BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Tom Torlakson, Chairman 2522 (Arambula) Hearing Date: 7/7/08 Amended: 5/23/08 Consultant: Miriam Barcellona IngenitoPolicy Vote: EQ 5-2; T&H 8-5 Page 2 AB 2522 (Arambula) _________________________________________________________________ ____ BILL SUMMARY: AB 2522 would authorize the San Joaquin Valley Unified Air Pollution Control District (district) to increase the existing fee authority to up to $30 per motor vehicle in order to establish and implement incentive-based programs to achieve surplus emissions reductions, as specified. Additionally, AB 2522 would authorize the district to adopt rules and regulations to reduce vehicle trips in order to reduce air pollution from vehicle sources. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2008-09 2009-10 2010-11 Fund DMV collection costs $200 Special* District revenues (unknown, potentially $60,000)** Special* ARB assessment of district minor and absorbable Special* _________ *Motor Vehicle Account **Assumes there are 2.5 million motor vehicles in the district subject to the fee _________________________________________________________________ ____ STAFF COMMENTS: Under existing law, the district is authorized to levy up to $7 per motor vehicle in its district as follows: Up to $6 on motor vehicles registered within the district because it is a state nonattainment area for pollutants emitted by motor vehicles. This revenue is to be used for reducing motor vehicle air pollution pursuant to certain California Clean Air Act requirements. This cap is reduced to $4 on January 1, 2015. $1 district surcharge to be used for certain purposes, such as clean a clean fuels program and motor vehicle use reduction measures. Existing law also authorizes the Department of Motor Vehicles (DMV) to collect the fees and to retain up to one percent of the revenues generated for its administrative costs. AB 2522 would authorize the district to increase the $6 fee paid by motorists in the district to up to $30 per motor vehicle per Page 3 AB 2522 (Arambula) year for the purposes of establishing and implementing incentive-based programs to achieve surplus emission reductions that the district determines are needed to remediate air pollution harms created by motor vehicles and that are intended to achieve and maintain state and federal ambient air quality standards required by the Federal Clean Air Act. The district estimates there are about 2.5 million motor vehicles it that are subject to the fee. If the district opted to increase the fee by the maximum allowable by AB 2522, and assuming there are 2.5 million motor vehicles subject to the fee, the fee increase generate about $60 million in additional revenues to the district, less DMV collection costs. DMV estimates it would require about $200,000 to reprogram its computers in order to collect the fee increase. AB 2522 would authorize the increased fee from 2009-2010 to 2023-24, but prohibits the increased fees from being charged after the 2012-2013 unless the U.S. Environmental Protection Agency approves the district's proposed reclassification of its nonattainment status for ozone from severe to extreme. Additionally, AB 2522 specifies that at least $10 million would be required to be used to mitigate the impacts of air pollution on public health and the environment in disproportionately impacted environmental justice communities. AB 2522 would require the district to convene an environmental justice advisory committee to recommend the neighborhoods in the district that constitute environmental justice communities and how to expend funds within these communities. In order for the fees to become effective, the state Air Resources Board (ARB) would be required to make two findings: (1) that the district has undertaken all feasible measures to reduce nonattainment air pollutants from sources within the district's jurisdiction and regulatory control; and (2) the district has notified the state board that fees have been adopted under this bill and has provided the state board with an estimate of the total revenues it estimates will be generated by the fees. ARB has already determined that the district has undertaken all feasible measures to reduce nonattainment air pollutants from sources within the district's jurisdiction and regulatory control. AB 2522 would require ARB to file a notice with the Secretary of State within two days of its determination. Finally, ARB would be required to assess the district's progress in using any new fees to achieve and Page 4 AB 2522 (Arambula) maintain state and federal ambient air quality standards every two years that the fee is assessed. ARB indicates it already assesses the district's progress and these requirements would not increase its workload significantly. ARB estimates that it would only incur minor and absorbable costs as a result of the provisions of AB 2522. AB 2522 specifies that the fees would first be collected nine months after ARB files its findings with the Secretary of State.