• 

South Coast 

Air Quality Management District 

21865 Copley Drive, Diamond Bar, CA 91765-4178 

(909) 396-2000 • www.aqmd.gov 

December 18, 2015 

Grants Management Section MTS-7 

Management and Technical Services Division 

U.S. Environmental Protection Agency 

7 5 Hawthorne Street 

San Francisco, CA 94105 

FE: EPA Section 105 Grant- Maintenance of Effort (MOE) for FY 15 

The South Coast Air Quality Management District (SCAQMD) is a single-purpose 

agency whose primary source of funding is from stationary sources of emissions. 

SCAQMD does not benefit from the proceeds of property tax, sales tax, or income tax. 

Both regulated and voluntary emission reductions along with the general economic 

downturn have resulted in less revenue to support SCAQMD programs as compared to 

FY 2008-09. In addition, the voters of the State of California approved Proposition 26 in 

November 2010 which may limit SCAQMD's ability to increase fees in the future. 

For the FY 15 (Federal Fiscal Year) Section 105 grant, the SCAQMD Maintenance of 

Effort (MOE) level is lower than the previous federal fiscal year (FY 14) by only 0.50%. 

Therefore, SCAQMD requests a non-selective reduction determination. The FY 14 MOE 

was $106.32 million and the FY 15 MOE is $105.78 million. Stationary Source revenues 

have declined by 6.50% from the FY 2008-09 pre-recession high to FY 2014-15 as shown 

in the table below. 

Comparison of Stationary Source Revenues 

Description Actual FY 2008-09 Actual FY 2014-15 Difference 

Stationary Source $91 ,472,243 $85,546,869 ($5,925,374) 

Revenues . 

The decline in stationary source revenues would have been even more pronounced had it 

not been for the SCAQMD Governing Board-adopted CPI-based (Consumer Price Index) 

fee increases totaling 10.90% over the last six years along with additional cost recovery 

fee increases. The net loss of stationary source revenues has given us no choice but to 

reduce our budget and find less costly ways to meet our mandates. Over the past several 

years actions have been undertaken to balance the budget by reducing overall 

Cleaning the air that we breathe ... ' 
U.S. Environmental Protection 

Agency 

-2- December 18, 20 IS 

expenditures including deleting and/or unfunding vacant positions, implementing a 

hiring freeze, enacting pension reform, reducing services and supplies expenditures and 

utilizing reserves. Since FY 2009-10, SCAQMD has supplemented revenues with a net 

$1S.86 million in General Fund reserves to meet program requirements. 

Based on: (I) SCAQMD's inability to levy taxes, (2) regulated and voluntary emissions 

reductions, (3) the general economic downturn, (4) voter approval of Proposition 26, (S) 

an overall decline in stationary sources revenue, (6) expenditure cuts, and (7) use of 

financial reserves to balance the budget, the request for a reset ofSCAQMD's MOE 

meets the criteria for a non-selective reduction determination. Although SCAQMD 

receives less than S% of its support from the Section I OS grant, the loss of that funding 

would seriously impact the Agency's ability to carry out its clean air program. 

If you have any question or require further information, please contact Mary Leonard, 

Financial Analyst, at 909-396-2780 or mleonard@aqmd.gov 

ML 

Enclosures 

cc: 

M. O'Kelly, SCAQMD 

D. Peterson, SCAQMD 

M. Leonard, SCAQMD