Title: Recommendations to the Water Management District Review Commission from the Financial Structure and Budgeting Subcommittee
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Title: Recommendations to the Water Management District Review Commission from the Financial Structure and Budgeting Subcommittee
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Language: English
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Spatial Coverage: North America -- United States of America -- Florida
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Abstract: Recommendations to the Water Management District Review Commission from the Financial Structure and Budgeting Subcommittee
General Note: Box 9, Folder 14 ( SF-WMD REview Commission - 1995-1996 ), Item 20
Funding: Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.
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Bibliographic ID: WL00001923
Volume ID: VID00001
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RECOMMENDATIONS TO THE WATER MANAGEMENT
DISTRICT REVIEW COMMISSION FROM THE
FINANCIAL STRUCTURE & BUDGETING SUBCOMMITTEE



The following recommendations regarding district fiscal policies and practices were passed
by the Financial Structure & Budgeting Subcommittee of the Water Management District Review
Commission during meetings of August 23-24 and September 25, 1995:1


1. Budgetary Oversight of Water Management Districts:2


**NOTE: The Commission unanimously approved the Subcommittee's major recommendations
regarding the expansion of legislative oversight of the water management districts at the
September meeting in Tallahassee. Those recommendations included establishment of standing
committees on water resources in the Senate and House, review of districts' budgets by the
general government subcommittees of the Senate and House appropriations committees, and
formalization of district budget review responsibility within the Office of the Governor.


A. Each district shall provide a copy of its proposed budget, the past year's
expenditures, and its annual in-house financial audit to the Governor, the
President of the Senate, the Speaker of the House, the chairs of all legislative
committees and subcommittees with substantive or appropriation jurisdiction
over water management districts, the Secretary of the Department of Envi-
ronmental Protection, and the governing body of each county in which the
district has jurisdiction or derives any funds for the operations of the district.
Such documentation shall also include copies of comments made by any of
the named entities, as well as the district's responses thereto.

NOTE: Mssrs. Joe Moore3 and John Wehle4 agreed to provide the Executive
Director with citations to all statutory provisions that require the districts to
provide proposed budgets, year-end reconciliations or audit reports to specific
entities or offices, so that an appropriate recommendation can be drafted that
will consistently address all district reporting sections in Florida law.



1 Unless otherwise indicated, the vote on all recommendations was unanimous.
2 Responding to the Commission's charge to review "ways to improve the financial and programmatic
accountability of districts."

3 Joseph M. Moore is the Director of Budget & Procurement of the South Florida Water Management District.

4 John R. Wehle is the Assistant Executive Director of the St. Johns River Water Management District.






0 0

2. District Budget Process:'


A. Truth-in-millage provisions within Chapter 200, Florida Statutes, should be
revised to permit more accurate noticing of district tax rates to both property
owners and the general public, and to allow additional information where
appropriate, e.g. explanatory phrases or examples.


B. Budget advertising requirements should be expanded to include notice of all
budget workshops and hearings in newspapers of local circulation.


C. Districts should be required to provide review copies of budgets to the chair
of each local government within its jurisdiction, the President of the Senate,
the Speaker of the House, and the chairs of the Natural Resources
Committees of both legislative houses, and the districts should respond in
writing to each comment received from those entities.


D. Districts should collectively standardize their budget reporting formats so that
all districts' are fully comparable; fiscal and budget policies and procedures
should approximate those of state agencies to the greatest extent practicable.



3. Costs of Operating the Districts:


A. The governing boards of water management districts have the prerogative and
the responsibility to determine the priority and the extent to which local
funding is appropriate and available to accommodate legislatively mandated
statewide programs. The Legislature shall affirm what it collectively deter-
mines are the important policies and programs of the state by providing
general appropriation funding to the districts to implement those priorities.
To the extent that new or expanded water resource programs and regulatory
responsibilities enacted by the Legislature or delegated to the districts by the
Department of Environmental Regilation are not accompanied by general
appropriation funding, the districts shall be exempt from implementing the
new or expanded programs.



To address the Commission's charge to review "the need for revision to the budget development and
adoption procedures of the districts, including revision of the laws governing the procedures for budget development,
adoption, the levy of ad valorem taxes and the public noticing procedures in Chapter 200 and 373, Florida Statutes."


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PROPOSAL: Amend S 373.501 and S 373.503 as follows:

373.501 Appropriation of funds to water management districts. The
department may allocate to the water- management districts, from funds
appropriated to the department, such sdlms as may be deemed necessary to
defray the costs of the administrative, regulatory, and other activities of the
districts. The governing boards of the water management districts have the
prerogative and the responsibility to determine the priority and the extent to
which local funding inappropriate and available to accommodate legislatively
mandated statewide programs. The governing boards shall submit annual
budget requests for such purposes to the department, and the department
shall consider such budgets in preparing its budget request for the Legislature.
The Legislature shall affirm what it collectively determines are the important
policies and programs of the sate by providing general appropriation funding
to the districts to implement those priorities. To the extent that new or
expanded water resource programs and rulartory responsibilities enacted by
the Legislature or delegated to the districts by the department are not
accompanied by general appropriation funding, the districts shall be exempt
from implementing the new or expanded programs.

373.503 Manner of taxation.-
(1) It is the finding of the Legislature that thegeneral regulatory and
administrative functions of the districts herein authorized are of gen-
eral benefit to the people of the state and should fully or in part be
financed by general appropriations. Further, it is the finding of the
Legislature that water resources programs of particular beliefit to lim-
ited segments of the population should be financed by those most
directly benefited. To those ends, this chapter provides for general
appropriation finding for the administrative and general regulatory
functions of thedistricts, the establishment of permit application fees,
and a method of ad valorem taxation to financethe activities of the
districts.


B. Where possible, the districts should develop uniform permit application fees and
forms for statewide use, with possible exceptions for geographic differences. As noted
by district representatives, however, each district has a somewhat different
philosophy regarding the portion of application review costs that should be paid by
the applicant versus what the "public" should pay in terms of the benefit derived
from the district's issuance of a permit. Query: Would a form and fee structure
appropriate for an urban development be too cumbersome or expensive for simple
rural projects?


C. A permanent and adequate source of state funding should be provided for implemen-
tation of the Surface Water Improvement and Management (SWIM) program.


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4. Funding Mechanisms Available to Districts:


A. The ad valorem taxing authority should be equal among all the districts, i.e.
Northwest Florida Water Management District's constitutional village cap should
be raised to the same level as that of the remaining districts, i.e. from .05 mill to 1.0
mill.

B. An alternative funding source should be provided by statute for the Suwannee River
Water Management District in recognition of its limited ad valorem tax base (and
for Northwest Florida Water Management District if its constitutional millage cap
is not raised to the level of other districts).

"Alternative water sources" was a topic discussed by the Financial Structure & Budgeting
Subcommittee on several occasions, and members generally agreed with Chairman Lewis'
comment that a new source of funding must be found for districts if they are going to move
forward with the programs mandated by the Legislature, As stated by one observer:

The concept of funding water management programs in Florida through an
assessment of ad valorem taxes originated with drainage and flood control
projects in the Everglades Drainage District where the benefits of such
activities accrued to the individual land owners. Today, the benefits of Water
Management in Florida accrue to niany other groups but is still substantially
funded through taxes on hnd[.]

Of course, the alternative most often suggested as a supplementary source of income for
districts is a "user fee" for water consumption, although a "special assessment" based on
acreage (or portion thereof) is also a possibility. While the subcommittee initially deter-
minedthat the discussion of "user fees" for water consumption was premature until certain
policy decision were made by the Legislature,6 it modified that recommendation following
further discussion to reflect its strong support fr legislative consideration of alternative
funding sources, including the concept of user fees, for the implementation Mf water resource
programs in the state. Some of the options available include:

(1) repeal of the current sales tax exemption for the sale of water (if all other
utilities are taxed, why not water?);

(2) impose an excise tax on water consumption by value (the consumer's water
bill would subject to a tax just like telecommunications);

(3) impose a consumption tax based on the olume of water used, with different
rate schedules for residential, industrial and agricultural users, and perhaps an
exemption for the first x-number of gallons consumed.

6 Issues such as (1) who gets the watet;, (2) where will it come from, and (3) wfat's.the role of water
management districts in the supply of that water?


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* IA


Subcommittee members agreed that the following suggestion should be included in the
Commission's report and passed along to the Legislature for its further consideration in its
review of an alternative funding source for water resource programs:

For urban, agricultural and environmental water supply capital improvements (such
as aquifer storage and recovery, regional reservoirs and reuse), establish of a 9-mem-
ber appointed commission, with three members each appointed by the Governor,
President of the Senate and Speaker of the House. The commission's charge would
be to recommend to the Legislature a funding mechanism for the creation of a
bondable capital improvement fund for consideration in the 1997 regular session.


C. The Legislature should cap district villages at their current rates and proposed
increases should receive full legislative consideration. This would require districts
to plan ahead and come to the Legislature for increases in millage rates and, perhaps
more importantly, it would force the Legislature to consider the funding impacts of
programs it creates and assigns to the districts as "unfunded mandates." It would
thus make our elected officials the ones "accountable" for district expenditures. (Yes,
this uas discussed earlier and temporarily deferred for later consideration; welcome back).


*


The following proposals presented to the Commission were affirmatively rejected by the Financial
Structure & Budgeting Subcommittee during meetings of August 23-24 and September 25, 1995:

I. There should be a limit on the annual budget increases of districts.


II. Capital improvements projects of greater than $1,000,000 should require legislative
ratification.


III. The planning and feasibility of future water supply projects of the districts must
include consideration of the full economic impact that potential projects will have
on urban, agricultural, environmental and recreational interests and be based on "full
cost accounting," ie cost projections must include land acquisition expenses, project
development and operational costs, anticipated area business losses, regional
economic impacts, sociological impacts, etc.7


IV. There should be statutory "not to exceed" maximums for fines and penalties assessed
in permit enforcement actions.


7 See Exhibit "A" for the subcommittee's discussion of this issue.


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Although the following issues were discussed by subcommittee members, the group makes no
specific recommendations regarding same except as stated:

a. What, if any, economic incentives should the districts offer consumers to encourage
conservation, reuse, development of alternative sources, etc.?

DISCUSSION: Jack Maloy, initially remarked that this issue was tough, because
water is free and how do you develop an economic incentive for using less of some-
thing that's free? John Welle stated that a consumer of reuse water or stormwater
in the St. Johns District is not subject to watering restrictions like regular water
customers, and this has been an incentive for some agricultural interests. Gene
Schiller indicated that the Southwest District gave economic incentives at the utility
level through its cooperative funding projects, and that half of its village was
reserved for basi's to use for projects such as alternative water source development.
He said that the Southwest board felt that cooperative funding was an appropriate
way to encourage development of alternative sources, and that the bill passed in 1995
codified that approach (see Chapter95-323 appended to this document).

Jack Maloy pointed out that the operative word in the proposal .was "consumer,"
and asked, "What is an economic incentive for a consumer to conserve water,
recognizing that to be successful in conserving water, your water bill's gonna go
down?" John Wehle said that water bills going down is exactly the opposite of what
the utilities want to happen. Mr. Maloy said he didn't know what the district could
offer the consumer, because the district does not deal directly with the consumer.

RESPONSE: The subcommittee decided that its response to this recommendation would
be to (1) point out that Representative Rayson's alternative water supply development bill
passed in the 1995 session, (2) explain what it did, and (3) detail what each district was doing
with respect to that legislation.

Appended to this document are copies.of the House of Representatives Final. ill Analysis
& Economic Impact Statement, together with Chapter 95-323 (House Bill No. 2609) relating
to alternative water supplies. Details of current conservation programs and initiatives of the
districts will be available by the Commission's November meeting in Orlando.


b. The districts should be limited in the expenditure of funds for- public relations."

5 373.103(5), Florida Statutes, provides as follows:

In addition to the other powers and duties allowed it by law, the governing board
of a water management district may be specifically authorized by the department to:
(5) Expend, at the discretion of the governing board, for purposes of promotion, ad-
vertisement, and improvement of the program and objectives of the district, a yearly
sum not to exceed 0.25 percent of the moneys collected by taxation within the
district.


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Chairman Phil Lewis pointed out that most of the district funds spent for "public relations"
was actually spent on educating the public on water resource issues. Gene Schillers noted
that in the Southwest District, the basins increased their budgets for educational programs,
but the communication budget of the district itself actually decreased.' Mike Slayton9 stated
that in the current budget year (1996-97), South Florida has $430,000 budgeted for
cooperative agreements with educators to fund water resource education efforts throughout
the district; this is not for public relations, it's for public education on water resources.

RESPONSE: Subcommittee members directed the Executive Director to draft a response
to this recommendation that would,(1) point out the public perception that the districts
were "throwing money away" on self-serving public relations when, in fact, the majority
was spent educating the public on water resource issues; and (2) explain that 5 373.103(5),
Florida Statutes, restricts district spending on "promotion, advertisement, and improvement
of the program and objectives of the district" to one-fourth of one percent annually, and
the results shown from a review of past years' audits of districts' expenditures in that regard.


c. When other governmental agencies and offices are having to cut budgets statewide, why are
the districts allowed to increase theirs? Shouldn't they be held to the same budget con-
straints and standards? This is a major thrust of the complaints that the Commission has
heard regarding "non-accountability" of the districts. How should the Commission respond
to these claims?

DISCUSSION: David Fisk pointed out the fallacy in this proposal: the state budget actually
grows every year, and that it would be interesting to see a comparison between the growth
of the state budget and the growth or decline of district budgets over the same period. Just
because programs are cut does not mean the annual state budget declines they just move
the money from one agency to another depending on the priorities that year. Mike Slayton
and Gene Schiller noted that each district has different programs and initiatives every year
and that the governing boards constantly wrestle with competing needs. Chairman Lewis
asked the districts to provide the subcommittee with documentary information (including
bar graphs) showing a comparison between the growth of the state budget and that of the
districts for the last five years. Based on what that information shows, the subcommittee's
response to this issue may be just to educate the public on how district budgets do or don't
increase when compared to other governmental agencies and offices.

Appended to this document is a Memorandum of October 17, 1995, from David W. Fisk,
together with a comparison chart and bar graphs showing the districts' actual ad valorem
tax revenues and the State of Florida's revenues for the last five years. As Mr. Fisk noted,
"[t]he bottom line of the information is the WMDs as a whole averaged 7.56% annual
revenue growth for the 5-year period while the State averaged 8.26% annual revenue growth
for a comparable period." (C:\DATA\WP\WM\PSBRECMS.EM)

8 Eugene A. Schiller is the Deputy Executive Director of the Southwest Florida Water Management District.

9 Michael C. Slayton is the Deputy Executive Director of the South Florida Water Management District.


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I







EXHIBIT "A"
The following sumarizes discussions of the Financial Struture & Budgeting Sbcom ittee
prior to its rejection of the following proposal (Item CC):

he, planning and feasibility jfu e water supply projects of he district
must include consideration oftefull economic impact that potential projects
will have on urban, agricultural, environmental and recreational interests
and based on "fult cost accounting," i.e. cost projections nmst include
land acquisition expenses, project development an operational costs,
anticipated area siness losses, regional economic impact, sociological
impacts, etc.

DISCUSSION: As it relates to assigning "value" to environmental restoration, while
you can "cost" a project and understand what the impact of the tax or'project will be
to the affected industry, the value of the benefit to be derived is a tough, highly debat-
able issue. In_ the Everglades res oration act, fpr.example, that's why the final legisla-
tion changed the "assessment" to a tax, because it was deemed infeasible to do a benefit
; test on an unknown, or immeasurable value. Furthermore, how does one evaluate
"sociological impact" or even "antiiated area ,biness losse" witl any degree of
accuracy? Business interests are normally quite hesitant when asked to divulge their
profit/loss statements. In the Southwest Florida Water Management District, most of
its projects are done with "cooperative .unding" and the entity asking for matching
district funds does ;'e analysis, i.e. the county or other local body, no the district. The
waythis recommendation is phrased, ie. "the planning and fesiblity... must include"
in most cases will refer o the Legislature when it is consider the creation of a new
program or project, and the Legislature is supposed to be doing the economicanalysis
at the front end that's where the planning and feasibility should be caslcilated,
S although this is. often a highly speculative (if not impossible) task.
VOTE: .Unanimously rejected (4/).

NOTE: The following prop sal by Joe Marlin Hiliard will be considered by the Com-
mission during discussions on the balancing and priority of competing interests ii water
supply and management: "[A]mbitious environmental restoration projects [should] be
subject to the same criteria and compete with the other water users, after the science
behind theprojects has been peer-reiwed d the benefits clearly, identified."




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