May 20, 2013: Last night the North Carolina Senate put out a draft budget. The new version of Senate Bill 402 has the budget bill text — which includes both legislative provisions related to the budget and other non-budget things that the Senate wants. (More about those in another post.) A detailed overview of the budget numbers can be found in the report of the Senate Appropriations/Base Budget Committee. Here is a quick take on the how the Senate budget would affect environmental programs.
Overview of DENR Budget Cuts
Although the Senate’s proposed budget shows a 40% increase in the budget for the Department of Environment and Natural Resources (DENR), the budget actually reduces funding for existing DENR programs in three ways:
1, The budget cuts funding department-wide by $2,277,894 (2%), allowing DENR to decide where to take the reductions.
2. The budget then takes an additional $2,055,782 in cuts to individual programs and funds. Some of the specific reductions include
— Elimination of funding for the Sustainable Communities Task Force
— Reduction or elimination of funding for some programs in the Division of Marine Fisheries
— Reduction in funding for the Adopt-a-Trail Program
— A cut in operating funds for the N.C. Zoo
3. The budget significantly reduces funding dedicated to parks and conservation by shifting revenue from the real estate excise tax (the deed stamp tax) to the state’s General Fund. By law, the deed stamp tax is now dedicated to the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund to be used for conservation, parks acquisition and improvement of park facilities. The budget repeals the law that dedicates deed stamp tax revenue for those purposes and replaces the tax revenue with appropriations at much lower levels. (More detail below.)
Funding for Conservation and Parks
The Senate budget proposes to do two significant things. First, it combines the Clean Water Management Trust Fund (CWMTF) and DENR’s Natural Heritage Trust Fund into a new Land and Water Conservation Fund. Then, the budget bill repeals the state law that dedicates revenue from the deed stamp tax to conservation and parks projects and makes both the new Land and Water Conservation Fund and the Parks and Recreation Trust Fund dependent on appropriations. The budget appropriates $12 million for the Land and Water Conservation Fund and $11 million for the Parks and Recreation Trust Fund; the $23 million total represents a reduction of about 65% compared to 2011 funds earmarked for CWMTF, the Natural Heritage Trust Fund and the Parks and Recreation Trust Fund combined. According to a N.C. Department of Revenue report, the deed stamp tax generated $63.5 million in revenue in 2010-2011 to be divided between the Parks and Recreation Trust Fund (75%) and the Natural Heritage Trust Fund (25%). The Clean Water Management Trust Fund received a 2011 appropriation of $11.25 million. Together, the deed stamp tax and CWMTF appropriation represented $74 million in total funding for land and water conservation projects and parks. Although the General Assembly diverted money from both the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund over the last four years because of budget shortfalls (so the full amount could not be used), the Senate budget permanently eliminates the deed stamp tax as a dedicated funding source to make much smaller appropriations through the budget process.
Programs that Receive Increased Funding
Much of the apparent increase in DENR’s budget comes from transfer of programs from other departments. For example, the State Energy Office and the Grassroots Science Museum pass-through grants would move to DENR from the Department of Commerce and the existing state funding would follow those programs. Other “new” appropriations really shift existing DENR activities from a dedicated funding source to appropriations – generally at the same or lower funding levels. In addition to the deed stamp tax, the list of dedicated funding sources diverted to the General Fund and replaced by appropriations includes the scrap tire disposal tax, the white goods disposal tax, and a portion of the solid waste disposal tax.
Actual increases in funding for existing or expanded DENR programs would go to:
— The Division of Energy, Mineral and Land Resources to support the Mining and Energy Commission; pay membership dues in the Southern States Energy Board (an organization of southern states supporting energy development) ; market North Carolina shale gas resources and do additional geological sampling and data collection on the state’s shale gas resource.
— Creation of a new water and wastewater infrastructure program that combines the existing drinking water and wastewater revolving loan programs with new grant funding for local water and sewer needs. The appropriation includes funding for a new Assistant Secretary for Infrastructure, a new division director position and funding for a water and sewer database as well as $3.2 million in grant funding for 2013. (The amount increases to $4.7 million for 2014.)
— A program to monitor the impact of gill net fishing on endangered sea turtles (required as part of an agreement with federal agencies under the Endangered Species Act).
— Two new positions in the Division of Waste Management to evaluate groundwater contamination that may threaten water supply wells.
— Repair and replacement of trams at the North Carolina Zoo.
DENR Budget Bottom Line:
Reductions to existing programs: $4,333,676 or approximately – 4% (not including reductions in funding to the Clean Water Management Trust Fund, Natural Heritage Trust Fund and Parks and Recreation Trust Fund)
Loss of a dedicated funding source for conservation and parks resulting in a reduction of approximately 65% from the amount of funding provided by deed stamp tax revenue.
Proposed cuts come on top of a 40% reduction in the DENR budget since January 2009 (including reductions in both operating funds and trust funds).
Increases to existing programs: $6,200,000 (this figure does not include appropriations that simply replace dedicated funding sources eliminated in the proposed budget or replace funds taken on a one-time basis last year). Most of the new funding — $4,000,000 — goes to the reorganized water infrastructure program for two high level management positions, a water and sewer database and grants to local governments.
Other apparent increases in the DENR budget involve the movement of money to follow the transfer of programs and positions from other state agencies or to fill gaps created by eliminating dedicated funding sources for DENR programs. Six positions and $1.7 million in operating funds come to DENR with transfer of the State Energy Office from the Department of Commerce. Over $2 million would be transferred from Commerce for pass-through grants to the Grassroots Science Museums. Appropriations also take the place of revenue from the white goods, scrap tire, and solid waste disposal taxes; those tax revenues would go to the General Fund to be appropriated by the legislature.