In the fall of 2002, the firm of Fiscal Analytics conducted an analysis of natural resources spending in Virginia. The principle objective of the analysis, which will be updated following the General Assembly's reconvened session on April 2, was to determine whether spending in Virginia is adequate to establish and maintain a healthy environment. Key findings of the analysis include:

Appropriations History
Natural Resources funding is at a relative level not seen since 1984, with only about six-tenths of a percent, or $76 million, of total general funds available for appropriation. General funds for natural resource agencies have fallen from 1.27% of the general fund budget in FY 2000 to 0.63% in the October 15 version of the FY 2004 budget. This represents a relative share decline of 50%.

If non-general funds such as fees and federal funding are included, the natural resource agencies' percentage of the FY 2004 budget has declined from 1.25% in FY 2000 to 0.97% in FY 2004. Natural resources spending has been reduced by 50.30% since the beginning of the state's budget crisis in FY 2001, more than any other Secretariat.

Agency Funding Trends
Natural resource agencies are relying more heavily on non-general funds, such as fees, permits, federal funds and dedicated taxes, to fund program needs. In the October 15 version of the FY 2004 budget, only 31% of funding for natural resource agencies came from general funds. Non-general fund revenue sources included: federal funds (26%), gas tax revenues (13%), enterprise funds (4%), and special & dedicated taxes (26%). Many environmental programs designed to protect the health and welfare of Virginia's natural resources are largely supported through general fund allocations and are considered discretionary. These programs do not lend themselves to user fees, permits, or license revenues. The result is that critical programs are not properly funded, and long-term environmental health is jeopardized. One example of inadequate general fund support is the DEQ's water quality monitoring program, which only receives enough funding to monitor about 20% of the state's streams and rivers.

Many programs are chronically under- funded, such as environmental education, pollution prevention, land conservation, and water quality programs. The lack of adequate general funds threatens Virginia's approach to environmental protection. Virginia has traditionally emphasized non-regulatory approaches to environmental problems, relying instead on citizen education and voluntary compliance. If Virginia continues to provide inadequate general fund support, the state may have no other way to protect natural resources other than to regulate more heavily and increase penalties for noncompliance.

Funding Comparisons to Other States
Virginia is ranked 50th in the nation in natural resources spending according to the U. S. Census Bureau. The Bureau further ranks Virginia near the bottom (at 22.5% state share) compared to other states (average 31.5% state share) in the percentage of state spending on natural resources. The Environmental Council of the States, whose analysis uses a broader definition of natural resources spending than those cited above, also ranks Virginia lower than our surrounding states in terms of average spending levels.

Agency Funding Needs
in 2001, the Commission on the Future of Virginia's Environment heard testimony from then Secretary of Natural Resources John Paul Woodley that environmental program needs for 2005-10 could be as high as $4 billion above current funding levels. This is the level of funding that will be required if Virginia is going to meet its Chesapeake Bay commitments and other statewide environmental goals. Other unfunded and/ or under-funded programs include: Total Maximum Daily Load planning and implementation plans, the Chesapeake Bay tributary strategies, state parks operations, agricultural best management practice programs, river and stream water quality monitoring, and point and non-point water pollution programs. General funds have declined 48% since FY 2000, from $145 million to $76 million in FY2004. Overall funding of $242 million cannot possibly provide revenue needed to meet Virginia's environmental goals. If Virginia continues to head down this path, a fundamental change in the philosophy of natural resources protection may be necessary. Virginia may have to move away from an approach based on discretionary citizen education programs and voluntary compliance and toward one based on mandatory general fund programs that cannot easily have their funding reduced. It is estimated that even a doubling of general fund allocations would only provide a tenth of the projected $4 billion that is required to meet cumulative long-term needs.