Establish State Funding Requirements for Local Air Pollution Agencies

The Texas Air Control Board s enabling statute should fund only local programs that also are funded by local contributions.


Background
The Texas Air Control Board (TACB) is the state s principal authority on air quality and is responsible for setting air quality and pollution control standa rds. Local governments have the same powers in their territorial jurisdictions and are subject to the same federal laws as the TACB.

Local governments have significant incentives to make sure that companies within their jurisdictions meet air quality standards. If an area is designated as a non-attainment area by the Environmental Protection Agency (EPA), a company that might emit pollutants is not allowed to build or expand in a non-attainment area. This limitation could damage an area s economy.

A number of Texas local governments provide air pollution control services. Five of these programs directly receive federal grants under Section 105 of the Clean Air Act. These programs operated by t he cities of Fort Worth, Dallas, and Houston and the city/county health departments in Galveston and El Paso counties have agreements with the TACB delineating their respective responsibilities within the geographical areas covered by the local programs. T he EPA holds TACB accountable for the performance of these programs, even though the local programs negotiate directly with the EPA for the grants. Each year the TACB reviews these programs and submits a report to the EPA.

Table 1 lists Texas five feder ally funded local air pollution programs, the amount of federal funds received in 1991, the local funds spent to satisfy certain federal funding requirements, the total program budgets, populations served and the per-capita spending levels. As the exhibit illustrates, Houston s program is the largest. In fact, the City of Houston program has a budget and staff larger than that of TACB s Houston office, which serves a 12-county region.


Table 1 - Federally Funded Local Air Pollution Control Programs in Texas
Local State Federal Total Local Dollars
Local Funds Funds Funds Dollars As Percent of Population Per Capita
Program FY 91 FY 91 FY 91 Budgeted Program Total Served Spending

Dallas $ 506,000 NA $200,000 $ 706,000 72% 1,006,877 $0.70 El Paso 369,641 NA 100,000 469,641 79 591,610 0.79
Fort Worth 117,106 NA 100,000 217,106 52 447,600 0.49
Galveston 255,907 NA 95,000 350,907 73 217,399 1.61
Houston 1,659,454 NA 400,000 2,059,454 81 1,631,205 1.26

Totals $2,908,108 $895,000 $3,803,108 3,894,691 0.98
TACB Field Offices $4,800,000 13,091,819 0.37

Source: Texas Air Control Board.


State law authorizes state funding of the five local programs. Until recently, the local offices actually did receive state funding. Beginning in fiscal year 1992, the Air Control Board set aside $621,000 for local programs in Houston, Galveston County, Da llas, Fort Worth and El Paso.

Generally, states that provide grant money to local governments also require a matching local contributi on. Some states require that local contributions stay above a certain level to maintain state funding. These requirements ensure that state funds do not simply replace local funds without additional public benefit.

To determine if the state is providing an appropriate level of support to local programs and that the conditions for funding are adequate to ensure the best use of state funds, the Texas Performance Review interviewed staff of both agencies and examined st ate and federal documents relating to the operation of local air pollution agencies. Here are the results of the review.

TACB has spent considerable time in recent months negotiating the terms of local grant contracts. The process is not sufficiently guided by state law and is cumbersome for the agency.

The review identified two specific problems with current statutory provisions relating to state funding of local programs. First, TACB s statute provides that the board may request appropriations of sufficient money to contract for services o f [local programs]. . .to ensure that the combination of federal and state funds annually available for an air pollution program is equal to or greater than the program costs for the operation of an air quality program by the [local program]. This provision is not consistent with the common federal and state funding policy of maintenance of effort. The provision essentially authorizes TACB to request an appropriation that would fully fund the local program, without any local contribution. The statute does not require any maintenance of effort on the part of the local program to receive funds. The agency reports that some local programs have already reduced their local funding, perhaps in anticipation of replacing funds with state money.

Second, the statute does not give the agency guidance on the amount of funds it may grant in relation to local contributions. Many federal and state-funded programs require a matching amount from the local program. For example, the Texas Juvenile Probation Commission provides Challenge Grants to county juvenile probation departments at a dollar-for-dollar match rate.


Recommendations
A. The Texas Air Control Board s (TACB) enabling statute should require that, to receive state funds, local programs must maintain funding and activities at least equivalent to the local program s contributions in state fiscal year 1992.

The provision authorizing the agency to request appropriations, when combined with federal funds, sufficient to meet the full program costs of a local program should be repealed. In addition, the statute should require the local program s contribution continue at an amount equal to or more than the amount contributed in 1992.

B. The statute should require that to receive state grant funds from TACB, local programs must match state and federal funds at a rate of at least one-third of the combined state and federal contribution.


Implications
Requiring matching funds by law would ensure that state money serves to supplement or enhance rather than replace local funds.

This would provide an incentive for local programs not only to maintain their 1992 contribution level, but to increase their contribution to increase state matching funds. It also ensures that local programs maintain a particular ratio of local funding to state and federal funding.

Fiscal Impact
These changes would not have a direct fiscal impact. They would, however, help to ensure a minimum level of local participation in air pollution control activities. This should help to protect the s tate from having to assume full responsibility for funding air pollution control activities.