Putting the Pieces Together

Transcription

1 Putting the Pieces Together Understanding Minnesota Governor Pawlenty s Conservation & Environmental Budget March 23 Version 1.2

2 Putting the Pieces Together Understanding Minnesota Governor Pawlenty s Conservation & Environmental Budget Table of Contents I. Introduction...1 II. III. IV. The Mechanics of Budgeting 2 Overview of Findings...3 Narrative Details by Agency 5 Department of Natural Resources...5 Pollution Control Agency..7 Office of Environmental Assistance 1 Board of Water and Soil Resources.1 Minnesota Department of Agriculture.12 Department of Trade and Economic Development..13 Planning - Environmental Quality Board 13 Legislative Commission on Minnesota Resources..14 Addendum 1: Summary of March 12, 23 DNR revisions Attachment A: Environmental Agencies Total General Fund Budgets & Expenditures Attachment B: General Fund Cuts & Dedicated Fund Diversions Attachment C: 23 Governor s Supplemental Budget vs. Governor's Unallottments Attachment D: General Fund Budgets for Select Non-Environmental Agencies Attachment E: Lottery in Lieu Attachment F: Legislative Commission on Minnesota Resources Attachment G: Proposed Fee Increases Attachment H: General Fund Budget Agency and Department Detail Minnesota League of Conservation Voters Education Fund 36 North Robert Suite 415 * St. Paul, MN 5511 Phone: * Fax:

3 I. Introduction Protecting the clean water and pure air that make Minnesota a great place to live requires ongoing investments. Pollution is contaminating our drinking water, lakes, rivers and streams. Precious prairies, forests and wetlands are disappearing, but Minnesotans place a high priority on protecting these resources and we all need to do a better job to stop things from getting worse. While individual Minnesotans strive to do their part to be good stewards of our environment, state funding plays a critical role in the effectiveness and implementation of good environmental programs and policies. Understanding the budget process as it affects conservation and the environment also helps citizens evaluate whether the environment is truly a priority for policy-makers. This is especially true in a year like 23 when serious pressure to cut government spending challenges the commitment of policymakers to make clean air and water a priority. The Governor s Budget is a key starting point in understanding and evaluating the budget process. This report analyzes the first biennial state budget presented by Governor Tim Pawlenty with an eye towards its impact on resource protection in Minnesota. The Minnesota League of Conservation Voters Education Fund designed this analysis of the Governor s budget with several objectives in mind. While many of Minnesota s conservation and environmental groups track budgets for specific programs, there is a clear need for an overall assessment of spending proposals. With Minnesota looking at record deficits and huge budget cuts proposed across all agencies, it is critical to understand what these cuts will do to the programs we count on for natural resource management and environmental protection. However, citizens and organizations cannot easily obtain information that allows them to assess ongoing trends in program funding such as incremental budget cuts, shifts and reallocations. This document addresses each of these problems and should help citizens and organizations judge the impact of the Governor s recommendation as well as proposals by the House and Senate. The analysis starts with information on the mechanics of the budgeting process followed by an overview of key findings with highlights of the Governor s recommendations. Narrative details follow for each of the eight agencies involved in conservation and environmental programs. Attachments A - H present data by agency. Information on the Governor s budget comes from his February 18, 23 release. Data on base budgets come from the November 22 Minnesota Department of Finance forecast. We would like to thank the incredibly hard-working state employees, legislators and legislative staff that serve the Minnesota people daily by protecting and restoring our state s natural heritage. They were very helpful as data for this analysis were compiled. Minnesota s conservation and environmental organizations also deserve great thanks for their committed work. We hope that this information provides you with an appreciation of the importance of participation in the budget process as well as the policy arena. Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2 1

4 II. The Mechanics of Budgeting Minnesota s budgeting process works on a two-year cycle, also known as a biennium. The budget, or fiscal year, begins on July 1. Odd years are used by the Governor and Legislature to do the budgets for all state agencies for the following biennium. In 23 they are working on the budgets. Even years are spent on capital bonding. While Pawlenty makes no bonding proposals in this budget, it is possible that there could be a bonding bill considered by the Legislature in 23. Several different types of funding sources are used to finance the services needed to protect Minnesota s natural heritage. Three major categories - general fund, dedicated funds and capital bonding make up the bulk of revenues. General fund revenue includes income and sales taxes and a variety of other general revenue sources. Many conservation and environmental programs are funded by licenses or user fees which are deposited into dedicated accounts such as the Game and Fish fund. Some dedicated funds build a pool of money that is invested. Income from investments by the fund is used for programs. For example, the Environmental Trust Fund uses a portion of the lottery proceeds to build its pool. While this report focuses in large part on the general fund budget, we also address recommendations to divert dedicated funds to non-environmental uses. Capital bonding requests are made for long-term investments such as land acquisition, buildings and restoration projects. Payment for these investments is most often made with debt financed through the sale of state-backed bonds. Pawlenty does not recommend any capital bonding for 23, and his budget cuts $8.2 million from funds available for debt services on any new bonding projects. The process for securing funding includes several steps. Each state agency compiles a combination of requests over the summer and fall based on budget goals. Their requests then go to the Governor s office and the Department of Finance. Taking the whole state budget and revenue forecasts into account, the Governor makes his recommendations in January or February. These go to the Minnesota House of Representatives and Senate where further changes will be made. The process is completed in the spring when and if the Governor signs off on the version approved by the Legislature. It is not uncommon for revenues to exceed or fall short of projections for the current biennium. When this happens, a surplus or deficit must be addressed. Governors often recommend a supplemental budget for the current year in January, even though the fiscal year is more than half over. When projections predicted a deficit for the 23, Pawlenty proposed a 23 supplemental budget. However, the Legislature could not agree on a solution. In response, we saw Governor Pawlenty use a rare power called unallotment in which he can unilaterally cut spending. (See Attachment C.) Download your own copy of the Governor s budget at: 2 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

5 III. Overview of Findings Unlike other parts of Minnesota s budget, spending on conservation and environment has not been rising. Less than 2 cents of each tax dollar goes to protect air and water, and that number is shrinking. Cuts to General Funds Under the Governor s budget, the total general fund cuts to conservation and environment programs are more than $55.3 million. These cuts come on top of serious cuts during the Ventura administration. The combined effect reveals a serious downward trend in general fund. From 21 to 25, total general fund spending on conservation and the environment will have dropped 33% - from $227.9 million to $151.9 million. (See Figure 1 and Attachment A.) History of Conservation and Environment Agencies General Fund Budget (in million dollars) Figure 1 Agencies in the environment and agriculture legislative spending area take an 18.6% general fund cut the second largest cut in all government, after local government aid. (See Attachment D.) Diversion of Dedicated Funds $38.5 million in hard-won dedicated funds are diverted every two years to the general fund. Minnesota sportsmen and environmentalists have spent years building long-term, stable funding to protect our resources. Much of this work is lost under this proposal to redirect the following revenues. (See Figure 2 and Attachment B.) LCMR/Future Resources Fund - $15.3 million. Lottery-in-Lieu - $6.4 million. Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2 3

6 Lottery Unclaimed Prizes Fund - $4.4 million Motor Vehicle Transfer Fee/State Superfund - $7.3 million Recycling Fund (SCORE) - $5 million Governor's Recommended Cuts to Conservation and Environment Dedicated Funds (in million dollars) $ $ $36.75 $3.52 $25.22 $2.176 LCMR Future Resource Fund Lottery in Lieu Recycling Fund 45 $7.282 $4.448 $ $ Motor Vehicle Transfer Lottery Unclaimed Prizes After Cuts Figure 2 Elimination of Local Resource Protection Water protection grants in Greater Minnesota that leverage matching resources are eliminated. Local communities are at the front line of Minnesota s water protection. Under a proposed $5.4 million cut to the Board of Water and Soil Resources, an estimated 1,5 local projects will be lost in 8 non-metro counties. An estimated $1.5 million in matching local levies will be lost in addition to possible federal and private dollars. Local efforts are further undermined by 2% cuts to county recycling and other key programs. These include sustainable agriculture, air toxics monitoring, mercury reduction research for taconite plants, waste tire cleanup and used oil management. On a Positive Note Ten proposed fee increases, totaling more than $17.94 million, will help pay a higher percentage of the program costs and are an important step in the right direction. (See Attachment G.) Full funding for the Clean Water Partnership program is recommended. Lottery-in- Lieu revenues remaining after the cuts are in the recommendations, making these programs more stable. Law enforcement is increased for the DNR. 4 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

7 IV. Narrative Details by Environmental & Conservation Agency The following sections provide a detailed narrative account by state agency for recommendations made by the Governor. We provide a summary statement, changes in general funds by division or program, changes in dedicated funds and proposed fee increases. However, the Minnesota Pollution Control Agency s complex restructuring proposal funding does not fit this format and so does not breakout changes by division. All numbers in this narrative are given for the two year, or biennium, total. Cuts are listed in parenthesis. (See Attachment H. for line item numbers by agency.) Department of Natural Resources (DNR) The budget proposed by Pawlenty on February 18, 23 is used as the basis for the following comments on the DNR. However, Commissioner Gene Merriam released a new budget on March 12, 23. Please see Addendum 1 for a summary of the changes made. Programs highlighted in the addendum have an *. Under both versions, the DNR suffers a very significant loss of general fund operating reductions, as well as long term dedicated funding sources. These will compound in the coming years to create a very real impact to the ability of the agency to protect the state s existing natural resources and to fulfill its mission of quality outdoor recreation and development of the state s resource-based industries. It is important to note these cuts are made on top of $2.37 million in DNR fee increases proposed to go into the general fund. (See Attachment G2.) DNR General Funds ($31.1 million) The agency takes an overall cut of 15% or $31.1 million for biennium. That works out to a 17% cut spread through department except for forestry which is cut only 1%. These cuts continue a long term downward trend which sees DNR general fund revenues dropping from $125 million in 21 to $9.3 million in 25 a precipitous 28% cut. While individual program lines within a division are not given, a highlight of programs mentioned for reduction by department includes: Forestry - $7.2 million estimated cuts White Pine Restoration Private land owner s forestry assistance Some Forest roads closed Parks - $6.5 million estimated cuts Resource management Interpretation Enforcement - $8, estimated cuts Eliminates 4 support and field officer positions Ecological Management $1.38 million estimated cuts Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2 5

8 Interpretation and data management on scientific and natural areas Water - $1.8 million estimated cuts Red River mediation Review of tax-forfeited riparian lands of more than 15 feet Mississippi Headwaters Board Office of Management & Budget Support $7 million estimated cuts As Commissioner Merriam re-works the budget, cuts for divisions or specific programs may shift. However, the total budget reduction for the agency will remain at $31 million. DNR Dedicated Funds ($6.4 million) *Lottery-in-Lieu ($6.4 million) The history of Lottery-in-Lieu funds is rooted in early 199s budget wrangling when the Legislature added a 6-½ cent sales tax on lottery tickets. This had the effect of siphoning off 6.5% of lottery proceeds to the state s general fund before the Environment and Natural Resources Trust Fund received its portion of the lottery profits. Three years ago the Legislature righted this raid and dedicated nearly all (97%) of the Lottery-in-Lieu funds to the DNR s Game and Fish fund, State and Metro Parks, Trails, and Zoos. This resulted in an increase of approximately $4 million per biennium to the DNR. In 21 and 22, the Legislature decreased the portion to 9% and 87.1%, respectively. The money freed up by lowering the percentage was used to fund Payment in Lieu of Taxes (PILT) to counties on state owned conservation lands. For the 24-5 biennium, the Governor recommends lowering the Lottery-in- Lieu percentage to 74% from 87.1%. This is a permanent cut of $6.4 million per biennium in revenue going to these dedicated accounts. These funds would be redirected to the general fund. (See Attachment E for a list of Lottery-in-Lieu programs funded and the Governor s recommendations.) *DNR Proposed Fee Increases $6,13, Aquatic Plant Management Fee $776, This fee increases from $2 to $5 per applicant and the current $2 cap per water body is removed. Permits are issued for destruction of aquatic plants in order to allow property owners access to public waters. Currently, most of the cost of this is paid for from the Game and Fish fund. This increase will generate adequate dollars to pay for the costs of administering the program. 6 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

9 Commercial Fishing Licenses $545, This proposal raises numerous commercial license fees to cover the cost of providing sustainable opportunities for the commercial fishing industry. For example, minnow retailers would pay $4 instead of $15, nonresident minnow haulers would pay $2,75 instead of $675 and a resident Lake Superior guide would pay $11 instead of $35. *Exotic Species Surcharge/Water Recreational Enhancement $776, The fee on all watercraft licenses is increased from $5 to $7 to help manage harmful exotic species in the state s waters. Utility License Fee $4, Under this proposal, licenses for utilities to cross state lands and waters increase from $4 to $5 each. This will recover the costs of administering the program. State Park Camping Fee $1,468, Three camping fees are raised in this proposal along with the elimination of a mid-week senior citizen discount. Semi-modern sites rise from $12 to $15, rustics from $8 to $11 and forest from $9 to $11. The estimated increase would be split with $1,418, going to the Natural Resources Fund and $5, to the General Fund. Water Use Fee $1,924, This will increase the fees for withdrawal and use of the state s ground and surface water by 38%. Proceeds are used for Division of Waters monitoring and research activities. This work provides some of the fundamental building blocks for sound water resource management both at the state and local level. Winter Aeration Permits $124, Under this proposal, lakeshore owners, fishing clubs, minnow dealers and others who do water aeration will be charged a $25 permit fee. This will cover costs of the program, including safety inspections, Thin Ice and Open Water signs and evaluation of aeration s impact on water quality and waterfowl management. Pollution Control Agency (PCA) The entire PCA budget is predicated on the intact passage of the agency s proposal to restructure the existing collection of funds into new Environmental and Remediation Funds. This plan redirects very significant revenues from agency funds and programs to the state s general fund. However, when coupled with the fund consolidation proposal and $11.35 million in new fees, actual program delivery on the ground is impacted only modestly. Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2 7

10 The agency believes this approach will allow more flexibility so that available dollars can be matched to the programs with the greatest environmental need. For example, the water program has long suffered from its heavy reliance on declining state general fund dollars, while at the same time the agency s solid waste fund is generating healthy cash balances which have been periodically tapped to balance the state s budget. Solid Waste Fund Big changes are recommended for this fund which currently receives 5%, or $28 million, of the $56 million generated annually by the solid waste tax. The tax includes a 9.75% charge on residential collection and 17% on commercial collection. The fund s balance at the end of fiscal 23 is forecast to be $43 million. Pawlenty s budget directs $11.4 million from the solid waste fund to the state s general fund in the biennium. Ten million of this is a one-time transfer, $1.4 permanently redirects funds to cover the cost of bonds that the state issued to fund the landfill cleanup program. In the future, Pawlenty recommends renaming the solid waste tax the environmental tax and depositing the funds in a new Environmental Fund to be used for high priority water programs. Motor Vehicle Title Transfer Fee Plans for this fund are also dramatic. While over $1.2 million of the fee already goes into the general fund, Pawlenty proposes to permanently redirect this entire $9 million per biennium. Under this proposal, the fund s major activity State Superfund Sites and the portion of the Voluntary Inspection and Cleanup (VIC) which is not recovered by fees would be covered by a new Remediation Fund. Support for programs would be transferred as determined by the agency from the new Environmental Fund. This should provide a stable long term funding source for State Superfund and VIC. However, four smaller programs funded by the fee would be permanently cut: Waste Tire Permitting ($278,) After a long term effort to clean up a large backlog of waste tires that were improperly stored in the state, the Governor s budget proposes to eliminate remaining activities in this area. In the past, large unregulated tire dumps had created health risks and environmental damages. Permitting of tire transporters and processors will end. Used Motor Oil Management Licensing and training ($354,) PCA education and training on the proper disposal of used oil for both individuals and businesses would cease. Reimbursement of service stations for costs associated with contaminated oil would end. Metro Air Toxics Monitoring ($25,) This proposal eliminates this enhanced monitoring program which was initiated two years ago. Monitoring would be done regionally at the agency baseline level only. Mercury Reduction ($124,) 8 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

11 Eliminate agency support of research to reduce emissions from the second largest Minnesota source of mercury - the taconite industry. Water Quality Programs Like other parts of the PCA plan, big changes are proposed for water quality programs. Permanent general fund cuts of $2.56 million to the water quality and $448, to emergency response are slated to be replaced with funding from the new Environmental Fund. There is good news for the Clean Water Partnership, which provides funding for local voluntary cleanup of contaminated lakes and rivers. Although this program lost 43% of its funding for 23 in the Governor s unallotment, it is restored to its full budget for 24 and 25. Two new fees are proposed: Water Quality Permits $4,326, Increases the five-year permit fee from $24 to $1, ($152 per year increase) generating $4.3 million to be deposited in the Environmental Fund. Stormwater Phase II $7,26, This federally mandated program regulates drainage from construction sites that disturb one to five acres of land. The proposal restructures the current Phase I fee which generates $2 million and adds a $4 fee on nearly 7, new permittees which will generate an estimated $5 million. The program is expected to result in a reduction of 1.6 million tons of sediment into Minnesota waters. This fee would go into the Environmental Fund. Feedlots Pawlenty s proposal avoids a scheduled 25% reduction in grant funds provided to counties for inspection and regulation of feedlots. This is done by eliminating six PCA feedlot staff positions and redirecting the $966, in savings to the county grant program. This action will result in an increased burden for the remaining PCA staff to properly complete the agency-level permitting required on large feedlots. A slowdown of this permitting is expected, with the decreased ability to meet the turnaround times for permit applications. It may also cut staff s ability to adequately review incoming permits. Finally, there are concerns that it will reduce the PCA s oversight of county programs that are not run adequately. Petro Fund tax - While the Governor s proposal for the Petrofund does not impact programs in 24 and 25, he does recommend allowing it to sunset at the end of 25. Unfortunately, this user-financed cleanup program of leaky storage tanks will not be completed until the end of 27. The Governor s recommendation will result in an anticipated $15.26 million loss to the new Environmental Fund in the biennium. This would force others to foot the cleanup bill or leave the job unfinished. Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2 9

12 Office of Environmental Assistance (OEA) Under the Governor s budget, the OEA takes an overall 2% cut in general fund spending. This is particularly significant because OEA is heavily reliant on the general fund general fund represents 54% of the total OEA budget. OEA General Funding ($1,63,) Operations Reduction ($1,63,) This 2% reduction affects a host of educational and partnership building activities ranging from the Governor s Award program to ISO 141 Certification and environmentally preferable purchasing to local government assistance. Specific details have yet to be determined. OEA Dedicated Funds ($5,312,) Waste Reduction and Recycling Grants Reduced ($5,44,) These grants to counties are cut 2% across the board. In addition, counties are required to provide a minimum 25% match from local funds. These matching dollars may also be lost by this proposal. The state s very successful recycling program is built on the delivery of this service at the county level. With this reduction, recycling services will drop, fewer opportunities such as drop off sites or community collections/pickups will be provided for the public. Recycling rates are expected to fall. Grants and Loans Reduced ($268,) This 2% cut in these areas will reduce opportunities for developing and adopting new and innovative solutions for waste reduction. The funds have leveraged matching funds and have focused on preventing pollution and reducing waste, as well as improving recycling techniques and developing markets for recycled materials. OEA Proposed Fee Increases No fee increases are proposed for the OEA. Board of Water and Soil Resources (BWSR) BWSR takes a 2% general fund cut. This is a drastic reduction because over 9% of its overall budget comes from the general fund. The Governor proposes to continue support for work done at the county level on the Wetland Conservation Act, Shoreland zoning, and Feedlot Permit Program. However, Local Water Planning, Minnesota s key strategy for water resources protection is eliminated. 1 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

13 BWSR General Funds ($6, 561,) Local Water Planning Act ($5,473,) This cut eliminates 1% of the state funding for county local water planning in the 8 non-metro counties. This program is the cornerstone of the state strategy for protection of our water resources through local government education, monitoring, planning, regulation and treatment. BWSR estimates that more than 1,5 local projects will be lost with this funding. The program has been the catalyst for bringing diverse members of local communities together to better understand and protect our waters across the state. The counties also collectively contribute a required minimum of $1.5 million in local tax levies to this effort annually. Some private and federal support is also used in these projects. In addition, many counties support goes far beyond this level. Feedlot Cost Share ($1,23,) While the Governor recommends a 54% reduction in state support for this effort to provide financial assistance to producers making upgrades to their livestock operations, it os being more than offset by a significant increase in the availability of Federal cost share dollars for improvements in animal agricultural facilities. Reinvest in Minnesota (RIM) Services ($81,) This cut reduces 54% of staff support for the RIM Conservation Reserve easement program. With the lack of current funding for new easements, staff will be reduced to what is believed to be the minimum level needed to do the inspection and maintenance of existing easements. Any future funding for new easements will require that some of those project dollars be earmarked for administration of the easements. Non Point Engineering and Operations ($28,) Reduction of field engineering staff and operations will result in fewer staff being available to offer assistance. Wetland Conservation Act (WCA) $94, BWSR will increase support to counties to fully fund the administrative costs of local implementation of the Wetland Conservation Act. Due to the regulatory nature of this program, it was given a high priority for remaining dollars. The Governor s budget also includes a recommendation to repeal the program whereby the state pays for the replacement of wetlands lost to construction projects done by local governments for road safety improvements. Funding for this program has not been adequate to meet demand. This will open up the issue of whether local roads should be exempt from compliance with the WCA, as some people believe. BWSR Dedicated Funds This agency does not rely on dedicated funds. Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version

14 BWSR Proposed Fee Increases $256, Wetland Banking $256, The Governor recommends new fees to cover the administrative costs of running this increasingly popular program. Wetland banking serves as a market tool that connects those who restore or create quality wetlands with those who need to provide mitigation for the destruction of wetlands. BWSR inspects and approves newly established wetlands that are then deposited into the bank, where they are then available for withdrawal, for a fee, by the buyer. The bank currently has 217 accounts listing 31 acres with an estimated total value of >$2 million. Most users of the system are private individuals and businesses, however, various public entities also participate. This fee proposal will internalize the costs to the users rather than having these costs borne by all citizens. Department of Agriculture (MDA) Taken together these relatively small, but targeted reductions nearly eliminate MDA support for sustainable agriculture in the state. This comes at the same time as the markets continue to depress the long term prices for the traditionally raised commodity crops and citizens throughout the state are becoming more aware of the tremendous impact that traditional agricultural practices have on our natural resources and health. MDA General Funds ($78,) Value-added Coop Grants ($32,) This grant program which served to assist the development of a new generation of farm coops for value added processing of Ag products is eliminated. Many of the coops that this program assisted targeted their products to niche markets such as the organic market. The loss of this program will undermine efforts to create a more diverse, profitable and environmentally friendly agriculture in Minnesota Sustainable Ag Demonstration Grants ($26,) A 62% cut is proposed in grants to farmers to demonstrate on-farm sustainable agriculture practices. These farmer to farmer demonstration projects served as not only research opportunities, but also utilized a tried and true method for introducing new, more environmentally friendly approaches to the countryside. Minnesota Institute for Sustainable Agriculture (MISA) Grant ($2,) The Governor proposes to eliminate funding for the MISA information exchange, which develops materials and serves as a clearinghouse for sustainable Ag information. This is information that is not readily available elsewhere in the state. The website alone has recorded nearly 1 quarter million hits in just the last nine months. Ethanol Subsidy The Governor recommends that this currently open appropriation be changed to a direct appropriation. This change means that the appropriation will have to be passed by the legislature each budget year instead of happening automatically as it 12 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

15 does with an open appropriation. He also proposes cutting state subsidies by $32.5 million. MDA Dedicated Funds This agency does not rely on dedicated fund for its work on environmental programs. MDA Proposed Fee Increases No fee increases are proposed for the MDA. Department of Trade and Economic Development (DTED) This agency plays a significant role in administering polluted lands cleanup, as well as wastewater treatment grant and loan programs. It also manages EPA state program matches for Clean Water funding. This work is done through DTED s Public Facilities Authority (PFA). DTED General Funding The Governor recommends cutting $2.6 million from the Contaminated Sites Cleanup grants. This leaves DTED with about $3 million in general fund money and will reduce cleanup by 1 to 3 sites a year. The program has an additional $12.4 million from the Petro Fund but this can only be used for sites polluted with petroleum products. Pawlenty also recommends canceling a remaining general fund appropriation for the WIF grants DTED Dedicated Funds Petro Fund - While no cuts are made to the Petro Fund in 24-25, the Governor s proposal does recommend allowing it to sunset at the end of the 25. This will cut a huge piece from contaminated sites cleanup. DTED Proposed Fee Increases No fee increases are proposed for the MDA. Department of Planning - Environmental Quality Board It appears that large changes are in the works for planning. Indications are that all of the agency s programs will be transferred to other agencies in the long run. While it is not clear exactly how things will shakeup, the Governor does recommend an overall cut of 15% for the Environmental Quality Board (EQB), which is housed in planning. Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version

16 Legislative Commission on Minnesota Resources (LCMR) Two recommendations made by the Governor will impact the LCMR. The first is a permanent diversion of $15.3 million from LCMR to the general fund. This represents 1/3 of LCMR s funding. The second is a $4.4 million cut dollars that do back into the Environmental Trust Fund from lottery unclaimed prizes. Future Resources Fund ($15,37,) For decades, the LCMR has received 2 a pack from the cigarette tax for protection of the state s future resources. This represents 1/3 of LCMR s total funding. The Governor s proposal diverts the entire $15.3 million to the general fund. All LCMR programs are threatened from wildlife to reforestation and water protection. (See Attachment F. for list of effected programs.) Lottery Proceeds (Unclaimed Prizes) ($4,448,) This is a conservative estimate of the permanent biennial loss of revenue to the Environment and Natural Resources Trust Fund (ETF) due to this redirection of lottery profits to the general fund prior to their deposit into the ETF. Currently prizes, which are not claimed within one year, are split between the general fund, the ETF and subsequent lottery prize pools. This $4.4 million is the portion of these prizes that would go directly into the ETF. In addition, it is presumed that a portion of the unclaimed prizes that go back into the prize pool would ultimately end up as lottery profits also going into the ETF. 14 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

17 Addendum 1 Department of Natural Resources Summary of March 12, 23 Budget Revisions Please find below a brief summary highlighting some of the changes released on March 13, 23 revising the original February 18, 23 proposals. Under both versions, the DNR suffers a very significant loss of $31 million in general funds as well as long term dedicated funding sources. These will compound in the coming years to create a very real impact to the ability of the agency to protect the state s existing natural resources and to fulfill its mission of quality outdoor recreation and development of the state s resource-based industries. It is important to note these cuts are made on top of $2.37 million in DNR fee increases proposed to go into the general fund. (See Attachment G2.) DNR General Funds ($31.1 million) Under the revised version the agency still takes an overall cut of 15% or $31.1 million for biennium. These cuts continue a long term downward trend which sees DNR general fund revenues dropping from $125 million in 21 to $9.3 million in 25 a precipitous 28% cut. Cuts within each department are modified from the February 18 budget as follows: February 18, 23 March 13, 23 Budget Budget Diff Lands -2,534-1, Waters -4,14-4, Forestry -7,272-7,72 2 Parks -8,48-9,286-1,238 Trails , Fisheries Wildlife Ecological Services -1,38-1,31-2 Enforcement -1,218 1, 2,218 Operations Support -5,262-5, Total Cuts -31,238-31,14 98 Enforcement $1,5, Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version

18 Under this proposal, the DNR's depleted conservation officer force, staffed below 194 levels, would grow by 24 officers. It currently has about 13 officers, compared with 135 in This in spite of the state s population doubling and the number of licenses issued tripling. There has also been a huge expansion in the duties of officers who now enforce everything from rules for all-terrain vehicles and personal watercraft to traditional game and fish laws. The DNR proposes taking a total of $1.5 million from the Water Recreation Account, the ATV Account and the Game and Fish Fund to hire more officers. Mississippi Whitewater Park $7, This appropriation would provide the 35% match needed to continue a cooperative project with the US Army Corp of Engineers to develop the build Mississippi Whitewater Park. DNR Dedicated Funds ($7.2 million) Lottery-in-Lieu ($7.2 million) The history of Lottery-in-Lieu funds is rooted in early 199s budget wrangling when the Legislature added a 6-½ cent sales tax on lottery tickets. This had the effect of siphoning off 6.5% of lottery proceeds to the state s general fund before the Environment and Natural Resources Trust Fund received its portion of the lottery profits. Three years ago the Legislature righted this raid and dedicated nearly all (97%) of the Lottery-in-Lieu funds to the DNR s Game and Fish fund, State and Metro Parks, Trails, and Zoos. This resulted in an increase of approximately $4 million per biennium to the DNR. In 21 and 22, the Legislature decreased the portion to 9% and 87.1%, respectively. The money freed up by lowering the percentage was used to fund Payment in Lieu of Taxes (PILT) to counties on state owned conservation lands. For the 24-5 biennium, the Governor recommends lowering the Lottery-in- Lieu percentage to 72.4% from 87.1%. This is a cut of $7.2 million per biennium in revenue going to these dedicated accounts. An estimated $6.4 million would be redirected to the general fund. The balance of $8, would go to the Department of Agriculture for work on chronic wasting disease. (See Attachment E for a list of Lottery-in-Lieu programs funded and the Governor s recommendations.) 16 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

19 DNR Proposed Fee Increases $8,195, Aquatic Plant Management Fee $776, This fee increases from $2 to $5 per applicant and the current $2 cap per water body is removed. Permits are issued for destruction of aquatic plants in order to allow property owners access to public waters. Currently, most of the cost of this is paid for from the Game and Fish fund. This increase will generate adequate dollars to pay for the costs of administering the program. Burning Permits $4, The department spends $17, per year to administer the burn permit program. This is done to ensure that burns are done safely in conjunction with wild fire prevention efforts. There is currently no fee for the permits. Under this proposal, a single burn event permit would be $6, four burn events would be $12 and expanded permit events would be $5. Camp Ripley Hunting, Wild Rice $4, A current fee of $6 to take part in a special deer hunt at Camp Ripley is raised to $8 under this proposal. The current fee does not cover deer management and hunt costs. Under the wild rice proposal, a resident permit would go from $12.5 to $25. New one-day permits would be $15 for residents and $3 for non-residents. Commercial Fishing Licenses $545, This proposal raises numerous commercial license fees to cover the cost of providing sustainable opportunities for the commercial fishing industry. For example, minnow retailers would pay $4 instead of $15, nonresident minnow haulers would pay $2,75 instead of $675 and a resident Lake Superior guide would pay $11 instead of $35. Exotic Species Surcharge/Water Recreational Enhancement $776, The fee on all watercraft licenses is increased from $5 to $7 to help manage harmful exotic species in the state s waters. PROPOSAL IS ELIMINATED IN THE MARCH 13, 23 BUDGET VERSION. Utility License Fee $4, Under this proposal, licenses for utilities to cross state lands and waters increase from $4 to $5 each. This will recover the costs of administering the program. State Park Camping Fee $1,468, Three camping fees are raised in this proposal along with the elimination of a mid-week senior citizen discount. Semi-modern sites rise from $12 to $15, rustics from $8 to $11 and forest from $9 to $11. The estimated increase would be split with $1,418, going to the Natural Resources Fund and $5, to the General Fund. Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version

20 Trout & Salmon Fishing $278, Under this proposal, the state trout and salmon stamp, now $8.5, would be increased to $1 to fund additional trout and salmon projects. Youth Hunting, Small Game, Stamps $1,88, This package of hunting license changes includes a cut in small game and deer licenses for kids. Youths 16 or 17 could buy a small-game license for half-price, and those 12 to 15 could buy a half-price deer hunting license. Resident deerhunting licenses would be increased by $1, nonresident licenses by $1 and resident small-game licenses by 5 cents, all to offset lost revenue to pay for new youth hunting licenses. State waterfowl and pheasant stamps, now $5 each would increase by $2.5 each generating an additional $475, a year that would be used to improve waterfowl and pheasant habitats and maximize habitat benefits available under the federal farm law. The $4 surcharge for small-game hunting licenses, used to pay for the acquisition and management of wildlife management areas, would increase by $2.5. The $738, a year would be used to accelerate wildlife management area acquisition and development. Water Use Fee $1,924, This will increase the fees for withdrawal and use of the state s ground and surface water by 38%. Proceeds are used for Division of Waters monitoring and research activities. This work provides some of the fundamental building blocks for sound water resource management both at the state and local level. Winter Aeration Permits $124, Under this proposal, lakeshore owners, fishing clubs, minnow dealers and others who do water aeration will be charged a $25 permit fee. This will cover costs of the program, including safety inspections, Thin Ice and Open Water signs and evaluation of aeration s impact 18 Understanding Minnesota Governor Pawlenty s Budget for Conservation & Environment Version 1.2

21 Conservation and Environment Agencies General Fund Budgets and Total Expenditures Five Year History Total - Conservation and Environment Agencies % Change (Gov Rec) * (Gov Rec) (Gov Rec) 1 to 5 General Fund 227,868, 174,3, 161,566, 151,916, 151,915, -33% Total Expenditures 554,315, 523,47, 599,757, 527,1, 524,72, -5% Agency Department of Natural Resources % Change (Gov Rec) (Gov Rec) (Gov Rec) 1 to 5 General Fund 124,756, 11,16, 15,615, 9,275, 9,275, -28% Total Expenditures 312,224, 279,653, 341,227, 3,465, 3,531, -4% Minnesota Pollution Control Agency % Change (Gov Rec) (Gov Rec) (Gov Rec) 1 to 5 General Fund 15,931, 13,74, 11,514, 14,819, 14,819, -7% Total Expenditures 9,667, 15,421, 124,54, 116,88, 116,772, 29% Office of Environmental Assistance % Change (Gov Rec) (Gov Rec) (Gov Rec) 1 to 5 General Fund 21,68, 18,38, 9,1, 14,785, 14,785, -32% Total Expenditures 26,23, 28,588, 29,735, 27,186, 27,234, 4% Department of Agriculture % Change (Gov Rec) (Gov Rec) (Gov Rec) 1 to 5 General Fund 41,924, 2,146, 23,45, 18,275, 18,275, -56% Total Expenditures 1,232, 86,18, 91,212, 68,269, 66,284, -34% Board of Soil and Water Resources % Change (Gov Rec) (Gov Rec) (Gov Rec) 1 to 5 General Fund 23,577, 2,757, 12,31, 13,762, 13,761, -42% Total Expenditures 24,989, 23,367, 13,79, 14,21, 13,881, -44% *Adjusted for 23 unallotments. Attachment A

22 Conservation and Environment Agencies General Fund Cuts Dedicated Fund Diversion General Cuts Department of Natural Resources $31,14, Pollution Control Agency $3,132, Office of Environmental Assistance $2,248, Board of Water and Soil Resources $7,721, Minnesota Department of Agriculture $7,491, Department of Trade and Economic Development (selected programs) $3,348, Minnesota Planning (selected programs) $32, Total General Cuts $55,382, Dedicated Fund Permanent Diversion Future Resources Fund $15,37, Lottery in Lieu $6,386, Environmental Trust Fund (Unclaimed Prizes) $4,448, Recycling Fund $5,44, Motor Vehicle Title Transfer Fee $7,282, Total Dedicated Fund Permanent Diversion $38,53, Attachment B

23 23 Governor's Supplemental Budget vs Unallotments 23 Budget 23 Unallotments Total Spending Cuts - Budget Reductions & Grant Cuts $12,515,792 $17,29, Budget Reductions Agriculture $829,237 $829, Board of Water & Soil Resources $13,39 $13, Natural Resources $3,818,713 $3,819, Office of Environmental Assistance $199,37 $49, Pollution Control Agency $422,496 $422, Total Budget Reductions $5,399,792 $5,69, Grant Cuts Agriculture $557, $657, County Fairs - Grants to Ag Assoc. $357, $357, Sustainable Agriculture Demo grants $14, $161, Short Rotation Woody Crop Grants $6, $55, Beaver Damage Control $ $45, Organic Cost Share $ $39, Board of Water & Soil Resources $1,167, $7,315, Local water planing and protection $1,167, $ Grants $ $7,15, Red River Program $ $3, NRBG Grants $ $ Minnesota Future Resource Fund $2,4, $ Cigarette tax money - 2 cents per pack $2,4, $ Natural Resources $23, $52, Taylors Falls Fire & Rescue $25, $25, Metro Greenways Grants $171, $171, Taconite Harbor - Safe Harbor Project $7, $7, Taconite Mining Grants $ $25, Aquatic Plant Restoration $ $49, Office of Environmental Assistance $21, $1,447, Project Implementation Grants $21, $1,447, Pollution Control Agency $2,579, $1,679, Clean Water Partnership $994, $994, County Feedlot Permit Program $468, $468, County Individual Sewage Treatment Systems $17, $17, Septic System Upgrades $1,1, $2, Total Grant Cuts $7,116, $11,6, Total One-time Cuts $13,3, $ 1998 Unspent Capital Cuts $2,3, $ Solid Waste Fund Balance $11,, $ Attachment C

24 Governor's Recommended General Fund Budget By Spending Area and for Selected Agencies Spending Area and Selected Agencies** 24-5 Budget Governor's Rec 11-2 Forecast 24-5 Local Government Aids $3,27,757, $2,632,519, Environment and Agriculture $514,299, $418,619, Dept of Natural Resources $29,316, $18,55, Pollution Control Agency $32,77, $29,638, Office of Envronmental Assistance $36,862, $29,57, Board of Soil and Water Resources $34,84, $27,523, Animal Health Board $5,66, $4,86, Agricultural Utilization Research Institute $7,458, $2,434, Horticulture Board $132, $ Science Museum $2,47, $618, Zoological Board $14,57, $13,114, Dept of Agriculture $42,698, $36,55, % Change -19.5% -18.6% -13.7% -9.6% -19.8% -19.2% -14.3% -67.4% -1.% -75.% -1.% -14.4% Economic Development $39,662, Arts Board $25,232, DETD/ Dept of Economic Security (merged) $128,956, Housing Finance $79,982, Humanities Commission $1,99, Mediation Services $4,554, MN Technology $1,71, MN Historical Society $53,638, $325,553, $2,186, $18,99, $69,47, $ $3,65, $ $45,592, -16.7% -2.% -15.5% -13.1% -1.% -19.9% -1.% -15.% Transportation $184,932, $161,54, Dept. of Transportation $36,46, $32,441, Public Safety Dept. $156,893, $136,286, Metropolitan Council $125,772, $112,266, -12.9% -1% -13.1% -11% Higher Education University of Minnesota/MNSCU $2,91,948, $2,552,456, $1,297,585, $1,93,575, -12.3% -15.7% Health and Human Services $7,84,289, $7,21,557, Human Services Dept $7,689,933, $6,91,149, Health Department $135,696, $119,124, Criminal Justice $1,524,986, $1,386,591, Corrections $774,91, $719,188, State Courts $462,69, $416,448, Dept. of Human Rights $7,882, $7,13, Public Defense Board $17,182, $91,15, Public Safety Dept. $156,893, $136,286, -1.4% -1.3% -12.2% -9.1% -7.2% -1.% -9.5% -15.% -13.1% **The list of individual agencies within each spending area is a representative sample, but not all agencies are shown. Therefore, the budgets for the listed agencies do not equal the total budget for the spending area. Attachment D 1

25 Governor's Recommended General Fund Budget By Spending Area and for Selected Agencies Spending Area and Selected Agencies** 24-5 Budget Governor's Rec 11-2 Forecast 24-5 State Government $66,346, $56,741, Administration $48,362, $43,942, Amateur Sports Commission $1,234, $1,5, Constitutional Officers $99,782, $8,846, Employee Relations $14,42, $12,236, Finance Dept. $31,38, $3,432, Legislature $128,756, $19,438, MN Planning $8,856, $7,528, Military Affairs $24,944, $24,558, MN State Retirement System $15,212, $1,583, Revenue $181,366, $175,432, Veteran's Affairs $8,848, $8,122, % Change -7.5% -9.1% -14.9% -19.% -15.% -3.% -15.% -15.% -1.5% -3.4% -3.3% -8.2% E-12 Education Department of Education Perpich Center for the Arts MN State Academies $12,876,472, $12,581,722, $12,835,73, $12,188,134, $15,632, $13,287, $23,42, $21,945, -2.3% -5.% -15.% -4.8% **The list of individual agencies within each spending area is a representative sample, but not all agencies are shown. Therefore, the budgets for the listed agencies do not equal the total budget for the spending area. Attachment D 2

26 Lottery in Lieu Governor's Recommendations Appropriations Enforcement Equipment Fuel Cost Vacancies DNR Division Subtotal Enforcement Biennium Biennium * Base Gov Rec Biennium (non-base) Total 1,328, 35, 1,2, 2,878, 2,274, 2,274, Wildlife Main or parent appropriation Prescribed Burn Prairie Grassland Development Forest Habitat Restore Wetland Basin Population Research Wolf Management Brushland Habitat WMA Development Waterfowl in Canada Prairie Chicken Technical Assistance WMA Habitat Improvement Grants Subtotal Wildlife Ecological Services County Biological Survey Expand Nongame Wildlife Ecological Services Information Prairie Stewardship Develop Education Products Forest Birds Subtotal Ecological Services Fisheries Walleye Stocking Fisheries Projects Metro Fishing Opportunity Aquatic Habitat Hatcheries Fisheries Acquisitions Field Positions Powderhorn Lake Stream Protection Grants Aquatic Plant Restoration Subtotal Fisheries Forestry Oak Wilt Grants Subtotal Forestry 35, 5, 475, 4, 525, 6, 19, 25, 15, 7, 6, 95, 1,895, 6,325, 5,4, 5,4, 1,3, 44, 374, 148, 2, 35, 2,812, 2,47, 2,47, 1,16, 3,96, 5, 3, 1,, 1,, 3, 134, 85, 1,36, 1,186, 3,36, 4,58, 7,814, 6, 47, 47, Attachment E 1