September 17, 2003

Natural Resources Funding Commission

On September 15, 2003, the Natural Resources Funding Commission, chaired by the Secretary of Natural Resources, Tayloe Murphy, met to review their draft report of recommendations to Governor Mark Warner regarding funding needs for Virginia’s natural resource programs. The meeting was held at the Department of Environmental Quality (DEQ) – Central Office in Richmond. The Commission will submit their final report to the Governor later this month.

You may recall that this Commission was created as a result of the Governor’s Natural Resources Partnership Agenda, which was presented at the Natural Resources Summit in Williamsburg this past April. The Commission’s charge was “to review recommendations made at the Summit on permanent funding alternatives, incentives, and other means to support specific natural resource programs,” and to present recommendations to the Governor.

The Commission is considering recommendations involving both General Fund and Non-General Fund sources of funding. The General Fund recommendations are as follows:

1) The Governor should reaffirm his commitment to natural resources as a Constitutionally established core responsibility of state government and challenge the General Assembly to recognize this priority as well.

2) The Governor should refrain from making any further general fund budget reductions within the Natural Resources Secretariat or within the Department of Forestry in the next and subsequent bienniums.

3) General Fund reductions experienced by the Secretariat since FY2000 have exceeded $74 million. In the first year of the next biennium (FY2005), the Governor should restore $22 million to the Natural Resources Secretariat. The restored funds should be targeted towards natural resource priorities, not necessarily directed solely to the replacement of lost agency positions and programs.

4) In the second year of the next biennium (FY2006), the Governor should propose increasing the Natural Resources general fund budget by an additional $27 million to boost natural resources funding to a total that represents 1% of the FY2004 state general fund budget and thereafter have as a goal further increases in general funds for natural resources.

5) The Governor should ensure that adequate funding for natural resources is included in the Roadmap for Virginia’s Future currently under development.

If fully implemented, these recommendations would generate an additional $49 million in general funds. All Commission members in attendance indicated that they generally supported these recommendations with a few minor revisions.

The Non-General Fund recommendations are as follows:

1) Submit legislation for the 2004 General Assembly Session that establishes a Virginia Natural and Historic Resources Fund (VNHRF) for further allocation to natural resource priorities.

2) The VNRHF could receive monies from five funding mechanisms (Water Utility Fee, Document Recording Fee, Tipping Fee on Municipal Solid Waste, Petroleum Fee, and Electric Utility Fee) as well as be authorized to receive other public and private monies.

Option # 1 for recommendation #3 (preferred alternative)
3) Allocations from the VNHRF are to be directed to key natural resources funds and grant programs through a set allocation formula specified in the legislation with the majority (over 75%) going to the Water Quality Improvement Fund (WQIF) and the Virginia Land Conservation Fund (VLCF).

Option #2 for recommendation #3
3) Allocations from the VNHRF are to be divided evenly between the WQIF and the VLCF only.

4) Monies from the VNHRF are to be used primarily for capital projects related to natural resources and for limited operational expenses as established in the receiving Fund’s Code authorities.

5) Following passage of this legislation, the Governor should initiate a Constitutional Amendment process that would protect all funds deposited to the VNHRF from diversion.

These recommendations, if fully implemented would generate approximately $213 million in non-general funds per year and would leverage an additional $208 million in federal, local and private matches.

The Commission could not get uniform support for all the proposed items in the non-general fund recommendations. Of the five funding mechanisms identified in recommendation #2, the Commission members generally supported the Water Utility Fee ($2 per month) and the Document Recording Fee ($10 per recorded instrument). The remaining three funding alternatives [Tipping Fee ($3 per ton), Petroleum Fee ($0.006 per gallon), and Electric Utility Fee ($2 per month)]; generated much discussion and did not receive support from all members.

The Commission agreed that the three contentious funding alternatives should be recommended to the Governor with an indication of the level of support or opposition that may be encountered through the legislative process. The Commission felt that it was important for the Governor to see all the funding recommendations even if there was not unanimity among the members. Staff will make various revisions to the draft report, as discussed and agreed by the Commission, and will forward the revised report to the Commission members prior to submission to the Governor.

If you have any questions regarding this Bulletin, please contact us by email or at (804) 355-4520 (Richmond) or (336) 323-0092 (Greensboro).