Budget Background: Where Did The $2.93 Billion In Environmental Funding The General Assembly Diverted Or Cut Go?

Over the last 17 years, General Fund support for DEP environmental programs has been cut by more than 40 percent, and the agency’s staff reduced by nearly 30 percent.

With the FY 2019-20 budget, General Fund support for DEP is now $30.5 million BELOW where it was in 1994-95-- $165.6 million.  Now it’s $135.1 million in FY 2019-20.

If the General Fund appropriation from 1994-95 had just kept up with inflation with no other increase, the appropriation to DEP would now be $285.67 million.  

DEP has had to replace some of those General Fund dollars by increasing fees charged on permit reviews and obviously cutting positions and other costs.  

In December of 2018, the Environmental Quality Board took action to raise DEP permit fees by $22 million in that one meeting alone.

Since then, another $23 million in DEP permit fee increases have been finalized or proposed.

Although the permit fee increases were a necessary reaction to General Fund budget cuts, some legislators have urged the Independent Regulatory Review Commission to disapprove permit review fee increases that make up the difference.

This squeezes DEP at both ends of the funding spectrum and guarantees permit review times will continue to falter.  Click Here for more on opposition to water permit fee increases.  Click Here for more on air permit fee increases.

There was a new authorization for the Governor to transfer $45 million to DEP and DCNR included in the FY 2019-20 state budget, and Gov. Wolf proposed in his FY 2020-21 budget to undo some of the cuts made in the FY 2019-20 budget.  Click Here for more.

The FY 2019-20 budget did contain some other increases here and there for project funding, but it was nickel and dime stuff and was not even close to what is needed to meet the Commonwealth’s legal obligations.  Click Here for more.

But even these actions come nowhere near replacing what has been taken (see below).

With the FY 2019-20 budget, less than 20 percent of DEP’s funding comes from the General Fund, 30 percent from the federal government and 50 percent from permits fees and some fine money.

In 1998, one-third of DEP’s budget came from the state General Fund, one-third from the federal government and one-third from permit fees, fines and penalties, a balanced partnership.

Fails To Meet Minimum Federal Standards

Over the past several years federal agencies have issued warnings to DEP that it doesn’t have the resources to meet minimum federal standards to administer certain federal programs like Safe Drinking Water, Air Quality, Surface Mining, Stormwater, Chesapeake Bay Watershed cleanup obligations and others.

In addition, the Trump Administration has threatened to cut funding to states for administering many of these same programs.

The FY 2018-19 budget did provide additional funding to add 35 new staff in some critical areas at DEP, but General Fund budget cuts still have several programs DEP administers for the federal government not meet minimum federal standards.

$2.93 Billion Transferred/Cut

Since 2003, over $2.93 billion in environmental funding was taken away from community-based environmental, recreation and restoration projects and environmental program funding by the General Assembly and various Governors and used to balance the state budget or for other purposes.

It’s important to note, the direction of funding to support local environmental projects and programs had been on a steady upward curve, with a few bumps, prior to the last 17 years.

The one notable positive addition to the ledger is the Act 13 drilling impact fee which has generated a total of $1.95 billion since it was established in 2012.

However, most of the 60 percent of the revenue from the impact fee given to county and local governments where most went to non-environmental purposes.  And, fee income depends on the number of wells drills producing and the price of natural gas.

Just some of the largest cuts or diversions include--

--  $1.17 billion diverted from DCNR’s Oil and Gas Lease Fund generated from upfront payments and royalties from leasing Shale gas drilling rights on State Forest lands and used balance the budget or to pay DCNR’s operating expenses through FY 2019-20;

-- $895 million (so far) from the elimination of the Act 339 wastewater treatment plant operations grants ($52 million a year);

-- $185.7 million from the Environmental Stewardship (Growing Greener) Fund to pay debt service on the Growing Greener 2 bond, and payments continue until 2031;

-- $100 million from the Underground Storage Tank Indemnification Fund to balance the budget, although this was supposed to be repaid and some of it actually was;

-- $69.7 million total transfer from the Keystone Recreation, Parks & Conservation Fund in 2 separate years to balance the budget;

-- $73.6 million total from the Marcellus Legacy Fund transferred to the Hazardous Sites Cleanup Fund over several years because the funding source for HSCA dried up;

-- $30.4 million from Attorney General Settlement from Volkswagen for vehicle testing violations transferred to balance the budget;

-- $20 million from State Forest Timber sales to balance the budget; and

-- $29 million total transferred from the Recycling Fund over 3 different years to balance the budget.

Itemized List Of Cuts/Diversions

Here's an itemized list of $2.935 billion (or so) in cuts and diversions of environmental funding over the last 17 years--

-- $895  million in Act 339 grants intended to support wastewater plant operations over the last 16 years were eliminated to balance the budget ($52 million or so each year);

-- $143 million diverted from the DCNR Oil and Gas Fund to balance the FY 2008-09 budget;

-- $79 million cut from the DEP and DCNR General Fund budget during FY 2009-10;

-- $60 million diverted from the DCNR Oil and Gas Fund to balance the FY 2009-10 budget;

-- $100 million in 2002 from the Underground Storage Tank cleanup insurance fund to balance the budget (although this was supposed to be repaid over 10 years);

-- $52.7 million “one-time” diversion from the Keystone Recreation, Parks and Conservation Fund in 2006 to balance the budget;

-- $50 million in 2007 and 2008 from the Environmental Stewardship Fund, which supports mine reclamation and watershed restoration, to fund the Hazardous Sites Cleanup Program because there was no agreement on how to fund that program;

-- $185.7 million in FY 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 (thru 2031) from the Environmental Stewardship Fund to pay debt service on the Growing Greener II bond issue and taking funding away from restoration projects each year for the next 25 years – reflecting a pattern of only environmental programs being required to address their own bond debt service;

-- $15 million “one-time” transfer from the Recycling Fund to the General Fund to balance the FY 2008-09 budget;

-- $18.4 million put into budgetary reserve in 2008-09 from the Department of Environmental Protection and Department of Conservation and Natural Resources;

-- $5 million reduction in Resource Enhancement and Protection (REAP) farm conservation tax credit program in FY 2009-10;

-- $102.8 million cut from the DEP and DCNR General Fund budget in FY 2010-11 budget;

-- $180 million diverted from the DCNR Oil and Gas Fund to General Fund in proposed FY 2010-11 budget;

-- $5.5 million reduction in Resource Enhancement and Protection (REAP) farm conservation tax credits in FY 2010-11;

-- $5 million in additional cuts to the agencies to balance the FY 2010-11 budget;

-- $3.9 million in across-the-board cuts to help fill gaps caused by reduced federal Medicaid appropriations-- $2.4 million from DEP, $1.5 million from DCNR;

-- $669,000 from the Safe Water line item in DEP's budget;

-- $102.8 million cut continued from the FY 2010-11 DEP and DCNR General Fund budget in FY 2011-12 budget;

-- $8.3 million mid-year budget freeze cuts additional resources for environmental programs: Agriculture: $2.6 million; DCNR: $1.5 million; and DEP: $4.2 million;

-- FY 2012-13 budget eliminates $11.8 million in General Fund monies from DEP, and $2.5 million from DCNR;

-- FY 2012-13 budget continues the $102.8 million cut in FY 2010-11;

-- FY 2012-13 budget for the State System of Higher Education zeroes out funding again for the PA Center for Environmental Education ($368,000) and McKeever Environmental Center ($213,000);

-- FY 2013-14 budget continues the $102.8 million cut in FY 2010-11;

-- FY 2013-14 budget for the State System of Higher Education zeroes out funding again for the PA Center for Environmental Education ($368,000) and McKeever Environmental Center ($213,000);

-- FY 2013-14 budget diverts $106.5 million from the Oil and Gas Fund to support DCNR  operations;

-- FY 2014-15 budget diverts $73 million from the Oil and Gas Fund to support DCNR  operations. 

-- FY 2014-15 budget diverts another $95 million in royalties and payments from the Oil and Gas Fund to balance the state budget;

-- FY 2014-15 budget diverts $20 million from State Forest Timber operations to balance the state budget;

-- FY 2014-15 budget diverts $6.2 million from the Alternative Fuels Incentive Grant Fund to balance the state budget;

-- FY 2014-15 budget continues the $102.8 million cut beginning in FY 2010-11;

-- FY 2014-15 budget for the State System of Higher Education zeroes out funding again for the PA Center for Environmental Education ($368,000) and McKeever Environmental Center ($213,000);

-- FY 2014-15 budget cuts $500,000 for Delaware River Basin Commission;

-- FY 2015-16 transfer of $31.9 million to pay for DCNR operations from Oil and Gas Lease Fund;

-- FY 2015-16 budget cuts $15 million coming from Environmental Stewardship Fund for watershed restoration projects;

-- FY 2015-16 budget cuts $900,000 for Sewage Facilities Grants;

-- FY 2015-16 budget continues the $102.8 million cut in FY 2010-11;

-- FY 2015-16 budget for the State System of Higher Education zeroes out funding again for the PA Center for Environmental Education ($368,000) and McKeever Environmental Center ($213,000);

-- FY 2016-17 budget cuts $35 million coming from Environmental Stewardship Fund for watershed restoration projects;

-- FY 2016-17 budget for the State System of Higher Education zeroes out funding again for the PA Center for Environmental Education ($368,000) and McKeever Environmental Center ($213,000);

-- FY 2017-18 budget transfers $9 million from Recycling Fund to General Fund

-- FY 2017-18 budget transfers $5 million from Alternative Fuels Incentive Fund to General Fund

-- FY 2017-18 budget cuts transfer from Marcellus Legacy Fund to Hazardous Sites Cleanup Fund by $5 million;

-- FY 2017-18 budget transfers $12 million from CBF High Performance Green Buildings Program to new CFA Natural Gas Infrastructure Program;

-- FY 2017-18 Governor puts $1.125 million from DCNR in budgetary reserve;

-- FY 2017-18 transfers $30.4 million from Attorney General settlement from Volkswagen to General Fund;

-- FY 2017-18 transfers $20 million from DCNR Oil and Gas Lease Fund to Marcellus Shale Legacy Fund for distribution to the Environmental Stewardship Fund;

--FY 2017-18 transfers $15 million from Marcellus Shale Legacy Fund to Hazardous Sites Cleanup fund;

-- FY 2017-18 appropriations for Susquehanna and Delaware River Basin Commissions and Interstate Commission on the Potomac River cut by half - $477,000;

-- FY 2017-18 $10 million transfer from the Keystone Recreation, Parks and Conservation Fund to the General Fund as part of a larger $300 million set of transfers to help balance the state budget;

-- FY 2017-18 budget for the State System of Higher Education zeroes out funding again for the PA Center for Environmental Education ($368,000) and McKeever Environmental Center ($213,000);

-- FY 2017-18 transfer of $61.2 million to pay for DCNR operations from Oil and Gas Lease Fund;

-- FY 2018-19 appropriations for Susquehanna and Delaware River Basin Commissions and Interstate Commission on the Potomac River cut by half - $477,000; and

-- FY 2018-19 transfer of $48.7 million to pay for DCNR operations from Oil and Gas Lease Fund.

-- FY 2019-20 $69.774 million transferred from the Oil and Gas Lease Fund to pay operating expenses for DCNR.

-- FY 2019-20 $16.045 million diverted from the Environmental Stewards (Growing Greener) Fund to pay for DEP administrative costs.

-- FY 2019-20 $10 million diverted from the Recycling Fund to pay for DEP administrative costs.

-- FY 2019-20 $20 million payment from Marcellus Shale Legacy Fund not made to Environmental Stewardship (Growing Greener) Fund.

-- FY 2019-20 transferred several programs formerly funded by the General Fund are now being paid for by the Environmental Stewardship (Growing Greener) Fund: $2.5 million to support county conservation districts; $873,000 in costs for the Delaware and Susquehanna River Basin Commission, Interstate Commission on the Potomac River, Interstate Chesapeake Bay Commission, Ohio River Valley Water Sanitation Commission, Delaware River Master; $2.25 million for  DCNR’s Heritage Parks Program.

(Written by David Hess, former Secretary of DEP.  Send comments to: PaEnviroDigest@gmail.com.)

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[Posted: February 4, 2020]  PA Environment Digest