BOARD MEETING DATE: June 6, 2003
AGENDA NO. 34
Adopt Executive Officer’s FY 2003-04 AQMD Budget and Work Program
SYNOPSIS:
The Executive Officer's Budget for FY 2003-04 represents the input over the past several months from Board members, staff, and the public. This year's process included meetings of the Budget Advisory Committee; a public hearing on February 7, 2003 to receive input on the AQMD's Program Goals and Objectives; and four budget workshops, two for the public held on April 22 and May 28, 2003 and two for the Board held on April 25 and May 23, 2003. This submittal transmits the required appropriations and reserves necessary to adopt the proposed budget.
COMMITTEE:
Administrative, May 9, 2003
Board Budget Workshop, April 25 and May 23, 2003
RECOMMENDED ACTIONS:
- Remove from Reserves and Designations all amounts associated with the FY 2002-03 Budget;
- Approve appropriations in the Major Objects for
Salary and Employee Benefits $75,012,500 Services and Supplies
26,398,530
Capital Outlays
202,500
Total
$101,613,530
- Approve a Fund Balance of the following:
Reserve1 for Encumbrances
$6,450,000
Reserve for Inventory of Supplies
80,000
Designated for Enhanced Compliance Activities 247,061 Designated for Enhanced Port Compliance 500,900 Designated for Equipment Replacement
1,000,000
Designated for Self-Insurance 2,000,000 Designated for Litigation/Enforcement 575,000 Designated for Unemployment Claims
80,000
Designated for Budget Stabilization2
6,000,000
Undesignated
15,018,591
Total
$31,951,552
- Recognize estimated revenues of $95,472,700.
- Restore to the General Fund, Penalty and Settlements Account, all CY 2003 Penalty and Settlement revenues originally authorized by Board action on February 2003 to be recognized in the "Lower-Emission School Bus Replacement & Retrofit Program Fund".
- As previously authorized by Board action on December 6, 2002, approving the Financial Incentives Program to Assist Dry Cleaners, formally establish the Dry Cleaners Financial Incentive Grant Program Fund in FY 2002-03 and approve the transfer of $2,000,000 from the General Fund, Undesignated Fund Balance.
- Recognize as expenses in the Dry Cleaners Financial Incentive Grant Program Fund all dry cleaner grants awarded to date (13 as of April 24, 2003, for a total of $65,000) from the General Fund.
Barry R. Wallerstein, D.Env.
Executive Officer
1 The terms Reserve, Designated, and Undesignated are terms
established by the
Government Accounting Standards Board.
2 Set-aside to cover projected
budget deficits for FY 2003-04 through FY 2006-07
Background
The Executive Officer’s Budget for Fiscal Year (FY) 2003-04 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 7, 2003, to take input on the AQMD’s FY 2003-04 Program Goals and Objectives; and four budget workshops, two held for the public on April 22 and May 28, 2003 and two held for the Governing Board on April 25 and May 23, 2003.
Over the last eleven 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 31% (365 FTEs) and 10% ($11.4 million) below FY 1991-92 levels. Using inflation adjusted dollars; this year’s budget request is 38% less than the budget approved FY 1991-92.
Proposal
This budget request is based on the goals and objectives presented to the Governing Board at the February 7, 2003 meeting. These goals emphasize implementation of the State Implementation Plan (SIP); implementation of Administrative efficiencies for all agency functions including permit processing, source inspections and emissions reporting; implementation of the Board’s initiatives; implementation of the Fleet Rules; pursuing environmental justice activities; reducing air toxics; and continuing to address other priority issues.
Comparing the FY 2003-04 Budget request to the May 2002 adopted budget, this request represents an increase of approximately $2.5 million over last year’s adopted budget. This increase reflects the addition of $2.7 million in Salary and Benefit costs associated with labor agreements; $5.9 million in increased retirement contributions; and the addition of one new attorney position in the District Prosecutor’s office to handle increased enforcement work associated with Notices of Violation and litigation. These increases are offset somewhat by the deletion of 22 positions, bringing total authorized staffing to 798, and expenditure cuts of $6.7 million in services, supplies and equipment accounts.
Board members must address an ever-increasing range of complex issues related to performance of their duties, requiring increased assistance and it is appropriate to make an adjustment to compensation for the Board Member Assistants at this time. Consistent with the 3.0% salary adjustments afforded AQMD employees for FY 2003-04 it is recommended that the contract and hourly compensation amount for a Board Member Assistant/Consultant be similarly adjusted by 3.0%.
At its February 7, 2003 meeting, the Governing Board approved agenda item #24 which approved the work plan to implement an initiative concerning lower-emission school buses. As part of the recommended action, 70% of the CY 2003 General Fund penalty revenue was recognized in the "Lower-Emission School Bus Replacement & Retrofit Program Fund" to purchase new lower-emission school buses, add on retrofit control devices, and CNG fueling infrastructure. Subsequent to this Board action, the AQMD learned that its retirement rates for FY 2003-04 were doubling. This increase follows three years of low or negative earnings by the retirement associations administering AQMD retirement plans. Therefore, staff is recommending that the penalty revenues redirected to the school bus replacement program be restored to the General Fund increasing available revenue to fund the FY 2003-04 Budget.
At its December 6, 2002 meeting, the Governing Board approved agenda item #37 which directed staff to establish a financial incentive grant program to assist dry cleaners making early transitions to non-perc alternative cleaning technologies. The $2,000,000 in grant funding for this program was initially proposed by staff to come from the Air Quality Assistance Fund but was changed by the Board at that meeting to use General Fund monies. This change required the establishment of a new special revenue fund to track grant awards. To minimize delays in establishing the grant program and to gain some experience with the program, the initial grants have been funded from the current budget. As of April 24, 2003 the AQMD has received 71 grant applications and has awarded 13 grants at $5,000 each for a total of $65,000. This recommended action would establish the $2,000,000 dry cleaners incentive grant program fund and transfer grant awards to date from the General Fund to the new fund to allow for the appropriate accounting of these grant awards.
Resource Impacts
In order to finance this year’s Budget, staff recommends an across-the-board fee increase of 3.0% consistent with the change in the California Consumer Price Index and an appropriation from of the Undesignated Fund Balance. In addition, based on input from the public and Board staff is recommending the restoration of nine positions targeted for deletion in the draft budget and the restoration to the General Fund of CY 2003 penalty and settlement revenues earmarked for school bus replacement. Discussion and potential approval of these augmentations will occur at the June 6, 2003 Board meeting.
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 May. 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.
Addendum and Abstract of the FY 2003-04 Draft Budget and Draft Work Program
/ / /