Department of Natural Resources
COMMITTEE ON JOINT AGRICULTURE AND NATURAL RESOURCES
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07:40 AM -- Department of Natural Resources
Representative Curry explained that the Joint House Agriculture, Livestock, and Natural Resources Committee and the Senate Agriculture and Natural Resources Committee met with the Colorado Department of Natural Resources (DNR) on February 4 to discuss the department's FY 2009-10 budget and other issues. Representative Curry and Senator Isgar invited the department to today's hearing to continue the discussion started on February 4.
07:42 AM -- Severance Tax Revenue Issues Affecting the Department of Natural Resources
Harris Sherman, Executive Director of DNR, explained that the Office of State Planning and Budget (OSPB) has tentatively approved the department's recommendation concerning adjustments to Tier 2 programs that receive revenue from the Severance Tax Operational Account (Attachment A).
Bill Levine, Budget Director for DNR, explained the state law that allocates the moneys from the Operational Account of the Severance Tax Trust Fund between Tier 1 and Tier 2 program. Tier 1 expenditures support salaries and on-going core programs of the DNR including the regulation of mining and oil and gas development. Tier 2 programs support grants, loans, research, and construction. The Tier 2 programs are subject to proportional reduction if severance tax revenues are lower than expected. Because severance taxes are historically highly variable, Tier 2 programs are selected in part because they are designed in such a way that they can weather short-term reductions in funding. By reducing funding for the tier 2 programs, the General Assembly could increase the uncommitted balance in the Operational Account that could be transferred to the General Fund. Mr. Levine explained that for FY2009-10, the Operational Account is projected to have a positive balance of $66,614. However, the account is estimated to have a negative balance of over $6 million in FY 2010-11. To address the projected revenue shortfall, the department is recommending reduction in spending for certain Tier 1 programs including a temporary reduction of $342,000 for reclamation of forfeited mine sites, and a $300,000 reduction in the Severance Tax Grant Program. He explained that these reductions were selected, in part, because they will not require staff reductions. Mr. Levine also recommended not using the statutory Tier 2 reserve to address the revenue shortfall.
Committee discussion followed about alternative funding sources for the Low Income Energy Assistance Program (LEAP) including Public Utility Commission approved utility rate adjustments as authorized by Senate Bill 07-22 (Section 40-3-106 (1) (d) (I), C.R.S.). Mr. Sherman explained that the federal economic stimulus legislation includes money for low income energy assistance.
In response to a question from the committee, Mr. Levine explained that the LEAP is administered by the Department of Human Services and that DNR does not oversee the expenditure of these moneys. He also described the use of moneys appropriated in Senate Bill 08-13 for the Division of Parks and Outdoor Recreation and the Division of Wildlife. This bill, recommended by the Interim Committee to Study the Allocation of Severance Tax and Federal Mineral Lease Revenues, changes permissible appropriations from the Operational Account of the Severance Tax Trust Fund to the DNR including $1.9 million in FY 2008-09 for State Parks and $1.5 million for the Division of Wildlife, in part, to study energy impacts to wildlife habitat. In response to a request from the committee, Mr. Levine said that he would provide a report on how the money appropriated by Senate Bill 08-13 was spent.
In response to questions from the committee, Director Sherman explained that he was not aware of federal funds available for the control of aquatic nuisance species. However, federal moneys may be available from the U.S. Forest Service for bark beetle mitigation. This federal money may enable the state to reallocate Operational Account moneys appropriated for bark beetle mitigation to other needs. He also responded to questions about the proposed reduction to the Water Supply Reserve Account and the use of money in the Colorado Water Conservation Board Construction Fund to pay for staff expenses related to the Interbasin Compact Committee (IBCC) that was created in House Bill 05-1177.
08:14 AM -- Colorado Oil and Gas Conservation Commission
Justin Rudder, Department of Natural Resources Budget Officer, described the FY 2009-10 request for 4.0 FTE in the Colorado Oil and Gas Conservation Commission (COGCC) for administrative support staff and contract funding. David Neslin, Acting Director of COGCC, explained that the requested FTE would manage oil and gas well records and would be paid from cash funds collected by the mill levy on oil and gas producers. Mr. Rudder also described Decision Item 2 which requests $34,456 for the Colorado Geological Survey for highway avalanche forecasting.
Jennifer Gimbel, Director of the Colorado Water Conservation Board, described the need for Decision Item 4 that requests $74,011 and one FTE for a contract coordinator and Decision Item 6 that requests $101,825 and one FTE for a Colorado River specialist.
In response to a questions from the committee, Mr. Levine explained that decision items 7 and 8 would use General Fund money for new leases for office space. General Fund moneys would be used because the offices would be used by the Division of Water Resources that is primarily funded by General Fund moneys.
08:34 AM - -Fiscal Year 2008-09 Budget Adjustments
Mr. Levine explained that the OSPB is proposing to transfer $10 million from CWCB Construction Fund and $20 million from the Perpetual Base Account of the Severance Tax Trust Fund to the General Fund to help balance the FY 2008-09 state budget. He also explained that approximately 95 percent of the Division of Water Resources' budget comes from General Fund. Consequently, DNR is also requesting the elimination of $248,913 General Fund related to overtime funding for water administration duties to address General Fund revenue shortfalls.
Dick Wolfe, State Engineer, explained that the Division of Water Resources (DWR) is working to address $600,000 General Fund reduction through the elimination of overtime funding - which saves approximately $250,000 - and vacancy saving for 25 FTE - saving approximately $400,000. Committee discussion followed about potential funding sources to make up for cuts to DWR. Director Sherman explained that the DWR is experiencing the cuts because it is primarily supported by General Fund moneys. He also explained that the JBC is considering draft legislation to increase DWR fees to make up for additional reductions in General Fund revenue in FY 2009-10. Specifically, it is considering increasing well permit, well inspection, substitute water supply plans, and dam inspection fees that will generate approximately $3 million in cash fund revenue. The fee increases are expected to take effect on March 1, 2009. Committee discussion followed about the cost of administering the DWR programs and the proposed fee increases. Mr. Wolfe explained that increases cover the cost of the administering the programs and the revenue will not be used to subsidize other DWR functions.
Representative Curry said that she will attempt to set up a meeting with the Joint Budget Committee and the Joint House Agriculture, Livestock, and Natural Resources Committee and the Senate Agriculture and Natural Resources Committee to discuss the DNR and Department of Agriculture budgets.
The meeting adjourned.
Colorado Water Congress submitted a letter to Senator Isgar and Representative Curry that provides recommendations on the FY 2008-09 and FY 2009-10 budgets for the Division of Water Resources and the Colorado Water Conservation Board (Attachment B).