimed at addressing efficiency concerns, specifically fee complexity and permit processing.

Despite reductions in expenditures of approximately $6 million over the next three years, the AQMD is projecting across-the-board CPI fee increases of 2.3% in FY 1998-99, 2.8% in FY 1999-00, and 3.3% in FY 2000-01 and the use of two to three million dollars annually from its reserves to make up for revenue shortfalls.

A detailed budget proposal for FY 1998-99 will be submitted for Board approval in May 1998. In addition, there may be some realignment of programs to improve efficiency and more evenly distribute work among the management team over the next few months.

Attachment

Three-Year Budget Forecast FY 1998-99, 1999-00, 2000-01

(Due to the size of the report, a hard copy is available for review in the Library and can be electronically accessed on the Internet.)

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