State Water Resources Control Board lays out fee scenarios to close Waste Discharge Permit Fund shortfall

David Ciavarelli, Fee and Revenue Branch Chief for the State Water Resources Control Board, opened a virtual stakeholder meeting Friday to review the waste discharge permit fund’s fiscal outlook and potential fee adjustments for fiscal year 2026–27. Board staff presented a current fee‑setting budget of about $197 million and the Governor’s May revise fee‑setting budget at just over $199.3 million, a net increase of roughly $2.4 million (about 1.2%).

Staff identified primary cost drivers including state operations (about $1.7 million), several budget change proposals (BCPs) and budget adjustments. Cassandra White summarized the BCPs affecting the fund, notably a border water quality protection unit (about $1 million), a CalEPA consolidated administration share to the fund ($328,000), landfill support and enforcement ($463,000), permitting impacts from the U.S. Supreme Court Sackett decision (nearly $2.6 million), and recycled water/Senate Bill 31 related needs (about $1 million). The May revise also added a Fresno office relocation request with the waste discharge permit fund share estimated at $4.5 million.

‘‘The first table shows the current fee setting budget of about 197 million followed by the governor’s May revise fee setting budget for fiscal year 2026–2027 at just over 199 million,’’ Cassandra White said while walking through the cost drivers. Staff also noted pro rata charges and fiscal control section reductions that partially offset increases.

Board staff presented three options for addressing a projected shortfall: no fee change (which would draw roughly $9.3 million from reserves and lower the reserve to about 21% of annual expenditures), a moderate option (Scenario A) combining modest fee adjustments of roughly 2.5% with using about $4.6 million in reserves, and a full‑recovery option (Scenario B) that would generate about 5% more revenue and avoid reserve use while preserving fund health. ‘‘Scenario B provides the greatest level of fiscal sustainability,’’ staff said, noting the tradeoff of higher fee impacts on permit holders.

Stakeholders pushed back on charging all fee payers for programs that appear regionally focused. Jared Voskuil of the California Association of Sanitation Agencies asked why inland fee payers would subsidize a border water quality unit targeted at cross‑border pollution in San Diego, and board staff replied that foundational programs have historically been spread across fee payers statewide and that staff prefers general fund support when available. Several stakeholder groups including the Wine Institute and LA County Sanitation Districts said they favored the no‑fee‑change option for FY 2026–27 given the fund’s current reserve level and urged multi‑year, gradual adjustments instead of a single large increase.

Stakeholders also requested more detail on specific cost allocations. Bruce Haddleshaw of the Northern California Water Association asked for a breakdown showing whether irrigated lands fees have subsidized non‑irrigated monitoring programs and requested a decade‑long spending history for the irrigated lands portion of the fund; staff agreed to prepare follow‑up materials.

Staff said the department is using FI$Cal reporting and that current figures are up to date. The next stakeholder meeting is scheduled for July 30, 2026, by which time staff expects the state budget to be in place and further discussion to continue.

The board has not adopted any fee changes at this meeting; staff presented scenarios for the board’s consideration and asked for stakeholder feedback to inform the board’s decision process.