BOARD MEETING DATE: May 3, 2002
AGENDA NO. 32
PROPOSAL: 

Adopt Executive Officer’s FY 2002-03 AQMD Budget and Work Program

SYNOPSIS: 

The Executive Officer's Budget for FY 2002-03 represents the input over the past several months from staff, Board members, and the public. This year's process included meetings of the Budget Advisory Committee; a public hearing on February 1, 2002 to receive input on the AQMD's Program Goals and Priorities; and two budget workshops, one for the public on April 17, 2002 and one for the Board on April 19, 2002. This submittal transmits the required appropriations and reserves necessary to adopt the proposed budget.

COMMITTEE: 

Administrative, April 12, 2002, Recommended for Approval
Board Budget Workshop, April 19, 2002

RECOMMENDED ACTIONS:
 

  1. Remove from Reserves and Designations all amounts associated with the FY 2001-02 Budget;
  1. Approve appropriations in the Major Objects for
                                    Salary and Employee Benefits $65,860,812
                                    Services and Supplies 31,019,903
                                    Capital Outlays     2,275,800
                                          Total $99,156,515
  
  1. Approve a Fund Balance of the following:
                                    Reserve1 for Encumbrances $6,829,000
                                    Reserve for Subvention Compliance
                                    Program2		 0
                                    Reserve for Inventory of Supplies 80,000
                                    Designated for Enhanced Compliance
                                    Activities		 291,061
                                    Designated for Equipment
                                    Replacement		 1,000,000
                                    Designated for Self-Insurance 2,000,000
                                    Designated for
                                    Litigation/Enforcement		 1,000,000
                                    Designated for Unemployment
                                    Claims		 80,000
                                    Designated for Budget Stabilization3 6,000,000
                                    Undesignated   16,669,771
                                          Total $33,949,832
  
          1 The terms Reserve, Designated, and Undesignated are terms
                established by the Government Accounting Standards Board.
          2 Reserve to account for salary and benefit expenditures
                restricted by the legislature.
          3 Set-aside to cover projected budget deficits for FY 2003-04
               through FY 2006-07		  
 
  1. Recognize estimated revenues of $98,366,900.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The Executive Officer’s Budget for Fiscal Year (FY) 2002-03 represents the input over the past several months from staff, Board members, and the public. This year’s process included meetings with the Budget Advisory Committee which is made up of representatives from the business and environmental communities; a public hearing, held on February 1, 2002, to take input on the AQMD’s FY 2002-03 Program Goals and Priorities; and two budget workshops, one held for the public on April 17, 2002 and a second for the Governing Board on April 19, 2002.

Over the last ten years AQMD has implemented regulatory reform to introduce market-based principles in cleaning up urban air, has streamlined aspects of permit processing, privatized to improve operational efficiency, and remained committed to treating regulated businesses fairly. This year’s budget proposal reflects both staffing levels and program costs which are 33% (378 FTEs) and 13% ($13.8 million) below FY 1991-92 levels. Using inflation adjusted dollars, this year’s budget request is 36% less than the FY 1991-92 Budget.

Last year, through the legislative efforts of CAPCOA (California Air Pollution Control Officers Association), Subvention funding from the State in support of local air pollution programs was doubled ($7.5 million) statewide. This funding, which was earmarked for enhanced compliance activities, had not been increased in 20 years despite the tremendous growth in the State’s economy, inflation and increased population. Even with the established and well-justified need for this State support to local agencies, the Governor’s proposed budget for FY 2002-03 includes a significant reduction (33%) in the statewide Subvention program. The Governor’s proposal represents a $2.1 million reduction in funding to the AQMD.

Proposal

This budget request is based on the goals and priorities presented to the Governing Board at the February 1, 2002 meeting. These goals emphasize achieving a balanced budget and improving efficiency and productivity; implementation of the SIP; implementation of the Board’s eight Strategic Alliance Initiatives; implementation of the Fleet Rules; pursuing environmental justice activities; reduction of Air Toxics; and continuing to address the energy crisis.

Included in this year’s request are four new office clerical and maintenance positions in support of increased work related to facilities management, contracts processing and legal support activities. These new positions plus a midyear decrease of one clerical position bring AQMD authorized staffing totals to 814 positions. As part of this year’s proposal, 29 of the 32 positions in support of enhanced compliance activities, added last year with the increased Subvention funding, have been unfunded. These positions are expected to be eliminated over the next twelve to eighteen months through attrition, unless the legislature and Governor reinstate full funding for Subvention.

Resource Impacts

The proposed budget for FY 2002-03 represents a $3.8 million (4%) decrease over the current amended budget. This proposal includes increased salary and benefit costs sufficient to cover the recently approved three-year labor agreement with its professional employees group and the estimated costs associated with the ongoing negotiations with the remaining represented and non-represented employees. Any changes necessary to reflect the results of these ongoing negotiations will be brought back to the Board. Also included are increases in retirement contributions as a result of retirement rate changes and increases in liability and workers compensation costs. As mentioned above, to partially offset the proposed $2.1 million reductions in State support, this year’s request includes program reductions tied to compliance activities.

In order to finance this year’s Budget, staff recommends an across-the-board fee increase of 2.5% consistent with the change in the California Consumer Price Index and an appropriation of the remaining Subvention Reserve. This reserve was established to account for the unspent portion of the first year’s legislatively restricted Subvention increase approved in FY 2000-01 but not awarded until the final quarter (April 2001).

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 AQMD’s web site at www.aqmd.gov by clicking on the Meet AQMD icon; as an attachment to this letter; or by request from the Public Information Center (909) 396-3600.

Attachment (1,300 KB)

Abstract of FY 2002-03 Draft Budget and Draft Work Program

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