BOARD MEETING DATE: May 2, 2008
AGENDA NO. 31

RECOMMENDED ACTIONS:

1. Remove from Reserves and Designations all amounts associated with the FY 2007-08 Budget;

2. Approve appropriations in the Major Objects for:

Salary and Employee Benefits	$ 100,035,370
Services and Supplies	30,112,945
Capital Outlays	1,962,600
Total	$132,110,915

3. Approve a projected June 30, 2009 Fund Balance of the following:

Reserve1 for Encumbrances	$ 7,166,000
Reserve for Inventory of Supplies	80,000
Designated for Enhanced Compliance Activities	2,876,154
Designated for Facility Refurbishing	1,925,087
Designated for Equipment Replacement	2,000,000
Designated for Self-Insurance	2,000,000
Designated for Litigation/Enforcement	1,000,000
Designated for Retirement Actuarial Increases	5,000,000
Designated for Permit Streamlining	677,021
Designated for Unemployment Claims	80,000
Designated for Budget Stabilization	6,927,377
Total	$29,731,639
Undesignated:	$14,711,767

4. Approve revenues from the following:

2008-09 Revenues	$130,042,000
Fund Balance – Prior Year Revenue	2,068,915 2
Total	$132,110,915

5. Transfer $3,574,725 from the BP ARCO Settlement Fund to the General Fund (Designated for Enhanced Compliance Activities) to fund the addition of five (5) Air Quality Inspector II positions for a five-year period.

6. Adjust Board Assistant/Consultant Compensation by 3.3% equivalent to the CPI salary increase afforded AQMD employees.
    
7. As authorized and directed by Resolution No. 07-23, adjust the compensation for Hearing Board Members and their alternates by 3.3% equivalent to the rate increase afforded to Board Assistants.
    

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The Executive Officer’s Budget for Fiscal Year (FY) 2008-09 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; a public hearing, held on February 1, 2008 to take input on the AQMD’s FY 2008-09 Program Goals and Objectives; and two budget workshops, one held for the public on April 15, 2008 and one held for the Governing Board on April 18, 2008.

Since the early 1990’s, the AQMD has implemented regulatory reform to introduce market-based principles in cleaning up urban air, has streamlined aspects of permit processing, privatized some functions to improve operational efficiency, and remained committed to treating regulated businesses fairly. This year’s budget proposal includes a total of 839 positions, which is still 28% (324 FTEs) below FY 1991-92 levels, and program expenditures which are $99,000 (0.08%) above the current amended budget. Using inflation adjusted dollars; this year’s expenditure request is 38% less than the budget approved in FY 1991-92.
 

Proposal

This balanced budget request is based on the goals and objectives presented to the Board at the February 1, 2008 meeting. These goals emphasize continued efforts to improve efficiency and productivity; implementing the 2007 SIP, the Board’s initiatives, and the Fleet Rules; reducing air toxics; and continuing to address other priority issues.

This balanced budget request includes cost increases associated with the agency’s labor agreements, which in the long term will continue to reduce the agency’s overall retirement cost by reducing retirement benefits for new employees. This proposal incorporates the Administrative Committee’s recommendation to enhance our compliance program by funding five additional inspector positions for a five-year period using penalty revenue from the BP ARCO settlement resulting in the addition of seventeen positions (eleven new positions and the refunding of six authorized positions lost in previous budget reductions) targeted to small business assistance; recruitment/selection; AB 32 implementation; public affairs/community outreach; laboratory analysis and special ambient air monitoring; cash management; and enhanced industrial inspections, bringing total staffing to 839. Even though we are adding staff, the AQMD expects a significant number of retirements, over the next one-to-five years, that will provide the Board the opportunity to readjust staffing levels downward, if necessary, without needing to rely on lay-offs. Services and Supplies and Capital Outlays includes funding associated with replacing outdated air monitoring equipment; inspector vehicles; the Laboratory Information Management system; and field enforcement equipment.

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 percentage salary adjustments afforded most AQMD employees for FY 2008-09 it is recommended that the contract and hourly compensation amount for a Board Member Assistant/Consultant be similarly adjusted.
 

Resource Impacts

In order to finance the FY 2008-09 Budget, staff is recommending a CPI increase of 4.1% for all stationary source fees with the exception of Permit, Annual Renewal and Emission fees which are scheduled to be adjusted by 10% this year (to support the agency’s cost recovery efforts), plus an appropriation of $2,068,915 in prior year revenues and penalty settlements set aside (Designated) in the Fund Balance for permit streamlining, enhanced compliance and budget stabilization. In addition, revenue associated with the proposed architectural coatings fee rule (to be phased in over the next three years) has been included.

There is sufficient funding available in the Fund Balance (Designated for Budget Stabilization and Enhanced Compliance Activities) to support the additional positions over the next one-to-five years.

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. The Draft Budget and Work Program are available via AQMD’s web site at http://www.aqmd.gov/finn/financialinformation.htm. Budget abstracts are available by request from the Public Information Center (909) 396-3600.
 

Attachment (doc 4183 KB)
Addendum to FY 08-09 Draft Budget and Work Program

¹  The terms Reserve, Designated, and Undesignated are terms established by the Government Accounting Standards Board.

² Includes $1,331,840 use of prior year revenue (Designated for Permit Streamlining and Budget Stabilization) and $737,075 in BP Arco Settlement revenue (Designated for Enhanced Compliance Activities) to fund the 1^st year of a five-year enhanced compliance program.