Colorado Legislative Council Staff
STATE and LOCAL
REVISED FISCAL NOTE
(replaces Fiscal Note dated February 4, 1998)
No State General Fund Impact
TABOR Refund Impact
State Cash Fund Revenue and Expenditure Impact
Local Revenue and Expenditure Impact
Drafting Number: Prime Sponsor(s): |
LLS 98-642 Rep. Smith Sen. Ament |
Date: Bill Status: Fiscal Analyst: |
April 24, 1998 Steve Tammeus (866-2756) |
TITLE: CONCERNING THE ESTABLISHMENT OF A PERMITTING SYSTEM FOR CONCENTRATED SWINE FEEDING OPERATIONS TO PROTECT THE QUALITY OF THE WATERS OF THE STATE.
Summary of Legislation
STATE FISCAL IMPACT SUMMARY |
FY 1998/99 |
FY 1999/2000 |
State Revenues General Fund Water Quality Control Fund |
$200,000 |
$200,000 |
State Expenditures General Fund Water Quality Control Fund Cash Fund Exempt - Dept of Law |
$165,725 3,840* |
$151,393 3,840* |
FTE Position Change |
2.0 FTE |
2.0 FTE |
Local Government Impact — Local health departments are required to enter into agreements with the Department of Public Health and Environment to assist with inspection and enforcement activities. |
*This amount for the Department of Law is included in the Water Quality Control Fund expenditures above.
This bill, as amended by the House Agriculture Committee, establishes environmental protection requirements and procedures for the Department of Public Health and Environment to regulate certain commercial swine confined feeding operations under the “Colorado Water Quality Control Act”. General provisions of the amended bill include:
• definitions of “housed commercial swine confined feeding operation” and “housed swine confined feeding operation”;
• requirements for the operator to obtain a permit from the Division of Administration and to submit quarterly reports and agronomic analysis to the division and the local health department;
• limitations on waste application rates to not exceed the agronomic rate of application;
• enforcement actions, including provisions for issuing a cease and desist order, to be imposed by the department when an operator exceeds the agronomic rate; and
• procedures for the operator to rebut the enforcement actions of the department and demonstrate the accuracy of the application process.
The bill requires the Water Quality Control Commission, under the Department of Public Health and Environment, to promulgate rules by October 1, 1998 in order to administer the permits no later than January 1, 1999. These rules shall require:
• the operator to submit a swine waste management plan prepared by a professional engineer, or a qualified consultant approved by the department;
• that land application areas shall not be located within certain distances of water reservoirs, bodies of surface water, stream beds, and domestic or community wells;
• that process wastewater retention structures or manure stock piles not be located within certain areas;
• that any spill or contamination be reported immediately to the division and the local health department;
• the owner or operator to provide financial assurances in the event of final closure to cover the costs of postclosure activities and any corrective actions;
• the owner or operator to provide estimates for a third party to undertake final closure activities, remediate soil and water contamination, and to clean a spill or breach;
• the department to determine the amount of the financial assurances;
• the operator to report a spill or contamination to the department and the county health department within 24 hours;
• the owner or operator to drill at least one monitoring well up-gradient and one monitoring well down-gradient from each application site;
• scientific requirements for the content of the monitoring report and agronomic analysis; and
• a monitoring plan to be submitted to the department for approval.
The bill requires the department to enter into agreements with the local governing body to assist with the site inspections and enforcement. The amended bill prohibits local governments or other political subdivisions of the state from enacting laws or regulations that are more stringent than the provisions of the bill.
The bill requires the department to assess an annual permit fee based upon the operation’s working capacity. All fees collected are to be deposited to the Water Quality Control Fund. The bill will become effective on July 1, 1998.
This bill will affect state cash fund revenue and expenditures, and local government revenue and expenditures. Therefore, it is assessed as having a state and local fiscal impact.
State Revenues
This bill requires the department to assess an annual permit fee, based upon the number of swine that the operation is capable of housing at one time. All fees are to be credited to the Water Quality Control Fund. Although the bill does not specifically authorize the department to recover all direct and indirect costs of administering the program, this fiscal note assumes the amount of the permit fee will be based on total program costs.
NOTE: Indirect costs are typically not included in the expenditure section of the fiscal note; except that, indirect costs will be included in the calculations for the purpose of identifying the “per unit” cost of a new or revised fee which is based upon the total direct and indirect costs of a program.
The department estimates that approximately 1,000,000 swine will be subject to the annual permit fee. Based upon the annual expenditures shown in the “State Expenditures” and “Expenditures Not Included” sections of this fiscal note, the department would have to assess a fee of approximately $0.20 per swine to recover the total direct and indirect costs of the program.
A fee of $0.20 per swine would generate revenue in the amount of $200,000 for FY 1998-99 and FY 1999-2000 to the Water Quality Control Fund. Based upon an average of 40,000 swine per facility, the average annual fee per facility would be $8,000.
TABOR Refund Impact
Section 20 of Article X of the Colorado Constitution, limits the maximum annual percentage increase in state fiscal year spending. Once total state revenue from all sources that are not specifically excluded from fiscal year spending exceeds these limits for the fiscal year, the state constitution requires that the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset. Based on the current Legislative Council economic forecast, it is projected that the state will be in a TABOR refund position during each of the next five fiscal years. Any increase or decrease in state revenue from changes in fees, fines, licenses, or other revenue sources will affect the amount of the state revenue to be refunded.
State Expenditures
This bill requires the Water Quality Control Division under the Department of Public Health and Environment to implement, administer, and enforce the regulation of housed commercial swine confined feeding operations throughout the state. The annual costs for the divisions to implement and administer the provisions of this bill are based upon the following assumptions:
• that based upon the definition of a “housed commercial swine confined feeding operation”, 25 swine confined feeding operations in the state would be regulated; and
• that each of these operations has the capacity to house 40,000 animals, therefore, 1,000,000 animals would be subject to the annual permit fee.
The Water Quality Control Division estimates it will annually expend approximately 3,717 hours of personal services on the following activities:
• developing rules and providing program oversight;
• establishing agreements (contracts) with local health departments and coordinating their activities;
• interfacing with the Department of Agriculture;
• providing training to operators and owners;
• establishing appropriate financial assurances;
• conducting pre-permit inspections and reviewing waste management plans for existing facilities;
• monitoring nitrogen and phosphorous discharges;
• drafting discharge permits;
• responding to environmental spills or discharges;
• environmental enforcement; and
• clerical support.
The department estimates that local health departments will annually expend 400 hours to inspect each of the 25 operations twice per year for water quality issues. The local departments will also be required to expend an additional 320 hours annually to respond to local citizen inquiries, participate in local land use or zoning meetings, and assist with enforcement actions. Based upon an hourly rate of $37 per hour, these contracted services are estimated to cost $26,640 per year.
The department will require additional legal services from the Department of Law to participate in the public water quality task forces, provide general counsel in the rulemaking process and enforcement proceedings, and determine the nature and scope of financial assurances to be provided by the owner or operator.
Table 1 provides a summary of the total Department of Public Health and Environment direct expenditures for FY 1998-99 and FY 1999-2000.
Table 1 - Department of Public Health and Environment Swine Confined Feeding Regulation Expenditures |
||
|
FY 1998-99 |
FY 1999-2000 |
Personal Services Prof Engineer I (grade 102/step 1) Prof Engineer II (grade 109/step 1) Admin Asst II (grade 68/step 1) Subtotal PERA and Medicare Total |
1.0 FTE - $47,064 0.7 FTE - 38,976 0.3 FTE - 6,163 92,203 11,940 2.0 FTE - $104,143 |
1.0 FTE - $47,064 0.7 FTE - 38,976 0.3 FTE - 6,163 92,203 11,940 2.0 FTE - $104,143 |
Local Health Department Contracts |
26,640 |
26,640 |
Training |
5,732 |
0 |
Laboratory Analysis |
11,800 |
11,800 |
Operating/Travel Expenses |
4,970 |
4,970 |
Computer and Furniture |
8,600 |
0 |
Dept of Law - Legal Services |
80 hours - $3,840 |
80 hours - $3,840 |
Total Expenses |
2.0 FTE - $165,725 |
2.0 FTE - $151,393 |
Expenditures Not Included
Pursuant to the Joint Budget Committee’s budget policies, the following expenditures have not been included in this fiscal note:
• health and life insurance costs of $4,424;
• short-term disability costs of $194;
• inflationary cost factors;
• leased space; and
• indirect costs of $28,215 (21.9% on-site and 1.8 % contract).
In summary, the total direct and indirect costs of this program are estimated to be 2.0 FTE and $198,558 for FY 1998-99 and $189,646 for FY 1999-2000..
Local Government Impact
Local health departments will be required to enter into agreements to assist the Department of Public Health and Environment with facility inspections and enforcement activities. As a result, the provisions of this bill will affect local health department revenue and expenditures.
Spending Authority
This fiscal note would imply the Department of Public Health and Environment would require a Water Quality Control Cash Fund appropriation of 2.0 FTE and $165,725 for FY 1998-99. Of this amount, the Department of Law would require a cash fund exempt spending authority of $3,840.
Departments Contacted
Public Health and Environment Local Affairs Law Agriculture