Government spending on stormwater management in California

Stormwater infrastructure in cities is highly visible and serves to mitigate flooding and reduce pollution that reaches local waterbodies. Being so visible, it might be reasonable to assume that stormwater is adequately funded both in infrastructure and water quality management. Yet, stormwater infrastructure and water quality improvement are notoriously difficult to fund. Paying for stormwater quality improvements in California has been a multi-decade challenge due to the industry’s relatively recent emergence during a time of fiscal constraints on local governments.

US funding needs for stormwater grew significantly after 1987. Amendments to the Clean Water Act (CWA) required municipalities to reduce pollutants such as sediment, oil and greases, and bacteria in stormwater. Through the CWA, regulatory agencies develop targets for pollution reductions, which municipalities must meet to obtain a discharge permit through the National Pollutant Discharge and Elimination System (NPDES) administered by the US Environmental Protection Agency (EPA) and state agencies. This new duty required localities to reconsider stormwater systems as more than just pipes and gutters to manage flooding.

Responsibility for most stormwater management, including funding, lies with city and county governments. This creates challenges in funding stormwater programs and projects. Municipal stormwater programs were established more recently than other water sector programs and often lack dedicated funding sources. In California, many stormwater programs were developed in recent decades when local taxation powers were already constrained by proposition ballot measures.[i] Without dedicated funding streams, municipal stormwater programs compete against other essential municipal services.

Amid fiscal challenges for local governments, diverse and integrated approaches to stormwater infrastructure design have emerged. Traditional stormwater designs relied on centralized “grey” infrastructure such as pipes, channels, and gutters, which conveyed water quickly from urban streets. In recent years, distributed designs, sometimes called green infrastructure or low-impact development (LID), have grown increasingly popular. These approaches offer opportunities to connect stormwater management goals with other planning sectors. Well-designed distributed green infrastructure can support urban and water planning needs such as street beautification, multi-modal transit, water conservation, and groundwater recharge. In California, green infrastructure typically includes native and drought-tolerant vegetation. Cities view these opportunities as “win-wins” that offer cost savings and support holistic approaches to broader community goals.

While cities recognize the benefits of these planning innovations, the adequacy of local stormwater spending in California has been a contentious policy issue for decades. In the early 2000s, state regulators developing municipal NPDES permits contended with claims of high costs for permit compliance. Local governments lacked standardized rubrics for tracking comparable spending. In 2018, similar issues arose as the California State Auditorreviewed local watershed studies in Southern California, the San Francisco Bay Area, and the Central Valley, which identified large stormwater investment needs. Today across California, stormwater funding efforts are growing, but they require years of planning. More cities and counties are developing funding through popular ballot measures such as Measure W in Los Angeles County that funded its regional Safe, Clean Water Program. SB 231 in 2017 resolved a long legal debate by clarifying that stormwater systems were not subject to Proposition 218 requirements, but many localities continue to seek popular approval for new or updated local stormwater fees. Examples exist for both successful and unsuccessful public measures.

During this time, very few state or national studies estimated what communities actually spend on stormwater. America’s Infrastructure Report Card, a national benchmark of infrastructure spending, addressed stormwater for the first time in 2019 and estimated a national funding gap of at least $7.5 billion (ASCE 2021). In California, a 2005 study by the Office of Water Programs (OWP) at Sacramento State surveyed six municipalities to estimate costs for compliance with permit requirements, finding that communities spent between $18 and $46 per household on permit compliance activities (Currier et al. 2005). In 2014, the Public Policy Institute of California estimated statewide annual stormwater funding needs in the range of $1 to $1.5 billion across the state, while current funding was only $500 to $800 million based on extrapolations from a few communities (Hanak et al. 2014).

In the context of the continued policy debates and local funding challenges for stormwater, in 2018, OWP sought to quantify existing stormwater funding and update its 2005 study (Babchanik et al 2022, Currier et al 2005). We explored if questions of municipal stormwater spending could be answered with data that already existed, but was only available in static, disaggregated, and difficult-to-use sources. This occurs in many sectors of water management in California.

After surveying possible sources, we identified spending and budget data for stormwater management in over 160 local governments in California through publicly available annual reports (discoverable through public sources). We extracted the data and developed standardized rubrics for classifying costs. The level of detail varied widely, with some localities reporting many years of data in a report, broken down by categories, and others only reporting a single year’s aggregated totals. Activities identified in NPDES permits provided a template for categorizing costs, including public education, pollution prevention, and illicit discharge detection and elimination. We standardized all data to 2018-dollar values.

Once categorized and standardized, we aggregated the totals and examined trends. Stormwater duties are dispersed across cities, counties, and flood control districts. The publicly-available reporting identified over $700 million in annual spending on stormwater management. However, this is an underestimate, as it only covered about half of the state’s urban and suburban populations. The availability of data varied across regions and depended on local municipal or regional board practices regarding publication of annual reports. Some local governments also posted annual reports on their websites. The composite database is available for future use.

Spending varied widely across the state. Annual expenditures for cities ranged from $48,000 to $88 million (median=$890,000), while annual county expenditures ranged from $400,000 to $51 million (median=$13 million). Counties and flood control districts budgeted on average more per entity than cities ($18 million/year vs. $3 million/year), but in aggregate, cities spent more than counties ($520 million/year vs. $170 million/year).

We also examined trends in per capita spending by cities. Reported data indicates that 50% of cities spent $14/person or less annually on stormwater management. A few small- or medium-sized cities had large reported per capita spending on stormwater (over $300/person-year). Average and median per capita spending values were $35/person-year and $14/person-year, respectively. Quantifying per capita spending was possible for cities but not counties, because county programs do not have identifiable populations. Many regions have overlapping city and county stormwater programs, with counties taking on some region-wide duties that make it difficult to compare values across regions.

We also examined spending trends by categories of activities. Many municipalities categorized costs based on broad categories from federal Phase 2 NPDES permits. The lumped category of “Pollution Prevention” had the most spending, followed by “Operations and Maintenance” and “Capital Costs.” While these categories offer an easy rubric for standardizing costs, they provide limited insight into the outcomes of spending. Some municipalities reported more detailed data with activities such as “Street Sweeping”, “Pesticide and Fertilizer Management”, and “Hazardous Household Waste Collection”. In developing standardized cost-reporting requirements, both regulatory agencies and local governments would benefit from a coherent list of detailed activities. This would enhance opportunities to evaluate the beneficial outcomes of local stormwater management investments.

Overall, the analysis validated the approach of estimating stormwater spending trends by collecting and standardizing annual budget and expenditure reporting from municipalities. The analysis also demonstrated that aggregating such data can address difficult and long-standing policy questions. However, the available data was not formatted for easy analysis and was only available for some of the state.

California regulators and municipalities will continue efforts to fund stormwater management and quantify funding gaps in future years. In California’s federated system of government that spans local and state agencies, quantifying trends can be challenging. Yet, data often already exists to answer some large policy questions. If the data become available in better formats for analysis, the information can help localities and state agencies develop funding plans to address California’s integrated sustainability and resilience goals. Stormwater management programs have the potential to help achieve diverse climate and equity goals, from groundwater recharge to urban beautification to sanitation and housing. Addressing these critical challenges will require a renewed understanding of the value of well-funded public services and infrastructure, including stormwater.

Erik Porse is a Research Engineer at OWP at Sacramento State, and an Assistant Adjunct Professor at UCLA’s Institute of the Environment and Sustainability. Maureen Kerner is a Research Engineer at OWP at Sacramento State and Associate Director of the Environmental Finance Center at Sacramento State. Brian Currier is a Research Engineer at OWP at Sacramento State. David Babchanik is a Civil Engineering student at Sacramento State and lead author of the associated research study. Danielle Salt is a Research Engineer at OWP at Sacramento State. Julie Mansisidor is the Publications Manager at OWP at Sacramento State.