BOARD MEETING DATE: May 14, 1999 AGENDA NO. 31

Reserve ¹ for Encumbrances	$10,000,000
Reserve for Inventory of Supplies	80,000
Reserve for Clean Fuels²	0
Designated for Equipment Replacement	613,000
Designated for Self-Insurance	2,000,000
Designated for Unemployment Claims	80,000
Designated for Forecasted Revenue Deficiencies	1,500,000
Designated for Enhanced Compliance Activities	470,000
Undesignated	9,443,936
Total	$24,186,936

¹The terms Reserve, Designated, and Undesignated are terms established by the Government Accounting Standards Board. ²Balance transferred to new special revenue fund titled Clean Fuels.]

State law (Health and Safety Code Sections 40720) which took effect in 1994 requires that the draft budget and revenue projection for the ensuing fiscal year must be prepared by the beginning of April. The law also requires the AQMD Board to adopt a final proposed operating budget, including final fee schedules, prior to May 15. The approved final proposed operating budget must be submitted to the Legislature and the California Air Resources Board annually by May 15. The final proposed operating budget submitted by the AQMD becomes operative on July 1 unless prior to July 1 the Legislature enacts an urgency statute amending or supplementing the proposed AQMD budget, or the AQMD adopts a revised final budget pursuant to the comments or formal recommendations made by the state board.

AQMD has responded to the concerns raised by businesses and the Legislature regarding the cost and effectiveness of its programs. AQMD has cut its work force by 35% and reduced its program costs by 24% ($27 million) overall. In real dollars, the AQMD budget is 37% less than the 1991-92 Budget. Over the last eight years AQMD has implemented regulatory reform to introduce market-based principles in cleaning up urban air, has automated some aspects of permit processing, privatized to improve operational efficiency, and remained committed to treating regulated businesses fairly.

This year's proposal is based on the goals and objectives presented to the Governing Board at the February 12, 1999 meeting. These goals emphasize achieving a balanced budget for future years and improving efficiency and productivity; implementation of the Board’s initiatives on Environmental Justice, Inland Empire priorities, and the Children’s Air Quality Agenda; resolving remaining issues with U.S. EPA regarding implementation of Title V, Title III, 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.

Included in this year’s request are eight new positions added in response to new federal monitoring requirements for PM_2.5. These new positions will be fully funded through a U.S. EPA 103 grant. In addition, three job classification titles in Human Resources, formerly Personnel, have been changed to reflect the change in the organizational name. A resolution amending the Salary Resolution to effect this change is attached.

This year’s proposal also reflects the pending loss in state funding for AQMD’s Clean Fuels program. Under current legislation, funding for this program expires in August 1999. A scaled-down Clean Fuels program, utilizing funding from the Clean Fuels reserve, is proposed to close out existing projects over the next two to three years. To implement this change in the administration of the Clean Fuels program, a new special revenue fund for Clean Fuels is requested for FY 1999-2000. Effective June 30, 1999, the balance in the Clean Fuels reserve will be transferred to the new special revenue fund.

Last year, as part of the FY 1998-99 Budget adoption, the Board established a designation in the Fund Balance of $500,000 for enhanced compliance activities. Staff at this time is requesting an appropriation of $30,000 from this designation for the purchase of fifteen laptop computers for field inspection staff. This equipment will allow compliance staff to remain in the field to complete report preparation and remotely access AQMD data without the need to return to the office. This request is in accordance with Environmental Justice Initiative No. 8 – Field Inspection Technology recommendations. This appropriation constitutes a supplement to the FY 1998-99 Budget. Therefore, the required thirty-day public notice of a proposed supplement to the FY 1998-99 Budget was published in five newspapers in the four counties.

The proposed budget for FY 1999-2000 represents a $6.8 million decrease over last year’s adopted budget. As mentioned above, this decrease is due in large part to the pending loss in state funding for AQMD’s Clean Fuels program. In addition, the AQMD is in its final year of a three-year labor agreement with its represented employees. Increases as a result of labor negotiations have not been provided for in this budget request.

In order to finance the FY 1999-2000 Budget, I am recommending an across-the-board fee increase of 2% consistent with the change in the state Consumer Price Index and approximately $900,000 from the Fund Balance to make-up for the revenue shortfall.

Copies of the proposed budget have been transmitted to the Board under separate cover. Copies for public review have been available in the AQMD Library since early April. Budget abstracts are available via our web site www.aqmd.gov as an attachment to this letter or by request from the Public Information Center.

A. Resolution amending the Salary Resolution to effect job classification title changes for Personnel Technician, Personnel Analyst and Personnel Services Manager.

B. Abstract of FY 1999-2000 Draft Budget and Draft Work Program. A copy of the proposed budget has been transmitted to the Board members separately. Copies for public review have been available in the AQMD Library and at the Public Information Center. The budget abstract is available through the Internet as an attachment to this board item or through the Public Information Center (909) 396-3600.

C. Addendum to the FY 1999-2000 Draft Budget and Draft Work Program to update the page reflecting the $30,000 FY 1998-99 midyear appropriation from the Designation for Enhanced Compliance Activities for the purchase of laptop computers for field inspectors. In addition, at the April 9, 1999 meeting of the Board, revisions to SCAQMD’s Procurement Policy and Procedures were approved which now classify a Capital Outlay fixed asset as an asset with a total acquisition cost of $2,500 or more. The appropriate changes have been made to reflect this.

A Resolution of the South Coast Air Quality Management District Board amending the District Salary Resolution to make the following job classification title changes: from Personnel Technician to Human Resources Technician, from Personnel Analyst to Human Resources Analyst, and from Personnel Services Manager to Human Resources Manager.

WHEREAS, the Governing Board of the South Coast Air Quality Management District exercises its duty to review and determine appropriate wages, hours, and other terms and conditions of employment provided to employees.

THEREFORE, BE IT RESOLVED that the Board of the South Coast Air Quality Management District, State of California, in regular session assembled on May 14, 1999, does hereby amend AQMD’s Salary Resolution make the following job classification title changes: Personnel Technician changed to Human Resources Technician, Personnel Analyst changed to Human Resources Analyst, and Personnel Services Manager changed to Human Resources Manager.

Salary and Employee Benefits	$55,776,500
Services and Supplies	28,677,250
Capital Outlays	1,520,400
Total	$85,974,150