SB0787: CONFERENCE REPORT (Date Completed: 5-26-16) - FY 2016-17 ENVIRONMENTAL QUALITY BUDGET

FY 2016-17 ENVIRONMENTAL QUALITY BUDGET S.B. 787 (CR-1): CONFERENCE REPORT

			CHANGES FROM FY 2015-16 YEAR-TO-DATE
FULL-TIME EQUATED (FTE) CLASSIFIED POSITIONS/FUNDING SOURCE	FY 2015-16 YEAR-TO-DATE	FY 2016-17 CONFERENCE	AMOUNT	PERCENT
FTE Positions..............................................................	1,220.0	1,232.0	12.0	1.0
GROSS.........................................................................	499,995,800	513,549,400	13,553,600	2.7
Less:
Interdepartmental Grants Received.....................	9,115,300	9,225,700	110,400	1.2
ADJUSTED GROSS..................................................	490,880,500	504,323,700	13,443,200	2.7
Less:
Federal Funds..........................................................	138,079,100	138,687,200	608,100	0.4
Local and Private....................................................	546,000	555,300	9,300	1.7
TOTAL STATE SPENDING.......................................	352,255,400	365,081,200	12,825,800	3.6
Less:
Other State Restricted Funds................................	305,341,200	317,344,800	12,003,600	3.9
GENERAL FUND/GENERAL PURPOSE..............	46,914,200	47,736,400	822,200	1.8
PAYMENTS TO LOCALS..........................................	14,685,000	3,750,000	(10,935,000)	(74.5)

FY 2015-16 Year-to-Date Gross Appropriation.....................................................................

$499,995,800

Changes from FY 2015-16 Year-to-Date:
Items Included by the Senate and House
1. Clean Michigan Initiative (CMI) - High Priority Cleanups. The Governor, House, and Senate included additional CMI bond proceeds which would use most of the remaining statutory allocation for response activities at sites deemed a high priority by the Department.	14,900,000
2. Water Withdrawal Assessment Program. The Governor, House, and Senate included $800,000 in Clean Michigan Initiative - Clean Water Fund appropriations to increase the scope of this program. The program models the effects on large-scale water withdrawals on local water tables and water availability for residential wells. The Governor's total for FY 2016-17 for this program, including this increase, is about $2.2 million.	800,000
3. Drinking Water Revolving Loan Fund - State Match. The Governor, House, and Senate included additional one-time GF/GP appropriations to draw down all available Federal funds for the Drinking Water Revolving Fund program. The program provides low-interest loans to municipalities for improvements to drinking water infrastructure. The exact amount of funds available for this program is contingent on the Federal budget for FY 2016-17, but the average for this program is about $30.0 to $35.0 million.	2,950,000
4. Flint Declaration of Emergency. The Governor, House, and Senate included a one-time appropriation including 10.0 FTEs for efforts related to Flint water issues. The proposal is comprised of three parts: $1.5 million and 10.0 FTEs for corrosion control specialists, sampling staff, lab staff, and service line verification staff; $3.9 million for three months of water payments to the Great Lakes Water Authority for Flint's water; and a $100 placeholder for the Flint Emergency Reserve Fund. That fund was proposed as part of Supplemental Request 2016-6, which would appropriate $50.0 million from the State General Fund to a new Flint Emergency Reserve Fund in the Department of Technology, Management and Budget. Part or all of that funding could then be authorized for expenditure in the DEQ budget through a contingency fund transfer by the Legislature.	5,400,100
5. Contaminated Lake and River Sediment Cleanup. The Governor, House, and Senate included additional one-time CMI-Contaminated Sediments appropriations to fund cleanups of toxic sediment from rivers, lakes, and streams. Typically about $1.5 million is appropriated each year for these purposes. This increase would increase that by about half for FY 2016-17.	700,000
6. Environmental Bond Site Reclamation Program. The Governor, House, and Senate removed appropriations for this program, as the underlying fund source, part of the 1998 Clean Michigan Initiative bond program, has been depleted.	(126,800)
7. Brownfield Grants. The Governor, House, and Senate removed appropriations for this program. Funding currently comes from the CMI allocation for response activities; the Governor proposed repurposing the remainder of these funds toward high priority cleanups.	(1,500,000)
8. Removal of Five-Year Early-Out Deferred Sick Leave Payments. Department obligations will be satisfied as of FY 2015-16 for employees who opted into the 2010 early retirement program, which deferred sick leave payments over five years.	(243,300)
9. Office of Oil, Gas, and Minerals. $5.4 million in Oil and Gas Regulatory Fund appropriation authority was removed from the Office of Oil, Gas, and Minerals as low oil prices have reduced revenue to this fund. The Governor, House, and Senate included a total of $10.8 million for this program.	(5,385,600)
10. Remove FY 2015-16 Supplemental Appropriation. The Governor, House, and Senate removed $13.1 million in FY 2015-16 appropriations for Flint water issues. These appropriations were related to one-time expenditures for the following: Reconnection of Flint's water to the Detroit Water and Sewerage Department ($6.3 million); increased water testing of homes in Flint ($1.0 million); aid to the City of Flint for unpaid water bills ($3.0 million); Flint water system needs ($2.0 million); Flint water infrastructure study ($500,000); DEQ lab testing costs ($250,000); and Flint water corrosion control ($36,500).	(13,086,500)
11. Economic Adjustments. Includes $788,800 Gross and $122,800 GF/GP for OPEB and $2,806,900 Gross and $429,700 GF/GP for other economic adjustments.	3,595,700
Conference Agreement on Items of Difference
12. Leaking Underground Storage Tank Cleanups. The Governor and Senate included additional Refined Petroleum Fund revenue in the DEQ budget to address leaking underground storage tanks. This item also appears in the budget for the Department of Agriculture and Rural Development (DARD), where the money is currently used to support the Weights and Measures program. GF/GP would be used in DARD to replace this revenue.	1,500,000
13. Oil and Gas Regulatory Fund Replacement. The Governor and Senate included additional one-time GF/GP appropriations to replace appropriations from this fund for the Office of Oil, Gas, and Minerals. The Fund normally provides much of the revenue necessary to operate the Office, which oversees regulation of mineral extraction in the State. However, low oil prices have reduced Fund revenue, which is based directly on the market value of extracted minerals.	4,000,000
14. Statewide School Water Testing for Lead. The House included $9,000,000 GF/GP for lead testing in public and private schools on municipal water systems. The Conference did not include this funding.	0
15. Saginaw River Dredging. The Conference included GF/GP for Phase I of a project to dredge parts of the Saginaw River to facilitate freighter traffic.	50,000
16. FY 2016-17 One-Time Gross Appropriations. The Conference report contains the following one-time appropriations: $700,000 for contaminated lake and river sediment cleanup, $5,400,100 for the drinking water declaration of emergency, $4,000,000 for the Office of Oil, Gas, and Minerals, $50,000 for dredging on the Saginaw River, and $2,950,000 for Federal match for the Water Pollution Control and Drinking Water Revolving Fund.

Total Changes.....................................................................................................................	$13,553,600
FY 2016-17 Conference Report Ongoing/One-Time Gross Appropriation.............................	$527,103,000
Amount Over/(Under) GF/GP Target: $0

Boilerplate Changes from FY 2015-16 Year-to-Date:

Items Included by the Senate and House

1. Communication with the Legislature. The Governor removed, and House and Senate retained a prohibition against taking disciplinary action against Department employees who communicate with the Legislature. (Sec. 220)

2. Rule Promulgation - Small Business Impact. The Governor removed, and House and Senate retained a prohibition against the promulgation of rules that would have a disproportionate impact on small businesses. (Sec. 221)

3. Refined Petroleum Fund Repayment. The Governor removed, and House and Senate retained a statement of legislative intent that the $70.0 million transferred to the Environmental Protection Fund from the Refined Petroleum Fund in FY 2006-07 be repaid. (Sec. 305)

4. Refined Petroleum Fund Site List. The Governor removed, and House and Senate retained a section detailing the RPF sites that would be funded in the budget. (Sec. 306)

5. Brownfield Grant Work Project. The Governor, House, and Senate removed a section allowing for Brownfield grant appropriations to be carried forward as a work project. (Sec. 309)

6. Groundwater Discharge Permit Fee Structure. The Governor, House, and Senate removed a requirement that the Department work with stakeholders to revise the fee structure for this program. (Sec. 406)

7. CMI - Contaminated Sediment Cleanup Work Project. The Governor included a new section containing work project carryforward language for this appropriation. The House and Senate included this section. (Sec. 407)

8. Air Quality Fee Increase - Hire Program Supervisor for Upper Peninsula. The Governor, House, and Senate removed a requirement that part of the air quality fee increase revenue be used to hire a program supervisor for the Upper Peninsula. (Sec. 501)

9. Flint Declaration of Emergency. The Governor included a new section requiring that funds appropriated for this purpose be used to keep Flint on the Detroit water system and for staffing, lab, testing, and contract costs. The House and Senate included this section, but revised it slightly. (Sec. 801)

Conference Agreement on Items of Difference

10. Metrics for New/Increased Programs. The Governor and House removed, and Senate and Conference retained a requirement that proposals for new programs or increases over $500,000 be accompanied by proposed metrics. (Sec. 215)

11. Report Retention. The Governor and House removed, and Senate retained a requirement that reports be retained according to State and Federal laws. The Conference removed this item. (Sec. 218)

12. FTE Report. The Governor and House removed, and Senate retained an annual report on the number of funded full-time equated (FTE) positions in the Department. The Conference removed this item. (Sec. 223)

13. Clean Michigan Initiative (CMI) Report. The House included a new reporting requirement on projects funded by CMI funds and remaining CMI balances. The Conference included this item. (Sec. 235)

14. Kalamazoo River Oil Spill Settlement Funds. The Governor and House removed, and Senate retained a report on the use of settlement funds from the 2010 oil spill on the Kalamazoo River. The Conference removed this item. (Sec. 311)

15. Statewide School Water Testing for Lead. The House included a new section requiring the DEQ to develop a statewide plan to test for lead in drinking water in public and private schools, as well as to provide reimbursement for testing. The Conference did not include this item. (Sec. 312 of House DEQ budget)

16. PFC Cleanup Criteria. The Senate included a new section requiring a study on the long-term effects of per fluorinated compounds (PFCs), and for the Department to develop cleanup criteria for PFCs. The Conference included this item. (Sec. 312)

17. Water Quality and Use Initiative - Spending Plan. The Governor and Senate removed, and House and Conference retained a requirement that a spending plan be established for this program. (Sec. 402)

18. Lake Erie Basin Collaborative Agreement. The Senate included a new report on the implementation plan for the Lake Erie Collaborative Agreement. The Conference included this item. (Sec. 410)

19. Statewide Septic Code Progress Report. The House included a new report on the development of a statewide sanitary septic code. The Conference did not include this item. (Sec. 601 of House DEQ budget)

20. Geological Resources Study and Advisory Committee. The House included a new section requiring the DEQ to conduct a study and mapping of Michigan's geological resources. The section also creates an advisory committee to develop a work plan for the study. The Conference did not include this item. (Sec. 604 of House DEQ budget)

21. Flint Supplemental Funding Report. The House included a reporting requirement on supplemental appropriations made in Public Act 143 of 2015 and Public Act 3 of 2016. Both Acts appropriated funds to address the Flint water crisis. The Conference included this item. (Sec. 803)