State Water Board staff say budget drills could lower some water-quality fees; May revise will set details

State Water Resources Control Board staff told stakeholders that temporary, statewide budget “drills” from the Department of Finance could reduce the board’s operating costs and — if those reductions are finalized in the May revision to the governor’s budget — could reduce fee needs for the Waste Discharge Permit Fund (WDPF).

Deputy Director John Russell said the board was directed to run two reduction exercises — a vacancy reduction drill and a separate operating reduction exercise — that together required about a 7.94% decrease to operating budgets. He said the exercises arrived after the usual budget materials were prepared and that staff lack final numbers until Finance finishes its review. “Those drills showed up in the governor’s budget as a control section,” Russell said. “We just don't have the information available to generate the detailed cost drivers that we normally do.”

Why it matters: the WDPF supports permitting and regulatory staff whose salaries and program costs are funded by fees on permittees. If agreed reductions lower base expenditures, staff said, less fee revenue may be needed, opening the possibility of fee relief when the May revised budget is published. Cassandra White and other Fee Branch staff said they expect to run the usual cost-driver analyses after the May revise and present firm fee proposals at the June 11 stakeholder meeting.

Key details from staff presentations: Cassandra White summarized the January proposed fee-setting budget as roughly $200 million for fiscal year 2025–26 and reported a net year-over-year decrease of about $1.3 million (0.7%) in the January materials. She said the largest state-operations change was a small increase (mainly compensation), while “pro rata” allocations from other state agencies were down approximately $1.5 million (about 0.7%). Staff emphasized those figures reflect the January proposal and will be updated in May.

Stakeholders asked about federal funding and other revenue sources. Sharon Green of the Los Angeles County Sanitation Districts asked whether pending federal changes — including to Section 106 grants — would affect fees. Staff said they were monitoring potential federal impacts but did not expect immediate effects to the WDPF; however, some state grant-funded programs (for example, certain SRF-related activities) could be affected. Outside speaker Bob Gore and other commenters warned that federal program changes are uncertain and may play out over months.

Cannabis program funding: an emailed question requested a 75% fee reduction for cannabis-related fees. Staff said cannabis-fee staffing has already been reduced “by about 70–80%,” from about 60 originally fee-funded positions to roughly 10 staff currently paid from cannabis fees, and that they have worked with the Department of Finance to shift some positions to the cannabis tax fund. Staff will evaluate cannabis revenue and expenditures after the May revise to determine appropriate fees for 2025–26.

Next steps and timing: staff said they will publish the complete cost-driver tables, fund-condition statements and proposed fee schedules after the May revise. The next WDPF stakeholder meeting is scheduled for June 11, when staff expect to present revised, detailed analyses.

Ending: Stakeholders were asked to submit questions by email and to monitor the Water Board fee web page for handouts and materials. Staff emphasized they could not finalize proposals until Department of Finance completes its review and the May revised budget is available.