DENR budget boost a far cry from pre-recession funding

But no matter what the final budget version shows when lawmakers emerge from their committees over the coming days, state funding for the Department of Environment and Natural Resources won't come close to what it's lost since 2008.

North Carolina's recession-plagued economy, coupled with a distinct policy shift from the General Assembly's new Republican majority, drastically reduced the state's contributions to the agency. To lawmakers and others who have long advocated for a leaner environmental regulator, the budgetary changes have led to increased efficiency and common-sense reorganization.

But environmental advocates say the cuts, which at one point reduced state funding for DENR by nearly half, have diminished the ability of the agency to prevent environmental disasters and keep natural resources safe. As proof, they point to political leaders' new efforts to restore regulator positions shed over the years – measures present in all three budget plans to deal with the February coal ash spill.

"These proposals for new positions indicate people think there aren't enough bodies out there to do what needs to be done on coal ash," said environmental lawyer Robin Smith, who worked as DENR's assistant secretary for the environment from 1999 to 2012.

To Steve Wall, a policy research associate at the University of North Carolina at Chapel Hill's Institute for the Environment, the coal ash measures look familiar despite the change in leadership.

Whether it's responding to issues such as hog waste, drinking water contamination or the more recent coal ash spill into the Dan River, he said political leaders respond to big problems only when they come to a head.

"The [General Assembly’s] response to adding positions for coal ash seems fairly consistent with the actions over the last 10 years of state leadership in adding environmental positions when an environmental problem is identified," Wall said in an email.

Grady McCallie, policy director for the North Carolina Conservation Network, said that's a problem because these budget increases aren't focused on long-term solutions.

"What the budget is really about is having state government be effective across the board at doing the job we ask them to do," McCallie said. "That doesn't mean just responding to the crisis of the day."

For most of the time Wall worked as one of DENR's chief policy analysts in the mid-2000s, budget bills were good to the agency.

Democratic leaders during that period pushed the growth of divisions focused on coastal habitat protection, private well water quality and a range of other environmental programs.

"The focus on environmental programs and what was happening in the state was moving things in the right direction and creating a good quality of life," Wall said.

But not everyone agreed with the trajectory of that growth. Republicans, then the minority, were concerned that expanding and unnecessary regulations were strangling business development.

When North Carolina voters made them the majority party in both the House and Senate in 2011, GOP leaders moved quickly to rein in what they saw as overreach.

State funding for the agency in 2011 dipped by about 15 percent, even after two years of recession-era budget cuts. In addition to less operating funding, many of these cuts came from wholesale transfers of divisions that had been in DENR's organizational structure.

"What started happening in 2011 was really different," Smith said. "At that point, the economy was starting to recover, but there was this round of reorganizations, many of which the department itself opposed." 

That included the transfer of Forest Resources and Soil and Water Conservation, which both moved into the Department of Agriculture and Consumer Services. The reorganization reduced DENR's budget by $50.5 million in 2012.

Wall said the reorganizations had the practical effect of stripping away missions that didn't directly tie into regulation.

"Soil and Water was doing technical assistance and helping farmers," Wall said. "Now, the department doesn't have that purpose or existence. It changes the dynamic."

When Republican Gov. Pat McCrory took office in 2013, state funding did begin to change course, ticking up 40 percent. But DENR officials point out this was largely due to a technical change by legislators.

Instead of drawing revenue directly from large environmental trust funds, the legislature opted to route that money through the state's General Fund, then back to DENR.

McCallie said that decision can help consolidate spending, but it can also reduce the flexibility of civil servants within the department.

"What they're essentially doing is getting total control of the purse by the legislature. That's a policy choice," McCallie said. "What it has to end up doing is restricting [the agency's] options."

With another fiscal year on the horizon, the governor, House and Senate have all called for more funding for DENR in targeted areas.

Rep. Tom Murry, R-Wake, who chairs the House Appropriations Subcommittee on Natural and Economic Resources, attributed the additional money to lawmakers who are becoming "more and more comfortable with the operations at DENR."

"We're watching them. We're definitely not giving them a blank check by any stretch," Murry said. "But we want to make sure we are properly funding DENR to the level where they can execute regulations to protect our water, protect our air and protect our environment."

For the House's part, those additional resources include about $1.8 million for additional regulators and infrastructure for coal ash enforcement and cleanup. That's marginally higher than the Senate's $1.75 million budget proposal for similar measures.

In both cases, Murry said, lawmakers worked closely with DENR to figure out what the agency needs.

DENR spokesman Drew Elliot attributes that working relationship to the efficiencies Secretary John Skvarla has adopted at the agency since taking the helm under McCrory.

"Part of the secretary’s strategy has been to establish trust with the General Assembly," Elliot said in an email. "When compared with the previous administrations, we have made great strides in proving to legislators that we can effectively manage the department. This, in turn, gives us credibility when we ask for more resources."

Big environmental disasters such as the coal ash spill can force political leaders to reexamine their assumptions, Smith said. That includes lawmakers who targeted DENR divisions such as water quality, which she said experienced much deeper cuts over the years than other regulatory divisions.

"The assumption was that DENR and the water quality program were over-regulating," Smith said. "The coal ash spill in the Dan River certainly doesn't indicate over-regulation."

Although she acknowledged that coal ash facilities had long been under-regulated by Democratic leaders, she said GOP lawmakers seem to be signaling a critical need in some of the same areas they've previously slashed. 

But Murry said the budgetary increases are not an acknowledgement that DENR funding has dropped too low.

"Whenever you have a new administration, you find a new way of doing business," he said. "That breeds efficiencies, and it also illuminates areas where we need to make more investments. That's the process we're working through right now."

After 20 years of running the state's environmental regulator under Democratic control, Murry said Republican lawmakers are working as quickly as they can to make improvements. 

"I think, over the past 18 months, we've found a new way to do things and hopefully make things better, make things more efficient and have better results for the environment," he said. "That's the ultimate bottom line."