Budget Deal Shifts Environmental Costs from Business to Taxpayers, Says NRDC

Governor, Democrats Give In to Republican Demand to Shield Special Interests

SAN FRANCISCO (July 28, 2004) - Republican legislative leaders have succeeded in blocking most environmental funding proposals from being included in the California budget. The deal means that more programs will be paid for by taxpayers through the General Fund, instead of by businesses through user fees, according to NRDC (Natural Resources Defense Council). Funding for other programs, such as the Cal-Fed Bay-Delta program, may dry up.

The environmental funding proposals were recommended by the governor in his May revise or by the legislative Budget Conference Committee. They would have helped balance the budget by shifting costs of environmental management programs from the general taxpayer to businesses and others who benefit the most from state services. With the notable exception of funding for an important clean air program and ocean protection, the proposals wound up on the cutting room floor.

"The average taxpayer will continue to pay," said Ann Notthoff, California advocacy director for NRDC. "We all will have to dig into our own pockets to pay for things like clean water and fire protection in far-flung places. Special interests won't have to pay for state services that benefit them the most. That's fiscally- and environmentally-irresponsible."

The environmental funding was deleted on the insistence of Republican budget negotiators at the behest of the California Chamber of Commerce, California Farm Bureau Federation, California Forestry Association and other business lobbying groups. The proposals were eliminated, even though they had already passed review by all the necessary legislative budget committees. Some of the proposals came from the governor himself in his May revise. Others grew out of recommendations by the non-partisan Legislative Analyst's office.

"The environment got the short end of the stick," said Notthoff. "Special interests got in the way of sound fiscal reform."

The funding proposals that were killed include:

• Water user fees that would have raised $150 million for the Cal-Fed Bay-Delta program, which aims to restore the San Francisco Bay-Delta, while ensuring clean, reliable water supplies for cities and agriculture. The Cal-Fed Record of Decision (ROD) requires that water recipients, rather than taxpayers, pay for water projects. The governor's May revise endorsed water user fees in accordance with this ROD requirement.
• A Timber Harvest Plan review fee on industry applications to log forestlands, which would have raised $10 million to $20 million for the Department of Forestry and Fire Protection and other agency work.
• Fees paid by landowners who kill, harm or harass threatened or endangered species. The "incidental take permits" would have provided about $500,000 for the cash-starved Department of Fish and Game.
• Increased coastal permit development fees would have freed up approximately $7.8 million from the General Fund.

Budget negotiators also agreed to introduce a separate bill to repeal a parcel fee in wildfire risk areas that is supposed to pay for firefighting costs incurred by the Department of Forestry and Fire Protection. The fee, which was approved last year, would save the General Fund over $100 million and would ensure that people who live in the highest risk areas bear more of the cost of fire suppression.

Two significant environmental funding and fee proposals that did survive the budget deal are:

• A $12 biennial smog inspection fee promoted by Gov. Schwarzenegger, to raise a permanent fund of $60 million annually for the Carl Moyer diesel clean up program. This program provides incentives for operators of heavy diesel equipment to upgrade to cleaner engines.
• Fees paid by offshore oil drillers operating in state waters within three miles of the coast. Under the budget deal, $500,000 will be used to implement the Marine Life Protection Act, a state law requiring the creation of marine protected areas where fishing and destructive activities are prohibited or limited. $10 million would go into a proposed California Ocean Protection Trust Fund for ocean management and research activities.

"The budget survivors show that when the governor works with legislative leaders, their bipartisan efforts can stand up to the monied interests and produce wins for the public," said Notthoff. "It's good that they saved the diesel and ocean programs. We only wish they would have stood up stronger for the other equally important environmental funding that was lost."