The 2021-22 Budget: Department of Toxic Substances Control

The 2021-22 Budget: Department of Toxic Substances Control SUMMARY In this analysis, we assess the Governor’s 2021-22 proposed budget for the California Department of Toxic Substances Control (DTSC). Specifically, we make recommendations and provide issues for legislative consideration regarding the Governor’s proposals to (1) establish a Board of Environmental Safety within DTSC, (2) restructure and increase charges that support the Hazardous Waste Control Account (HWCA), (3)restructure and increase the tax that supports the Toxic Substances Control Account (TSCA), and (4)provide funding to support brownfield cleanups and investigations across the state. While the Governor presents all four of these proposals as one interrelated package, we recommend the Legislature consider the merits of each proposal separately. In particular, we do not believe the Legislature should view the decision whether to provide General Fund to clean up brownfields as being contingent on reforming DTSC’s fiscal and governance structure. We recommend the following: • Board of Environmental Safety. We recommend the Legislature authorize the establishment of a new oversight board in order to improve transparency and promote greater accountability of DTSC. However, we recommend the Governor’s proposal be modified to provide for legislative appointment of some board members, make board members subject to Senate confirmation, and require the board to report annually to the Legislature on the department’s performance. • Structural Shortfall of HWCA. We recommend the Legislature approve the Governor’s proposals to (1) provide $22.5 million in one-time General Fund to address the funding gap in the budget year, (2)restructure and increase HWCA charges, and (3) authorize the new board to set future charge levels. • Structural Shortfall of TSCA. We recommend the Legislature (1) approve $13 million in one-time General Fund to address the funding shortfall in the budget year, (2) consider a tax level and structure that reflects legislative priorities, and (3) authorize the new board to set future tax levels. • Brownfield Cleanups. We recommend the Legislature consider how the proposal aligns with its priorities, including what it views as the most important objective for cleaning up brownfields— addressing serious environmental risks or remediating parcels to develop for new housing. GABRIEL PETEK LEGISLATIVE ANALYST MARCH 2021 analysis full gutter BUDGET OVERVIEW DTSC is charged with protecting the people of brownfields across the state, with a special California and the environment from the harmful focus on remediating sites to develop effects of toxic substances by cleaning up new housing. contaminated resources, enforcing hazardous waste • Exide Residential Cleanup ($31.4 Million). laws, reducing hazardous waste generation, and The Governor’s budget includes a loan from encouraging the manufacture of chemically safer the General Fund for DTSC to finish cleaning products. up lead contamination at the 3,200 high-risk Proposes $597 Million for DTSC in 2021-22. As properties identified around the former Exide shown in Figure 1, the Governor’s budget proposal Technologies facility. reflects a $270 million (82 percent) increase • Structural Shortfall of HWCA ($22.5 Million). compared to estimated current-year expenditures. The Governor proposes budget trailer The increase is largely attributable to a proposal to legislation to restructure and increase provide $300 million on a one-time basis from the HWCA charges, as well as one-time General General Fund to clean up “brownfields”—properties Fund resources to keep the fund solvent that are underutilized due to the presence or in the budget year until changes are fully potential presence of hazardous substances, implemented. pollutants, or contaminants—within DTSC’s Site • Exide Cost Recovery ($16.5 Million). The Mitigation and Restoration Program. Governor proposes $2.5 million ongoing Major Proposals. The Governor’s budget from the Lead-Acid Battery Cleanup Fund package includes several significant policy and for DTSC and $14 million in one-time General funding changes, several of which are discussed in Fund resources—$12.9 million for the greater detail later in this analysis: Attorney General’s Office and $1.1 million for outside bankruptcy counsel—to support cost • Brownfield Cleanups ($300 Million). recovery efforts related to the former Exide The Governor proposes one-time General Technologies facility. Fund spending to investigate and clean up Figure 1 Department of Toxic Substances Control Budget Summary (Dollars in Millions) Change From 2020-21 2019-20 2020-21 2021-22 Fund Source Actual Estimated Proposed Amount Percent Total $301 $328 $597 $270 82% By Program Site mitigation and restoration $103 $162 $439 $277 172% Hazardous waste management 90 84 90 6 8 Exide Technologies Facility contamination cleanup 91 66 47 -19 -29 Safer Consumer Products 15 15 16 1 7 Board of Environmental Safety — — 3 3 300 State Certified Unified Program Agency 2 2 2 — 29 By Fund Source General Fund $56 $78 $383 $305 389% Special funds 215 216 179 -37 -17 Federal funds 30 33 35 2 5 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET • Structural Shortfall of TSCA ($13 Million). • Board of Environmental Safety ($3 Million). The Governor’s proposal includes budget The Governor proposes one-time General trailer legislation to restructure and increase Fund resources and budget trailer legislation the tax that supports TSCA, along with to establish a Board of Environmental Safety one-time General Fund resources to keep within DTSC. the fund solvent in the budget year until the changes are fully implemented. BOARD OF ENVIRONMENTAL SAFETY Background basis from the General Fund to staff the board in 2021-22. Administrative costs for the board Independent Review Panel (IRP) would be funded from TSCA and HWCA in future Recommended Establishing Oversight Board for years. The five-member board would be composed DTSC. In 2015, the Legislature enacted Chapter 24 of a full-time chairperson and four part-time (SB 83, Committee on Budget and Fiscal Review), paid members. Additionally, the board would be which established within DTSC a three-member IRP supported by 12 staff performing a combination to assess the department’s performance in various of technical and administrative duties. Beginning areas of operations and administration, as well in January 2022, the board would be required to as to make recommendations to improve DTSC’s conduct no fewer than six public meetings per year. programs. One of the IRP’s recommendations Board Would Have Several Key in its final report (issued in January 2018) was to Responsibilities. The Governor’s proposed establish an oversight board or to consider other budget trailer legislation specifies the board’s structural changes to improve the accountability and responsibilities, including the following functions: transparency of DTSC. Both Governor and Legislature Proposed • Set Annual Charges for HWCA and TSCA Oversight Board in 2020-21. The Governor’s Based on Budgeted Appropriations. The 2020-21 budget included a proposal that would board would adopt regulations to establish a have established a new oversight board within schedule of charges for (1) hazardous waste DTSC. (The proposal also included fiscal reform of facilities, generators, and handlers subject to HWCA and TSCA.) The Legislature did not adopt this HWCA charges and (2) entities subject to the proposal in its final budget package. Additionally, tax that supports TSCA. The board would be in September 2020, the Legislature passed authorized to update these charges annually AB 995 (C. Garcia), which would have created a beginning in 2023-24, based on legislative new governance board for the department, along changes to appropriation levels. with other policy changes. The Governor vetoed • Hear and Decide Permit Appeals. The board this legislation, citing that DTSC would be unable would hear and decide appeals of hazardous to deliver on the proposed changes without also waste facility permit decisions made by DTSC. implementing a full fiscal reform. • Provide Opportunities for Public Hearings. The board would be required to hold public Governor’s Proposal hearings on DTSC’s actions pertaining to Establish Board of Environmental Safety. The individual permitted or remediation sites. Governor again proposes budget trailer legislation • Provide Direction to DTSC. The board would to establish a Board of Environmental Safety review and approve the director’s annual within DTSC, as well as $3 million on a one-time priorities—including performance metrics— www.lao.ca.gov 3 analysis full gutter for each of DTSC’s programs. The director and provide the public and stakeholders with a would provide annual updates to the board on regular venue to raise issues and discuss their the department’s progress towards meeting concerns. The board structure could also help these priorities. to promote greater accountability by requiring • Develop a Multiyear Schedule for the DTSC director to regularly report on the Discussion of Long-Term Goals. The department’s progress towards meeting annual board would discuss long-term goals for priorities and long-term goals. various components of DTSC’s operations, Governor’s Proposed Board Differs including improvements to (1) the efficiency Somewhat From Legislature’s Approach. While of DTSC’s hazardous waste facility permitting largely mirroring the board structure the Legislature process, (2) DTSC’s ability to meet its duties would have established through AB 995, the board and responsibilities, (3) the site mitigation proposed by the Governor would differ from the program and how contaminated properties Legislature’s approach in the following ways: are prioritized for cleanup, and (4) DTSC’s • Board Would Establish Future Charge implementation of its enforcement activities. Levels for HWCA and TSCA. The • Provide Ombudsperson Services to the Legislature’s approach required the Secretary Public and Regulated Community. The of CalEPA to convene a task force to review legislation would establish an Office of the the revenue structures that support HWCA Ombudsperson within the board to (1) receive and TSCA and to report recommendations to complaints and suggestions from the public, the Legislature for future changes through the (2)evaluate complaints, (3) report findings and budget process. In contrast, the Governor’s make recommendations to the director and the proposal empowers the board to make future board, and (4) provide assistance to the public changes based on legislative appropriation when appropriate. levels. (We discuss the proposed changes • Annual Report to Secretary of CalEPA. to these charges in greater detail later in this The board would be required to transmit to report, raising several issues for legislative the Secretary of the California Environmental consideration. We find that providing the Protection Agency (CalEPA) an annual review board with authority to administratively adjust of the department’s performance. charges is reasonable.) Governor’s Proposal Includes Several Policy • Board Would Be Under DTSC, Not CalEPA. Changes. The Governor’s proposed budget trailer The Legislature’s approach would have had legislation also includes several policy changes the board report directly to the Secretary of for the department—many of which were not CalEPA, whereas the Governor proposes included in his 2020-21 proposal but were included having the board housed within DTSC. in AB 995. These changes would implement the • Board Member Appointments Would following: (1) require the department to update Not Require Legislature’s Approval. The a state hazardous waste management plan by Governor would not require any of the five March 2027 and every three years thereafter; board members to be appointed by the (2)accelerate time lines for the department to Legislature or receive Senate confirmation, complete hazardous waste facility permit renewals, whereas the Legislature’s approach would as well as implement other accountability measures; have required that three board members be and (3) strengthen financial assurance requirements subject to Senate confirmation, one member for entities who handle hazardous waste. be appointed by the Senate Rules Committee, and one member be appointed by the Speaker Assessment of the Assembly. Concept of Establishing a Board Has Merit. • Board Member Qualification Requirements A board that holds regular public meetings could Slightly Different. The Governor would improve transparency around DTSC’s operations require one board member to be selected from 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET the general public, whereas the Legislature’s Governor’s Proposal Now Reflects Some approach would have required professional Other Legislative Priorities. The Governor’s qualifications for all members. 2021-22 proposal incorporates many of the policy • No Annual Report to the Legislature. changes that were adopted in AB 995 that were Assembly Bill 995 would have required the not included in the administration’s approach from board to transmit to the Legislature and the last year, such as requiring DTSC to update the Secretary of CalEPA an annual review of the statewide hazardous waste management plan. department’s performance measured against The inclusion of these changes better aligns the the board’s objectives, whereas the Governor’s administration’s proposal with priorities that the proposal only requires reporting to the Legislature has previously identified as being Secretary of CalEPA. important reform measures for DTSC. Governor’s Proposal Excludes Components Recommendation That Could Increase Transparency and Approve Proposal to Establish Board, but Accountability to Legislature. Three of the Include Components That Increase Legislative AB 995 provisions that the Governor’s proposal Oversight. We recommend the Legislature establish leaves out could provide opportunities to a board in order to improve DTSC’s transparency increase the proposed board’s accountability and and accountability, and thereby help restore transparency to the Legislature. Specifically, the confidence in the department within the regulated Governor’s approach denies the Legislature the community and the public. However, we recommend opportunity to (1) appoint board members, (2) vet that the Legislature require that (1) the Senate and and approve the Governor’s board appointees Assembly each have the opportunity to appoint a through the Senate confirmation process, and board member, (2) gubernatorial board members (3)be provided a required annual report on DTSC’s be subject to Senate confirmation, and (3) the performance. Given that increasing oversight over board report annually to the Legislature on the DTSC has been a high priority for the Legislature, department’s performance. These changes would these differences contained in the Governor’s strengthen the Legislature’s ability to oversee the proposal would limit the extent to which a new board and department and ensure that the reforms board would reflect legislative priorities and being implemented are resulting in performance and enable the Legislature to stay informed about outcome improvements. DTSC’s progress. STRUCTURAL SHORTFALL OF HWCA Background disposal entities, and other facilities that handle hazardous waste. Figure 2 on the next page lists HWCA Primarily Funds DTSC’s Regulatory the major revenue sources for HWCA and provides Activities. HWCA is one of the department’s two a brief description of each. As shown, the amounts major special funds. The fund primarily supports charged ranges due to differing rate structures. For the department’s Hazardous Waste Management instance, the generator fee is an annual charge that Program, which regulates the generation, storage, is tiered based on the amount of hazardous waste transportation, and disposal of hazardous waste an entity generates. While these charges generally through permitting, compliance monitoring, and are applied to the different categories of businesses enforcement of noncompliance. displayed in the figure, in some cases exemptions HWCA Receives Revenues From Several Fees. apply. For example, hazardous waste generators HWCA currently receives revenues from various that generate fewer than five tons of waste annually fees levied on hazardous waste generators, waste are not required to pay the generator fee. Major www.lao.ca.gov 5 analysis full gutter revenue sources for HWCA totaled about $47 million Governor’s 2020-21 budget included a proposal in 2019-20 and are anticipated to be roughly the to restructure and increase charges that support same amount in 2020-21. Combined with revenues HWCA. The proposed HWCA reform ultimately was from other sources, such as cost recovery charges, not included in the budget package approved by total revenues for HWCA were roughly $56 million in the Legislature. Assembly Bill 995 also included 2019-20—not including the General Fund backfills a HWCA reform component that would have discussed below. restructured and increased charges in a way that HWCA Faces Structural Imbalance. In was nearly identical to the Governor’s proposal. recent years, the growth in expenditures from Assembly Bill 995 also would have required the HWCA has outpaced the growth in revenues, Secretary of CalEPA to convene a task force to creating a structural imbalance in the fund. The review the charges under HWCA and to provide administration indicates these trends are primarily recommendations to the Legislature on additional due to increasing statutory requirements and reform options for the future. As noted earlier, responsibilities for the department, as well as AB 995 was vetoed by the Governor. increasing operational costs that have exceeded Department’s Workload Analysis Indicates inflationary adjustments to the fees that support Resource Gaps. In January 2021, the department HWCA. For instance, Chapter 611 of 2015 (SB 673, released a workload analysis that provided Lara) required DTSC to establish and implement information on DTSC’s current staffing, funding, new permitting criteria to improve enforceability, and workload, as well as a discussion of identified transparency, and equity in permit decisions. resource gaps for high-priority programs and The total costs associated with DTSC’s activities activities. The analysis identified roughly $20 million supported by HWCA are estimated to be about in resource gaps within the Hazardous Waste $77.5 million in 2020-21. To meet its costs and keep Management Program—the program primarily the fund solvent, DTSC received General Fund supported by HWCA—of which a significant portion backfills for HWCA totaling $27.5 million in 2019-20 was related to shortcomings in the department’s and $19.5 million in 2020-21. ability to inspect hazardous waste facilities and Both Governor and Legislature Sought to to pursue enforcement cases for violations. This Address HWCA Imbalance in 2020-21. The assessment suggests that even with the recent Figure 2 Major Revenue Sources for HWCA Under Current Law 2019-20 Revenue Feea Payer Charge (Millions) Generatorb Generators who produce five or more tons of hazardous waste annually. $250 to $100,000 $26.8 Disposalb Generators who send hazardous waste to authorized disposal facilities $6 per ton to $310 per ton 6.5 in the state. EPA identification Businesses with 50 or more employees that require an identification $150 to $250 5.7 verification number from DTSC or U.S. EPA. Facilityb Any facility with a permit from DTSC to treat, store, or dispose of $2,300 to $355,000 5.6 hazardous waste. Manifest user Businesses that use hazardous waste manifests to track the shipment of $3.50 per manifest to 2.3 hazardous waste. $7.50 per manifest Total $46.8 a Certain exemptions exist for some fees. b Adjusted annually for inflation based on the Consumer Price Index. HWCA = Hazardous Waste Control Account; DTSC = Department of Toxic Substances Control; and U.S. EPA = United States Environmental Protection Agency. 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET General Fund backfills, HWCA is not providing These changes would take effect in 2022 and sufficient resources to enable DTSC to meet its provide additional revenue for 2022-23. Figure 3 statutorily required regulatory workload. shows the additional revenues the restructured and increased charges would provide for HWCA. Governor’s Proposal As shown, the administration estimates that its General Fund Transfer to Address HWCA proposal would provide an additional $49.6 million Shortfall in 2021-22. The Governor’s budget for HWCA starting in 2022-23, more than doubling proposes to transfer $22.5 million from the General the amount of revenue from the existing fees, Fund in 2021-22 to keep HWCA solvent. This would enough to close the structural deficit and to allow the department to continue its regulatory accommodate new spending. activities at existing levels in the budget year. Eliminates Some Exemptions, but Continues Short-term funding is needed since the proposal to Exempt Smaller Generators From Paying. to raise HWCA charges—discussed below—would The Governor’s proposal would eliminate various not take full effect in the budget year, resulting in exemptions that currently exist for both the a lag before sufficient new revenues materialize. facility and generator fees. For example, current With the proposed General Fund augmentation, exemptions for entities that handle used oil would be HWCA would begin the 2021-22 fiscal year with an eliminated under the new generation and handling estimated fund balance of $8.6 million and end the fee. However, the proposal would continue to year with an estimated balance of $1.3 million. allow entities that generate less than five tons of HWCA Charge Restructure and Increases to hazardous waste per year to be exempt from paying Take Effect in 2022-23. The Governor proposes the generation and handling fee. This is a change budget trailer legislation that would make four from the Governor’s 2020-21 proposal, which would significant changes to the existing HWCA fee have removed that exemption. The department structure: states it is proposing to retain this exemption to minimize the economic impact on small businesses • Replace the existing generator, disposal, EPA that are recovering from the pandemic. Moreover, identification verification, and manifest user the department indicates that the administrative fees with a new generation and handling fee. costs associated with collecting payments from The new generation and handling fee would be these smaller generators would outweigh the based on a price-per-ton model—instead of revenues it estimates it could collect. Because the the current tiered model—and set at $46 per ton. Figure 3 • Increase the existing facility Projected Revenue Increases Under Governor’s fees. The primary facility HWCA Proposal fees would more than double 2022-23 (In Millions) under the administration’s proposal. Currenta Proposed • Eliminate various exemptions Existing Fees Revenue Updated Fees Revenue for which entities are subject Generator $26.2 Generation and handling $80.9 to paying the charges. Disposal 6.4 EPA ID verification 5.5 • Revise the timing of Manifest 2.2 payments to coincide with Subtotal ($40.3) Subtotal ($80.9) the fiscal year in which the Facility $5.6 Facility $14.6 Legislature appropriates the Total $45.9 Total $95.5 department’s funding (rather a Administration’s estimates for fee revenues if no reforms were adopted. than by calendar year, which HCWA = Hazardous Waste Control Account and EPA ID = Environmental Protection Agency Identification. is how current payments are structured). www.lao.ca.gov 7 analysis full gutter proposal retains this exemption, the administration in future years beginning in 2023-24. This would believes that a vote on the HWCA reform package allow revenues to keep pace with growth in DTSC’s would require a two-thirds vote of the Legislature. regulatory workload. Specifically, the board would Revenue Increases Address Structural Deficit set charges annually to align HWCA’s revenues and Provide for Additional Program Spending. with the amount of expenditures authorized by As shown in Figure 4, the administration intends the Legislature through the annual budget act. to use the additional $49.6 million in new HWCA The administration indicates that the board would revenues to (1) address the structural deficit in hold public meetings following the release of the the fund ($22.5 million), (2) provide additional Governor’s January budget and May Revision to funding to address resource gaps identified in the discuss how proposals would affect the level of department’s workload analysis ($22.5 million), charges, with adjustments officially being made in (3) build reserve levels within the fund ($3.1 million), the fall after the budget act is passed. While the and (4) provide ongoing funding for administrative board would have the authority to set these charges costs related to the new board ($1.5 million). annually, the administration’s proposed language The amounts intended to be used for increased sets a maximum level for each charge. These caps programmatic expenditures and the board reflect would be set two times higher than the rates being the department’s current estimates. However, the proposed for 2022-23. For instance, the initial rate use of these funds would need to be authorized in for the generation and handling fee would be set at the 2022-23 budget based on proposals submitted $46 per ton, and the maximum charge level would to and approved by the Legislature. That is, the be set at $92 per ton. The caps would be adjusted proposal currently before the Legislature would annually for inflation according to the Consumer authorize charge increases to generate an additional Price Index beginning in 2024-25. If in some $22.5 million for the workload expansions but not future year the board has set charge levels at the the authority to spend those revenues. maximum allowable amount and finds that revenues are insufficient to meet the department’s regulatory New Board Would Establish Future HWCA workload and legislatively authorized expenditure Charge Levels According to Appropriation levels, then the Legislature would need to take Authority Set by Legislature. The Governor additional action to authorize higher charges. would grant the proposed Board of Environmental Safety with authority to set charge levels for HWCA Assessment Figure 4 General Fund Support Would Keep HWCA Solvent in 2021-22. The proposed one-time Proposed Uses of New HWCA General Fund backfill of $22.5 million would keep Revenues Beginning in 2022-23 HWCA solvent in the budget year and allow DTSC to (In Millions) continue undertaking its existing level of activities. Expenditures Amounts Because of the delay in when the restructured charges and increases go into effect, providing Address HWCA structural deficit $22.5 Additional program spending 22.5 short-term funding for the fund likely is necessary if Enforcement 6.0 the Legislature wants DTSC to continue performing Federal delegation requirements 4.0 its regulatory function at existing levels in 2021-22. Criminal investigations 4.0 Proposal Would Solve Existing Shortfall. The Legal services 2.5 Governor’s proposal would address the structural Information technology systems 2.5 problems within HWCA on an ongoing basis starting Permitting 2.0 in 2022-23. Specifically, the proposed increases Hazardous waste management plan 1.5 Set aside for HWCA reserves 3.1 would provide sufficient new revenues for HWCA Administrative costs for new board 1.5 to address the fund’s current operating imbalance Total $49.6 and cover DTSC’s existing workload on an ongoing HWCA = Hazardous Waste Control Account. basis, as well as build up a prudent level of operating reserves. 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET Incorporating Revenue Increases to Expand Retaining Exemption for Small Generators Is Programmatic Expenditures in 2022-23 Is Reasonable. We also find that the administration’s Reasonable. We find the administration’s proposal decision to retain the exemption for generators to also incorporate estimated costs for future that generate less than five tons to be reasonable. programmatic expansions into its new charges The exemption does not completely align with the to be justified. We find that the programmatic “polluter pays” principle under which entities who expenditures anticipated for 2022-23 appear engage in regulated activities should be responsible reasonable based on DTSC’s workload analysis for paying regulatory and oversight costs. However, of existing regulatory requirements and funding assessing the charge on small generators would not deficiencies. Additionally, the Legislature will be make fiscal sense because the administrative cost able to conduct further oversight over the specific to collect from these entities would be greater than proposed expenditures when the department the estimated revenues generated. According to the submits budget requests next year to authorize the department, there are 67,000 small generators— use of these funds in 2022-23. making up about 90 percent of generators—but Moreover, authorizing the proposed charge which produce only 2 percent of the total hazardous increases to go in effect in 2022 is reasonable waste in the state. We also find that retaining this because doing so would make sufficient resources exemption could provide some relief to smaller available to support the new activities beginning businesses that are struggling due to the pandemic. in 2022-23. Absent such action, the board would (However, as we discuss in more detail related to not be able to raise charges to generate increased TSCA changes below, these types of exemptions revenues until 2023-24, resulting in an additional are not necessarily the most effective way to provide year wait before DTSC would be able to increase fiscal relief to pandemic-impacted businesses.) staffing levels and commence the additional work Allowing New Board to Adjust HWCA Charge proposed. Levels Is a Reasonable Approach. While the New Generation and Handling Fee Has Governor’s approach differs from AB 995, we find Several Benefits. The proposal includes that allowing the new board to set future charge eliminating several existing fees and replacing levels annually has some key benefits and still would them with a new generation and handling fee. allow for ample legislative involvement. First, it We find that the new charge would have several creates more stability for HWCA by establishing a advantages over the current structure. First, the way for revenues to annually align with expenditure new charge structure would distribute costs across levels established by the Legislature through the hazardous waste generators more equitably budget act. For instance, if revenues were to when compared to current fees. For instance, decline or grow more slowly than expenditures, the the generator fee’s current tiered structure allows board could adjust charges—up until the maximum businesses that generate different amounts of level—to prevent a structural deficit from occurring. hazardous waste to pay the same annual charge. Second, this approach provides the Legislature with For example, an entity that currently generates greater confidence that it can assign necessary 500 tons of hazardous waste would pay the same responsibilities to the department without placing amount as one that generates 900 tons. The new excessive pressure on HWCA. For example, generation and handling fee would correct this approving ongoing positions or augmentations for by charging businesses based on a price-per-ton the department could ultimately be funded through model. Second, the new charge could encourage the board’s ability to increase charges. Given reductions in hazardous waste in the long run. that HWCA is largely used for the department’s This is because the model of placing a charge on regulatory responsibilities, creating this type of every ton of hazardous waste generated creates alignment between authorized expenditures and an incentive for businesses to pursue innovative revenues that are collected from regulated entities ways to reduce their waste and thereby lessen their is reasonable. Third, since the board will discuss regulatory costs. charge adjustments at public meetings that align www.lao.ca.gov 9 analysis full gutter 2021-22 BUDGET with the budget process, the Legislature will be deficit and provide additional revenues to enable the able to weigh prospective impacts on rates before department to address several of the resource gaps making decisions on new expenditure proposals. it has identified. Approve Governor’s Proposal to Grant Board Recommendations With Ability to Adjust Charge Levels in Future Approve One-Time General Fund Years. We recommend that the Legislature approve Augmentation in 2021-22. We recommend that the Governor’s proposal to provide the new board the Legislature approve the Governor’s propo sed with the ongoing ability to adjust charge levels. $22.5 million in one-time General Fund to backfill Allowing the board to set charges annually would HWCA. Providing the backfill would keep HWCA create more stability for HWCA and help ensure that solvent and allow DTSC to continue its existing revenues will be able to keep pace with legislatively programmatic workload in the budget year. approved expenditures. Additionally, because Adopt HWCA Charge Restructure and the board would discuss adjustments during the Increases. We recommend that the Legislature legislative budget process, the Legislature would approve the Governor’s HWCA charge restructure be able to weigh the merits and associated charge and increase, which would solve HWCA’s structural impacts of proposals requesting funding from HWCA before approving them. STRUCTURAL SHORTFALL OF TSCA Background premise for the widespread nature of the tax is that all businesses contribute to hazardous waste TSCA Funds Several DTSC Programs. TSCA is through the use of basic products that were the department’s other primary special fund source. either manufactured using chemical processing TSCA largely funds DTSC’s activities related to techniques or that become hazardous waste investigating and cleaning up contaminated sites. after they have been discarded. In 2019-20, the The fund also supports the department’s Safer tax generated about $56 million for TSCA, and Consumer Products program, which attempts to is anticipated to be roughly the same amount in reduce human and environmental exposure to toxic 2020-21. chemicals by working with industry to develop safer TSCA Faces Structural Imbalance. In recent alternatives. years, the growth in expenditures from TSCA TSCA Funded by Tax on Businesses. Major has outpaced growth in its revenues, creating a sources of revenue for TSCA include various structural imbalance in the fund. According to the charges, fines, and penalties. Roughly 80 percent administration, these trends are due, in part, to of TSCA’s revenues come from an annual tax levied additional operational costs to implement expanded on most businesses with 50 or more employees. responsibilities the department has been assigned (The remaining amount comes from cost recovery since 2000. For example, Chapter 559 of 2008 revenues, penalties, and interest.) The amount of (SB 509, Simitian) established the Safer Consumer the tax applied is scaled based on the number of Products program, which is currently funded at employees and is adjusted annually for inflation. about $16 million annually, mostly from TSCA. For example, in 2021, businesses with between Additionally, California faces increasing cost 50 and 74 employees pay $357 whereas larger pressures related to required state contributions to businesses with between 500 and 999 employees federal cleanup projects, which typically are funded pay $4,985. (While the charge is generally referred out of TSCA. In contrast, the tax that funds TSCA to as an environmental fee, it aligns with the State has not been increased—apart from inflationary Constitution’s definition of a tax.) The underlying adjustments—since 1997. Expenditures from TSCA 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET in 2020-21 are anticipated to total $63.1 million. begin the 2021-22 fiscal year with an estimated (This does not include expenditures related to the balance of $13.4 million and end the year with former Exide Technologies facility, which is largely estimated reserves of $3.1 million. supported by General Fund loans to TSCA.) To keep TSCA Tax Restructure and Increase to Take the fund solvent in 2020-21, the budget provided Effect in 2022-23. The Governor proposes budget TSCA with a General Fund backfill of $7.8 million. trailer legislation that would make the following Governor and Legislature Proposed two significant changes to the environmental fee Differing Approaches for TSCA. The Governor’s to take effect in 2022: (1) exempt businesses with 2020-21 budget included a proposal to increase fewer than 100 employees from paying the tax the tax that supports TSCA. Like the Governor’s (extending the existing exemption to businesses board and HWCA proposals, the proposed increase with 50 to 99 employees) and (2) increase tax rates was also ultimately omitted from the final budget for businesses with more than 500 employees. package adopted by the Legislature. In contrast to The Governor would maintain existing tax rates for the board and HWCA—for which the Legislature and businesses with 100 to 499 employees. Additionally, the Governor had somewhat similar proposals— the proposal would revise the timing of payments to AB 995 did not include a specific TSCA proposal. coincide with the fiscal year in which the Legislature However, the legislation did include a requirement appropriates the department’s funding (rather than that the Secretary of CalEPA convene a task force being charged on a calendar-year basis). Figure 5 to review the funding structure that supports TSCA shows how the tax increase would affect the and to provide recommendations to the Legislature amounts charged in each tier. The administration on potential reform options through the budget estimates that the resulting changes would provide process. an additional $54.6 million for TSCA beginning Department’s Workload Analysis Indicates in 2022-23. Resource Gaps. As discussed earlier in this report, Certain components of this proposal differ from the department recently released a workload what the Governor proposed for TSCA in 2020-21. analysis on DTSC’s existing staff and funding, as Specifically, the previous proposal included rate well as identified resource gaps for its programs increases for all businesses that currently pay and activities. In this assessment, the department the tax. The administration has indicated that the identified resource gaps related to cleanup activities decision to exempt smaller businesses from paying associated with identifying contaminated sites, the environmental fee and to maintain existing rates site inspections and establishing initial remediation for midsized businesses primarily is to reduce their actions. The additional costs associated with economic impacts as they are recovering from the these activities were estimated to be between effects of the pandemic. $43.5 million and $138.2 million annually, depending on how many additional contaminated sites the state Figure 5 chooses to address. Annual Environmental Fee Rate Changes Under Governor’s Proposal Governor’s Proposal 2022-23 General Fund Transfer to Address TSCA Number of Shortfall in 2021-22. The Governor’s budget Employees Existinga Proposed proposes to transfer $13 million from the General 50-74 $362 — Fund to keep TSCA solvent while the proposed tax 75-99 636 — increase—discussed next—is being implemented. 100-249 1,261 $1,261 Short-term funding is needed due to a lag between 250-499 2,706 2,706 when the proposed changes to the environmental 500-999 5,054 16,500 fee would take effect and when the revenues will 1,000 or more 17,144 56,000 materialize. With the proposed funding, TSCA would a Administration’s estimate of environmental fee if no reforms were adopted. www.lao.ca.gov 11 analysis full gutter Revenue Increases Address Structural Deficit would be set two times higher than the initial rates and Provide for Additional Program Spending. being proposed for 2022-23. For instance, the initial As shown in Figure 6, the administration intends rate for businesses with more than 1,000 employees to use the additional $54.6 million in new TSCA would be $56,000 per year, but the maximum level revenues to (1) provide additional funding to address would be set at $112,000 per year. The cap would resource gaps identified in the department’s be adjusted annually for inflation according to the workload analysis ($36.5 million), (2) address the Consumer Price Index beginning in 2024-25. Once structural deficit in the fund ($13 million), (3) build the cap is reached, the Legislature would have to reserve levels within the fund ($3.6 million), and take action to authorize additional tax increases to (4) provide ongoing funding for administrative costs align with higher expenditure levels. related to the new board ($1.5 million). The amounts Assessment intended to be used for increased programmatic expenditures would need to be authorized in the General Fund Support Would Keep TSCA 2022-23 budget based on proposals submitted to Solvent in 2021-22. The Governor’s proposed and approved by the Legislature. $13 million General Fund transfer would keep New Board Would Establish TSCA Tax TSCA solvent and allow DTSC to continue its According to Appropriation Authority Set by current program expenditures as the tax increase is Legislature. As with HWCA, the administration implemented. Providing short-term funding for the would task the new Board of Environmental Safety fund is necessary if the Legislature wants DTSC to with ongoing authority to set future tax rates for continue performing its existing level of activities in TSCA beginning in 2023-24. The board would adjust 2021-22. the tax annually to align TSCA’s revenues with the Proposal Would Solve Existing Shortfall. The expenditure authority the Legislature includes in Governor’s proposal would address the existing the budget act. The administration indicates that structural problems with TSCA. Specifically, the the board would hold public meetings following proposed increases would provide sufficient new the release of the Governor’s January budget and revenue for TSCA to address the fund’s current May Revision to discuss how proposals would operating imbalance and cover DTSC’s existing affect the environmental fee, and the board would workload on an ongoing basis, as well as build up a make adjustments in the fall after the budget act is prudent level of operating reserves. passed. The administration’s proposed language Amount of Tax Increase Should Be Driven by also sets a maximum level for the tax. The caps Legislature’s Programmatic Priorities. We find that the department’s estimated programmatic expansions for 2022-23 seem reasonable and Figure 6 are based on its workload analysis. For instance, Proposed Uses of New TSCA Revenues the amount provided for site cleanup staff—the Beginning in 2022-23 majority of estimated ongoing spending beginning (In Millions) in 2022-23—would allow the department to conduct Expenditures Amounts 50 to 150 site discoveries and 60 to 130 site initiation actions annually. However, determining Additional program spending $36.5 the “right” level of funding needed for TSCA is Site cleanup staff 21.5 somewhat more subjective than for HWCA. In Safer Consumer Products Program 10.0 Legal services 2.5 contrast to HWCA—for which a strong nexus exists Information technology systems 2.5 between charges and DTSC’s regulatory workload— Address TSCA structural deficit 13.0 TSCA is largely supported by a broad-based Set aside for TSCA reserves 3.6 tax that can fund a wide variety of department Administrative costs for new board 1.5 activities. That is, the workload to be supported Total $54.6 by TSCA is driven by the Legislature’s decisions TSCA = Toxic Substances Control Account for what activities it wants DTSC to perform 12 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET with the fund, rather than by what is needed to approach of allowing the new board to set the tax enforce regulatory requirements. For example, the annually would provide some important benefits— Legislature has added new responsibilities to the establishing a mechanism for revenues to keep pace fund in recent years, such as the Safer Consumer with annual expenditure levels set by the Legislature Products program. Therefore, the process of and providing confidence that the department establishing a new tax increase should include can be tasked with future responsibilities without an assessment of which activities the Legislature placing excessive cost pressures on TSCA. believes TSCA should support, a determination Additionally, because the board will meet to discuss of the corresponding amount of revenues needed tax adjustments at public meetings that align with to support these activities, and the impact on the the budget process, the Legislature will be able to businesses paying the environmental fee. Should understand how future TSCA expenditure proposals the Legislature determine that the specific activities would affect tax rates as it deliberates their merits. and service levels proposed by the Governor align Recommendations with its priorities, then it may find the proposed level of tax increase to also be reasonable. However, Approve One-Time General Fund in 2021-22. should the Legislature believe that TSCA should Because it would keep TSCA solvent and allow the support a different mix of activities with higher department to continue with its current expenditure or lower associated costs, then a tax structure levels, we recommend that the Legislature approve generating a different level of revenue might be more the proposed $13 million General Fund backfill for appropriate. TSCA in the budget year. Merits of Pandemic Relief Measures Are Design a TSCA Package That Reflects Unclear. The administration indicates that its Legislative Priorities. As the Legislature decision to include relief measures for smaller deliberates over how it will increase taxes for businesses—by exempting small business TSCA, we recommend that it consider the following and maintaining the existing rate for midsized questions: businesses—is related to the pandemic. We find that this approach likely is not the best way for the state • What Programs and Activities Should TSCA to provide pandemic relief. For instance, the size of Support? Does the Legislature want the new a business—the basis on which the environmental tax rates to cover just existing activities, or fee is assessed—does not necessarily indicate the are there additional high-priority activities it degree to which a business has faced financial wants to fund from TSCA? Do the Governor’s losses due to the pandemic, which is more likely proposed activity expansions align with the to vary based on the business’ industry. We note Legislature’s priorities? as well that the state and federal government have • How Much Funding Should Be Provided provided direct fiscal relief to small businesses to Support These Activities? How much through a variety of other programs. Moreover, revenue needs to be raised in order to meet we note that the Governor’s proposal would be the Legislature’s priorities? What level of implemented on an ongoing basis. It is unclear additional taxes is the Legislature comfortable why the proposal does not include any provisions requiring businesses to pay? to sunset these changes or to revisit them at some • Should Pandemic Relief Measures Be point in the future—for example, after the state has Included? Should the tax exemption entered into an economic recovery—which would be extended to businesses with 50 to ensure that the tax is more evenly borne by the wide 99 employees? Should rates be maintained for array of businesses that contribute to hazardous businesses with 100 to 499 employees? waste. • Should Pandemic Relief Measures Be Allowing New Board to Adjust Tax Is a Revisited in Future Years? If included, should Reasonable Approach. As we discussed with pandemic relief measures be continued on an regard to HWCA, we believe the administration’s ongoing basis as proposed by the Governor, www.lao.ca.gov 13 analysis full gutter or should there be some mechanism to Approve Governor’s Proposal to Grant Board revisit these measures in the future? For With Ability to Adjust Tax in Future Years. We example, should there be a sunset date for tax recommend the Legislature approve the Governor’s exemptions on midsized businesses? proposal to provide the new board with the ongoing ability to adjust tax levels. Allowing the board to Adopt a Tax Package That Raises Sufficient set the tax annually would create more stability for Revenues to Pay for Desired Expenditures. TSCA and help ensure that revenues will be able to To address the ongoing structural imbalance, we keep pace with legislatively approved expenditures. recommend the Legislature adopt a tax structure Additionally, information from the board on how for TSCA that aligns with its expenditure priorities. annual budget proposals would affect tax rates This could include adopting rates that are lower or would allow the Legislature to consider whether higher than what the Governor is proposing, but the merits of a proposed activity justify imposing a that ultimately align with the Legislature’s spending higher tax on the business community. priorities for TSCA. BROWNFIELD CLEANUPS Background developing a property are concerned with its associated cleanup costs—which can reach Likely Tens of Thousands of Brownfields hundreds of thousands of dollars or more—and Across the State. The term brownfield generally potential liability issues. This results in these sites describes a property that is underutilized due to being underutilized—particularly in economically the presence or potential presence of a hazardous disadvantaged communities that already struggle to substance, pollutant, or contaminant. Common receive private investment. examples of brownfield sites are former dry DTSC Addresses Brownfields Through a cleaners, gas stations, and chemical storage Variety of Programs. DTSC administers several facilities. According to a report from DTSC, there programs to address brownfields, some of which are are roughly 15,000 known contaminated sites supported by funding from the U.S. Environmental across California. However, these numbers likely Protection Agency (U.S. EPA). DTSC’s major underestimate the number of brownfields in the brownfield programs include the following: state given the difficulty in estimating the number of properties that are underutilized as a result of • Site Mitigation and Restoration. DTSC suspected contamination. Some research estimates investigates sites with known or suspected that this number could be between 150,000 to contamination and ensures removal or control 200,000 sites. when contamination is found. DTSC has the Brownfields Have Disproportionate Impact authority to issue orders to require responsible on Low-Income Communities of Color. parties to cooperate with site investigations Studies have shown that brownfield sites are and remediation. State and federal funds are disproportionately located in neighborhoods that used when a site lacks a known or financially have lower average incomes and more people viable responsible party. of color. Brownfields negatively impact these • Voluntary Cleanups. Voluntary cleanups communities in two ways. First, brownfields can are initiated by motivated parties, such as affect public health in surrounding communities developers, local agencies, or nonprofit if contamination is able to spread through air or organizations, to investigate and remediate water. Second, the presence or even perception brownfield sites and reimburse DTSC’s of contamination at brownfield sites often hinders oversight costs. redevelopment because parties interested in 14 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET • Grants and Loans. DTSC offers loans are disproportionately vulnerable to their effects. and grants—largely supported by U.S. Because the state has not defined EJ communities EPA funding—to assist with addressing in statute, DTSC indicates that it will develop a environmental investigations and cleanups working definition for such neighborhoods for at properties throughout the state. Grants the purposes of targeting this funding, including can provide up to $200,000, while loans can criteria such as a community’s CalEnviroScreen provide up to $2.5 million. Funding is generally score and housing needs. (CalEnviroScreen is a available for local governments, tribes, state screening tool that evaluates communities’ nonprofit organizations, and private entities. cumulative burdens associated with pollution from multiple sources and socioeconomic factors.) Governor’s Proposal Proposal Seeks to Address State’s Housing Shortage. DTSC indicates that its proposal has $300 Million for Brownfield Activities and two primary goals—(1) to investigate and clean up Workforce Development. The Governor’s proposal contaminated sites in EJ communities and (2) to includes one-time General Fund resources to develop these sites for future housing. The latter address brownfields, to be allocated in the following is to help address the state’s severe shortage ways: of affordable housing. (The Governor’s budget • State Investigations and Brownfield also includes $500 million in one-time General Cleanups ($220 Million). DTSC would use Fund resources for the Infill Infrastructure Grant these funds to investigate and clean up various program administered by the California Department projects where no financially viable responsible of Housing and Community Development party can be found. The department estimates [HCD]. This funding would provide grants for this funding would enable it to take action on housing-related infrastructure projects, including 170 additional sites over the next four years. environmental remediation.) • Brownfield Grant Program ($76 Million). Funding Would Be Contingent on Adoption The Governor proposes to establish a new of Governance and Fiscal Reform Package. The competitive grant program to provide funding administration has indicated that it views funding for to local governments, tribes, nonprofit this proposal to be contingent upon the enactment organizations, and private entities primarily to of the Governor’s governance and fiscal reform investigate as well as clean up brownfield sites. package for DTSC. That is, the Governor indicates The department estimates it could provide that he will support inclusion of this $300 million for 130 grants over the next four years with this addressing brownfields only if the Legislature also funding. approves his proposals to add a new governing board and increase the HWCA and TSCA charges. • Workforce Development ($4 Million). The proposal would establish a new workforce Assessment development program. The funding would go to various organizations (such as technical Legislature Need Not Consider Proposal as schools and community-based organizations) Being Contingent on Reform Package. While to train individuals to perform environmental the Governor has presented this proposal as being remediation work, such as site sampling contingent upon the enactment of the governance technicians. and fiscal reform package for DTSC, the proposals are not fiscally linked. Because the Governor would Funding Would Focus on Communities fund this proposal using General Fund, the existing That Are Disproportionately Burdened by structural imbalances in HWCA and TSCA would not Contamination. The proposal indicates that preclude the Legislature from appropriating funds to funding for all three components will be targeted clean up brownfields, regardless of what it decides for “environmental justice (EJ) communities” that to do with the Governor’s proposed governance and are burdened by multiple sources of pollution and fiscal reform package. www.lao.ca.gov 15 analysis full gutter Additional Support for Brownfield Additional Coordination Could Assist Housing Investigations and Cleanups in EJ Communities Goals. DTSC’s core mission is to protect people Has Merit. Because they could provide multiple and the environment from the harmful effects benefits to EJ communities, we find that the of toxic substances by restoring contaminated funding being proposed for state cleanup projects resources—yet this proposal is also seeking to and the brownfield grant program have merit. develop new housing. The department likely is For instance, cleaning up brownfield sites can not the most suitable agency to best achieve this reduce the health and environmental risks that second goal—at least not on its own. Selecting stem from contamination in communities that sites that have the best potential to be developed can least afford to remediate the contamination for housing would require significant coordination themselves. Moreover, the cleanup also could help between DTSC and other state and local entities. to encourage economic development in struggling While the current proposed budget trailer legislation areas by making more land available for housing and requires the department to consult with HCD to commercial activity. In this way, targeting funding develop guidelines for the grant program, it does for projects in EJ communities can help alleviate not include language governing how HCD will be the disproportionate environmental and economic involved in selecting sites for DTSC’s own cleanup burdens that these communities experience. and investigation actions. Clarifying how exactly Could Be Difficult to Prioritize Both DTSC and HCD will coordinate—potentially through Environmental and Housing Goals. The statutory language—could provide the Legislature Governor’s stated dual goals of reducing health and with greater confidence that housing goals will be environmental risks associated with contaminated met. sites and increasing the supply of housing are Grant Portion of the Proposal Might Be both worthwhile endeavors for the state. However, Duplicative of Other Housing Proposals. As meeting both could be difficult, as site selection noted earlier, in addition to the proposed funding might differ depending on which goal is prioritized. for DTSC, the Governor has proposed $500 million For instance, sites that may have high levels of for HCD to develop housing-related infrastructure, contamination might be in areas that are not zoned including for environmental remediation. Given for or would not be feasible to build housing. that DTSC’s proposed grants would also be for For example, many sites of former dry cleaners cleanup activities, these efforts could be somewhat likely are located in areas zoned for commercial, duplicative. Additionally, having similar grants not residential, development. Conversely, prime administered by two separate departments could locations for developing additional housing are cause confusion amongst departments and not necessarily the sites of the most significant applicants. How these two programs would be environmental risks for nearby residents and, coordinated under the Governor’s proposal is still therefore, might not be the highest priority for somewhat unclear. improving public health. It is unclear at this time Need for Workforce Development Program Is on how the department plans to prioritize between Unclear. The administration has not yet provided these two goals when selecting state projects evidence that the state is lacking a sufficient and when designing grant guidelines. Given the pipeline of environmental remediation workers to significant number of brownfield sites across the justify the need for this new program. Moreover, state, the proposed one-time funding would not funding a workforce development program would allow the department to address all known needs be problematic if there are not enough ongoing job in all communities. This makes understanding opportunities to support those who do become and having confidence in the administration’s trained by the program. The department has plan for how it will prioritize funding for both state indicated that workforce development funding will investigations and the grant program all the more be distributed according to where cleanup projects important. will be undertaken with the proposed new funding. Given that this funding is proposed on a one-time 16 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET basis, the associated cleanup project workload will interact with other housing proposals in the be limited-term in nature. Whether the job market Governor’s budget—such as funding in HCD’s could sustain newly trained workers over the long budget for housing infrastructure, including run is unclear. environmental remediation—as well as any legislative housing initiatives. This proposal Recommendations should complement and support other efforts Consider the Merits of This Proposal and not create a complicated or duplicative Independently From Reform Package. We program for departments and applicants. recommend that the Legislature evaluate whether Request Additional Information at Budget or not this proposal is worthy of adopting on its Hearings. We recommend the Legislature require own merits and not view this proposal as being DTSC to report at budget hearings on how the contingent on the Governor’s reform package for department will coordinate with the appropriate DTSC. housing entities and the state’s current needs Consider Key Policy Questions When for additional workforce training. Specifically, we Evaluating Proposal. Overall, we believe that the believe it would be beneficial for DTSC to report on Governor’s proposal has merit given the significant the following: number of brownfields and their disproportionate impact on low-income communities of color. • How Would Department Ensure Housing However, we believe there are several key questions Objectives Are Met? If the Legislature that the Legislature should consider in designing a believes that an important goal for this spending approach for these funds. funding is to spur housing development at brownfield sites, it will want to ensure DTSC • What Intended Goal Is the Highest Priority has developed an effective plan for how it for Funding? The Legislature may want to will coordinate with the appropriate agencies identify a clear primary goal to ensure that to ensure that state cleanup projects are funding is well-targeted and aligns with its targeted at sites where housing development highest priorities. For example, this could is most feasible. Based on the department’s include indicating whether addressing serious responses, the Legislature could also consider environmental contamination should take adopting additional budget bill language to precedence over developing sites for new help guide and ensure coordination across housing, or vice versa. Identifying a clear departments. goal—such as through budget bill language— • Does Demonstrated Need Exist for would also allow the Legislature to better Developing Remediation Workforce? In track the success of the program against its deciding whether to fund this component, the expected outcomes. Legislature will want the department to show • How Will Grant Funding Complement and that there will be enough ongoing jobs to Support Other Proposals? The Legislature employ trainees once they finish the program. will want to consider how the proposed grants LAO PUBLICATIONS This report was prepared by Frank Jimenez and reviewed by Rachel Ehlers and Brian Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 17 LEGISLATIVE ANALYST’S OFFICE