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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 ninth annual Three-Year Budget Forecast.

COMMITTEE:

Administrative, January 22, 1999, Reviewed

RECOMMENDED ACTION:

Receive and file.

Barry R. Wallerstein, D.Env.
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 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: 

• continued implementation of the Board’s initiatives on Environmental Justice, Inland Empire priorities, and the Children’s Air Quality Agenda;
• achieving a balanced budget for future years and improving efficiency and
  productivity;
• resolving remaining issues with U.S. EPA regarding implementation of Title V (operating permits), Title III (toxics), and Lowest Achievable Emission Rate (LAER);
• implementation of permit streamlining actions;
• an aggressive rulemaking calendar related to reaching the goals outlined in the latest revision of the AQMP; and
• implementation of PM_2.5 and community-level air quality monitoring.

This year’s forecast reflects several changes at the AQMD. These include the establishment of a new Rules Development group and Area Source group and the reorganization of its compliance staff assigning inspectors to geographic areas instead of industry categories. These changes along with our efforts to initiate a multi-faceted program to streamline the permitting system are expected to improve compliance, increase efficiency, and continue our progress toward clean air.

The most significant financial changes in this forecast reflect the loss of funding effective July 1999 for the AQMD’s Clean Fuels Program and the increase in staffing to meet the new federal requirements for PM_2.5 monitoring. As a means of closing out its Clean Fuels Program over the next three years, the forecast proposes to use monies available in its Reserve for Clean Fuels to complete the final phases of several ongoing projects. The proposed increase of eight new positions beginning in FY 1999-00 to implement new federal PM_2.5 monitoring requirements will be funded through an EPA grant. This proposed increase, along with the twelve positions added midyear for service station compliance, will bring total staffing levels to 761 positions for each of the next three years.

Despite increased funding from EPA and additional revenue from Title V permit processing, total revenues are expected to continue to decline. The AQMD is projecting across-the-board CPI fee increases of 2.9% for each of the next three years and the use of two-to-three million dollars annually from its reserves to make up for revenue shortfalls. The AQMD has contracted for two independent studies in the areas of permit streamlining and fee structure. The results of these studies are expected in March and April of 1999. All items contained in the forecast are subject to subsequent review and approval during the formal annual budget adoption process.

Attachment

Three-Year Budget Forecast FY 1999-2000, 2000-01, 2001-02

(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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