Dinged by criticism over the Missouri Department of Natural Resources' decision to delay the release of water quality results at Lake of the Ozarks this summer, Gov. Jay Nixon announced sweeping new initiatives aimed at cleaning up the state's rivers, lakes and streams. It was clear protecting water quality had become a top priority for the administration. But now the Department of Natural Resources is teetering on the edge of being unable to pay for some of its most basic regulatory functions such as protecting the state's water resources. That's because the fees that support the department's clean water efforts are set to expire this year and the department is put in the undesirable position of asking the Legislature for an increase during a recession. Or they could ask to renew the fees, which won't likely thwart layoffs and program consolidations due to a projected multimillion-dollar shortfall. To make matters worse, the funds that also support the department's air, and solid and hazardous waste programs are also projected to reach insolvency this year.

"To put it simply, we're broke," said Davis Minton, the department's newly appointed deputy director for efficiencies and operations.The Legislature has not voted to increase the fees that pay for the department's environmental programs in almost 10 years. And while the department's cost of permitting, inspecting and enforcing environmental regulations has increased, its fees have not.  While department officials will not confirm whether they intend to ask for a fee increase for its clean water program this year, all signs indicate they won't. Since the Lake of the Ozarks scandal broke, the department has faced harsh criticism from legislators, environmentalists and even Nixon himself. A Senate investigation was launched, some department officials resigned in the scandal's wake and the DNR saw its political capital further diminished.

"To tell you the truth, I think there has been a legislative bias against DNR," said Rep. Walt Bivins, R-St. Louis County. "It will be interesting to see what kind of nip and tuck they come up with this year." Even if the department persuades the Legislature to simply renew fees, the agency will face a significant shortfall. Unlike other state agencies, the department receives very few funds from general revenue. In fact, dedicated funding sources such as fees pay for 83 percent of its proposed $311 million budget.  Department officials this week declined to give details about projected
shortfalls, but a few months ago officials told permittees that the deficit in the water protection program alone was projected to be about $1.7 million, assuming there are no general revenue cuts and federal funding levels remain the same.

Consequently, department officials have confirmed they are considering layoffs and consolidating some programs while they continue to look for alternative funding."We are looking to see where we might implement some efficiencies," said Bill Bryan, the department's deputy director. "At the same time, we have no illusion that every gap will be filled simply by tightening the belt." Over the past year, the department has also been warning permittees about another potential consequence of its budget predicament — regional federal environmental regulators taking over responsibility for permitting and inspecting facilities and enforcing environmental laws.

Department officials say they believe they're in a better position to work with Missouri businesses to make sure they are complying with environmental regulations than the federal EPA. And for the most part, Missouri permit holders agree. "Missouri facilities are increasingly forced to keep two sets of rule books:  state and federal," said Roger Walker, director of REGFORM, a statewide
business group focused on environmental policy. He said as the DNR withers away it will become little more than "an administrative handmaiden of the federal government." Either the state
adequately funds the department, he said, or we "bow to the federal government and hand over the keys to the car."

In recent months, department officials have been meeting with permit holders — industries, small businesses, livestock producers and cities — to gauge what, if any, changes should be made to the current fee structure. Some permit holders say they'd agree to fee increases if it allows the department to function like it should.The Metropolitan St. Louis Sewer District in St. Louis, which pays about $340,000 a year in permit fees, supported a fee increase during the 2007 legislative session. At the time, MSD officials said they would support a fee increase if the agency could find a way to increase its general revenue share and process permit applications in a timely manner — a common request by permit holders who have complained the DNR takes too long to complete the task which drives up project costs.

When asked this week if MSD's previous position still held, Jeff Theerman, MSD's executive director, said, "I think it could be warranted, but it depends on what structure is being proposed." Kathleen Logan Smith, director of the Missouri Coalition for the Environment, said one of the problems with the DNR's current fee structure is it allows some industries to pay less than the cost of providing service.  Currently, publicly owned treatment systems, industries, and domestic sewage plant operators pay about 72 percent of fees collected by the DNR's clean water program. Concentrated animal feeding operations, builders and small businesses like metal fabrication shops pay about 16 percent combined. "The bottom line is the home builders and factory farms aren't paying their fair share," Smith said. "And if the costs of administrating the program is less than what they're paying, Missouri taxpayers are essentially subsidizing polluters." Environmentalists and most permit holders agree on one thing — the DNR's current funding scheme is not sustainable in the long run. For now, DNR officials aren't publicly discussing long-term solutions. For now, it's about surviving 2010.

"We going to make some very, very tough decisions in a short period of time," Minton said. "That's for certain."

Source:
By Kim McGuire
ST. LOUIS POST-DISPATCH
Wednesday, Jan. 27 2010