# • 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 75 Hawthorne Street San Francisco, CA 94105 FE: EPA Section 105 Grant- Maintenance ofEffort (MOE) for FY 15 The South Coast Air Quality Management District (SCAQMD) is a single-purpose agency whose primary source offunding is from stationary sources ofemissions. SCAQMD does not benefit from theproceeds ofproperty 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 ofthe State ofCalifornia 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 ofStationary 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 ofstationary source revenues has given us no choice butto reduce our budget and find less costlyways 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, 20IS

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 ofProposition 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% ofits support from the Section IOS grant, the loss ofthat funding would seriously impact the Agency's ability to carry out its clean air program. Ifyou have any question orrequire 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