In the Red: Harbors and Waterways Revolving Fund teetered on insolvency

STATEWIDE—California’s fund to support boating infrastructure and activities is in the red and was recently on the verge of going under entirely. Efforts to resuscitate the Harbors and Watercraft Revolving Fund, however, appear to be underway in earnest, according to California State Parks Director Lisa Mangat and Division of Boating and Waterways (DBW) staff.

The Harbors and Watercraft Revolving Fund, which replaced the Small Craft Harbor Revolving Fund, helps pay for things such as facilities development, boating safety and regulation programs. Signage, loans, ramp repair and boat launch projects are also supported by the fund. Mangat and DBW staff spoke about the fund at the May 30 DBW Commission meeting.

DBW staff is looking ahead to 2020 budget and hoping to find solutions to save the fund from insolvency. State officials appear to be willing to listen to as much public input as they can, meaning boaters could influence how the Harbors and Watercraft Revolving Fund is managed and whether new funding would be available to boating communities throughout the 2020s and beyond.

“We have not yet determined the long-term solution to that will set the fund on a path to solvency, we have put in place a few short-term measures that would increase the fund balance,” Will Sshaafsma, deputy director for California State Parks, said. “These short-term solutions will allow for a longer term solution to be implemented and prevent any adverse impacts to the fund.”

The fund was deemed to be unsustainable as it had a negative balance – too much money was going out and not enough was coming in. State officials determined changed had to be made to the way the fund was managed in order to prevent insolvency.

DBW staff has been in discussions with California’s Department of Finance to determine what steps needed to be taken now in order to prevent insolvency and grow the fund balance to a position where the division can start to implement some solutions.

“We determined we would need to build a sufficient reserve in the fund by the end of 2019-2020 [Fiscal Year] so the fund could withstand a down year for boating registrations,” Schaafsma said. “We need to grow that fund balance in 2019-2020.”

He said the division projects to have $28 million available in 2019-2020, which would certainly help.

Next year’s budget hearings and deliberations will be significant, Mangat added. She said public engagement would be a significant part of the process.

“We will need to make some decisions. And not just us as a division or us as a department, but there will be discussions,” Mangat said during the May 30 DBW Commission meeting. “The governor will have to put forward some proposals in January. It will be subject to public discussions.

“We’re reaching out to the public now because we want there to be some engagement,” she continued. “We want everyone to have a seat at the table. It’s very early in the process. We’re not wedded to any specific ideas. The purpose of today is to help define the issue, educate folks and we’re going to talk about how you can engage with us.”

A proposal will be presented to the state’s Department of Finance in fall 2019. Budget hearings commence in spring 2020, and implementation of a sustainable solution could happen as soon as summer of 2020.

Mangat added she hopes all of California’s divisions and departments do a better job of working together and operate holistically, as opposed to working in silos, as she believes to be the case in Sacramento right now. She hopes DBW and other divisions/departments build relationships and work with nonprofits, for example, in order to be more engaged with the community and incorporate as many stakeholders and interested parties as possible.