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Regulators face deep cuts as governors close budget gaps

As they battle record deficits, governors nationwide are digging into state environmental regulatory bodies in budget proposals, many in the name of increasing efficiency and creating states that are "open for business."

In some states, environmental groups say budget proposals unfairly target those departments over other state agencies and would set back conservation efforts by years. They also argue that cutting environmental spending will end up costing more jobs than are created by bolstering other state programs.

"Unfortunately there's this perception that if we dismantle rules and we slash the budgets of these regulatory agencies, that somehow that's going to create jobs and enhance our economy," said Jimmy Orth, executive director of St. Johns Riverkeeper in Florida. "I think the opposite can be argued, that protecting the environment is good economic policy."

Industry supporters and budget hawks say environmental agencies have to face the ax like everyone else.

"Everybody's having to tighten the belt, both in the private sector and in the public sector," said Steve Henke, president of the New Mexico Oil & Gas Association.

In Florida, Gov. Rick Scott (R) has proposed reducing the tax allocations for the state's five water management districts by 25 percent. Also included in his budget plan is a proposal to require those districts to get approval before spending any taxpayer money on projects. The districts are charged with managing water quality, administering flood protection programs, performing technical investigations and developing water management plans.

Scott is trying to close an approximately $3.6 billion budget deficit with his $66 billion spending plan. Florida Chamber of Commerce President Mark Wilson hailed the budget proposal as "true leadership by making our government live within its means."

But the proposal would diminish the ability of water districts to provide research and funding for conservation and restoration projects, Orth said.

"You're not going to be able to get the opportunity to really learn about the things we really need to learn about the river to make wise decisions," he said.

Further, Orth added, requiring approval for decisions would politicize water districts' activities.

"A lot of these decisions are highly technical decisions that are best left to non-politicians who have technical expertise," Orth said. "And what happens is if you open this up, put this into a political arena where it's at the whim of the political motivations of a legislator or a lobbyist ... that could literally kill important funding for projects."

Adding the extra step of approval would discourage the water management districts from enacting rules because districts would not want to spend limited resources on attempting to pass a rule that does not have an assurance of passage, he added.

Reducing water management budgets would also cut into restoration funding for the Everglades, as a large part of the South Florida Water Management District's more than $390 million annual collection from property taxes goes toward those restoration efforts. The budget proposal also cuts almost two-thirds of the state's annual allocation toward Everglades restoration, which environmentalists say will decrease jobs rather than save them.

N.M. cuts 'a decisive return to fiscal discipline' or 'draconian'?

That type of argument is similar to one used by Sandy Buffett, executive director of New Mexico Conservation Voters. Buffett accused Gov. Susana Martinez (R) of unfairly targeting environmental protections in her first budget proposal and said that the proposal would detract investments and jobs in clean energy technologies.

Martinez has proposed a $5.4 billion general fund budget that represents a $179 million decrease below fiscal 2011 spending levels. The general fund allocation to the state Environment Department would be slashed by $3 million, or 21 percent.

The budget "marks a decisive return to fiscal discipline in New Mexico" and would help make up a $450 million shortfall, Martinez argues.

Henke, of the New Mexico Oil & Gas Association, said he is hopeful that the oil and gas industry will be able to improve under a recovering economy and Martinez's policies and help the state narrow the gap between revenues and expenditures. The oil and gas industry contributes about a quarter of the revenue dollars for the state budget, Henke said.

"I don't think there will be any significant ramifications in terms of permitting, enforcement actions, actions with state governments with the oil and gas industry at the budget levels that are being proposed in New Mexico," he said.

However, compared to the approximately 6 percent cuts at other state departments, the cuts to the Environment Department are "draconian double-digit cuts that are totally disproportionate to what other agencies are facing," Buffett said.

She said that the budget proposals would affect water monitoring and increase air pollution that causes asthma.

"This just basically guts the ability enforce and regulate existing laws and monitor permits," Buffett said. "I fear that polluters that were held accountable would have an easier time now."

Governors' proposals are not likely to end up as final budgets as state appropriations committees take over the budget process. But the choices governors make on where to cut and where to spend serve to signal their priorities.

Martinez, for example, has previously targeted the state's environmental protections. She made headlines within the first few days of her first term of governor when she halted all proposed and new regulations in the state, including one that would set limits to greenhouse gas emissions. That policy, along with a rule that requires the oil and gas companies to line waste pits, is especially detrimental to the industry, Henke said.

The state Supreme Court later ruled that Martinez did not have the authority to prevent that rule from being published.

Republican Gov. Rick Perry is proposing similar cuts in Texas, where the state faces a record deficit of at least $15 billion.

In his two-year budget plan, Perry has asked for more money for the Texas Enterprise Fund, the Emerging Technology Fund and small-business tax exemptions. Meanwhile, he proposed giving the Texas Commission on Environmental Quality two-thirds and the Public Utility Commission 10 percent of what those agencies requested.

"We must respond to the state's budget challenges just as Texas families respond to their own financial challenges -- by tightening our belts, discerning between 'needs' and 'wants,' and setting priorities accordingly," Perry said in his budget. "We must increase government efficiency by consolidating services and suspending or eliminating services that are not necessary functions of government."

Bill Hammond, president of the Texas Chamber of Commerce Executives, called Perry's proposal a good starting point.

"He has created a budget that agrees with the revenue estimate, as a starting point," Hammond said. "At the same time we think that that number will have to be increased in order to maintain a lot of programs, particularly in the area of education, and can be substantially increased without any new taxes."

While the state Legislature is not contemplating cuts as deep as Perry has suggested, there will still be a number of TCEQ programs that will be "hit pretty hard" in the appropriations process, said Cyrus Reed, conservation director with Lone Star chapter of the Sierra Club.

Environmentalists say the TCEQ already does a poor job in enforcing regulations and accuse its leaders of taking their cues from industry. Jeffrey Jacoby, a director at the Texas Campaign for the Environment, said throwing money at the agency probably won't fix it but neither will taking it away.

"Taking money away is going to do more harm than good and put the agency in a position where it has even less ability to address the major air, water and soil pollution issues that are affecting lives," Jacoby said.

The Legislature has also proposed staffing cuts in the utility commission.

Those proposed cuts are "a little bit of a concern," Reed said, because of the recent rolling blackouts during the last cold snap in the state.

The Texas Sunset Advisory Commission, which evaluates state agencies, has recommended that the utility commission have more direct oversight over the Electric Reliability Council of Texas, the state's grid operator.

"We're calling for them to do more at a time when we're contemplating cutting their budget," Reed said.

Wis. coal plants may be sold

In Wisconsin, a different type of budget proposal is riding under the radar of the massive protests for collective bargaining rights and the flight of the state's Democrats to Illinois. There, Gov. Scott Walker (R) has proposed putting the state's 37 publicly owned power plants up for sale without bids in what he calls a "budget repair" measure, which passed the state Assembly on Friday.

The plants are largely aging coal-fired plants, 15 of which are under U.S. EPA investigation for possible Clean Air Act violations, according to Katie Nekola, an attorney with Clean Wisconsin. Whoever buys them would inherit any issues EPA finds.

"These are being investigated for a reason. They're dirty and they're old," Nekola said.

There are rumors of interested buyers, but no company has publicly stated it would purchase any specific plants. It is also unclear how much revenue the state would actually generate from their sale.

Darin Renner, an analyst at the state Legislative Fiscal Bureau, said the price of each plant will be determined on a case-by-case basis and could not give an estimate of total expected revenue.

"There are no required sales. And if there are sales or lease agreements, there's no minimum or maximum, so it allows the secretary of DOA [Department of Administration] to determine if it's in the best interest of the state to sell any number of the plants," Renner said.

Nekola cautioned against going into the proposal too quickly.

"We need to carefully evaluate these kinds of sweeping changes, and the public and the Legislature need to stop and take the time to consider what these kinds of initiatives mean, what kind of revenue they'll actually generate," she said.

On the other side of the spectrum, environmentalists are praising Maryland Gov. Martin O'Malley (D) and New York Gov. Andrew Cuomo (D) for their budget proposals. O'Malley has proposed increasing the state allocation for the Chesapeake Bay Trust Fund by 25 percent, or $5 million, compared to last year. Cuomo has proposed keeping the Environmental Protection Fund stable at $134 million.

Cuomo's budget "hopefully marks a turning point for this longstanding source of conservation funding, which was all but gutted in several rounds of severe budget cuts by David Paterson's administration," wrote Natural Resources Defense Council's Richard Schrader in a blog post.

In Oregon, the governor has not yet proposed his budget, but state legislators have introduced a bill to eliminate the state Department of Energy to both cut costs and provide structural change.

The bill is about "improving efficiency in how we plan for and manage energy," said state Rep. Jules Bailey (D), one of two co-sponsors.

Under the bill, a governor's energy office would do long-term planning, much like the CEO of a company, Bailey said. The Oregon Business Development Department would handle incentive programs, while the Public Utility Commission would deal with cost-benefit analysis and energy efficiency.

Environmentalists say they are willing to work with Bailey and co-sponsor Rep. Chris Edwards (D) on the measure. They acknowledge the department needs change, as it has recently run into difficulty with paying back a tax credit to small businesses.

"The problems Representative Bailey speaks to are real, and we have to figure them out," said John Audley, deputy director of the Renewable Northwest Project. "We're open to a proposal to break up the Department of Energy and reallocate it. ... We want to work with all folks to figure out what design is best for Oregon if our goal is reutilizing our energy needs with clean reliable renewable energy."

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