BILL ANALYSIS
AB 2744
Page 1
Date of Hearing: April 14, 2008
ASSEMBLY COMMITTEE ON TRANSPORTATION
Mark DeSaulnier, Chair
AB 2744 (Huffman) - As Amended: April 8, 2008
SUBJECT : Metropolitan Transportation Commission: greenhouse gas
mitigation fee on motor vehicle fuel
SUMMARY : Provides authority to the Metropolitan Transportation
Commission (MTC) to impose a fee on motor vehicle fuels in their
jurisdictional area. Specifically, this bill :
1)Deletes the existing authority of MTC to impose a regional gas
tax.
2)Makes various legislative findings and declarations basically
indicating that transportation is the leading contributor to
statewide greenhouse gas (GHG) emissions.
3)States that intent of the Legislature to allow bay area voters
to decide whether to alleviate burdens on the global climate
by imposing a fee on motor vehicle fuel and using the funds
derived from that fee to reduce and mitigate climate changing
emissions from transportation.
4)Defines "motor vehicle" as every self-propelled vehicle
operated or suitable for operation on a public street or
highway in the bay area.
5)Among other definitions, defines "motor vehicle fuel" as
gasoline or any other combustible liquid, regardless of the
name by which the liquid is known or sold, the chief use of
which in this state is for the propulsion of motor vehicles.
6)Upon voter approval from each of the counties within the MTC
area, authorizes MTC to impose a fee on each gallon of motor
vehicle fuel sold in the region that is delivered into the
fuel supply tank or tanks of a motor vehicle. Authorizes the
fee to be levied at a rate established by MTC, but not to
exceed 10 cents per gallon and not to exceed a 25-year period.
7)Requires MTC and the Bay Area Air Quality Management District
(District) to jointly adopt a regional transportation/climate
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protection expenditure plan (expenditure plan). The
expenditure plan is to fund programs and projects to cost
effectively reduce GHG emissions directly associated with the
operation of motor vehicles. Programs and projects are to be
described and costs estimated. Requires MTC and District,
upon their separate adoption of the expenditure plan, to
include a finding that the expenditure plan will achieve a
nexus between payment of the fee and the mitigation of GHG
emissions.
8)Establishes criteria and process for the development of the
expenditure plan and establishes a working group to make
recommendations for projects in the expenditure plan.
9)Requires MTC and District to prepare project specific
estimates, GHG reductions, and mobility improvements. An
equity analysis is required indicating costs and benefits by
income group. States a goal of the expenditure plan to select
projects that cost-effectively reduce climate emissions and
provide at least as much benefit to low-income households, on
average, as may be imposed in costs.
10)Requires sufficient funding to be included in the cost
estimates and expenditure plan to operate and maintain each
project for the duration of the fee.
11)Requires MTC to adopt a measure, after the joint adoption of
the expenditure plan by MTC and District, that will be
submitted to the voters of each county upon the request of MTC
and District to the counties and San Francisco in the region.
The measure would authorize MTC to impose the fee throughout
the region.
12)Prohibits the measure from being grouped with other state or
local measures on the ballot.
13)Requires MTC to reimburse the counties and San Francisco for
costs of the measure in the election.
14)Authorizes, not requires, MTC to impose the fee in all
counties upon approval by the margin of voters within the
region voting as determined necessary by the California
Constitution or other applicable statutory provisions.
15)Requires MTC to contract with the State Board of Equalization
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(BOE) to administer the fee and authorizes BOE to receive
reimbursements of its administrative costs.
16)Establishes the Transportation Fund for Climate Protection
administered by MTC and restricts expenditures to the
expenditure plan as adopted. However, authorizes MTC to
deduct costs incurred in the initial implementation and
thereafter, administration costs of MTC not to exceed 5% of
annual net revenues.
17)Establishes requirements of project sponsors for the
expenditure of the funds.
18)Requires the expenditure plan to include periodic public
reviews and citizen oversight as well as updates and amendment
procedures.
19)Indicates that this bill's provisions are severable.
20)Provides for no state mandated reimbursement of costs.
EXISTING LAW :
1)Creates MTC to provide comprehensive regional transportation
planning for the nine-county region comprising its
jurisdiction. Has general responsibility for planning,
approving, and carrying out various transportation-related
activities within the region, including functions pertaining
to highways, toll bridges, and transit systems. The nine
counties are Alameda, Contra Costa, Marin, Napa, San
Francisco, San Mateo, Santa Clara, Solano and Sonoma as well
as 101 municipalities. Approximately seven million people
reside within its 7,000 square miles.
2)Authorizes MTC to impose a motor vehicle fuel tax within its
region jurisdiction, excluding motor vehicle fuel used to
power aircraft, upon approval of the measure by 2/3rds
approval by the voters within the region at an election.
3)Authorizes cities and counties to impose a local general sales
tax increase up to 1% with 2/3rds local voter approval.
4)Creates District, the state's first regional agency dealing
with air pollution, in 1955. Its jurisdiction encompasses all
of seven counties: Alameda, Contra Costa, Marin, San
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Francisco, San Mateo, Santa Clara and Napa, and portions of
two others - southwestern Solano and southern Sonoma.
FISCAL EFFECT : Unknown
COMMENTS : The author contends that "In 1995, the Legislature
gave MTC the authority to levy a tax on gas sold in the Bay Area
for transportation projects, including road maintenance and
rehabilitation, upon approval from 2/3 of the Bay Area's voters.
However, the MTC has not used this authority because polling
shows not enough residents would support an open ended gas tax.
That said, residents would support a gas fee to help fund
greenhouse gas reduction strategies?A recent poll conducted by
MTC showed nearly two-thirds of respondents (65%) believed that
global warming is extremely important and should be one of the
highest priorities in transportation planning in the Bay Area.
Sixty-nine percent of respondents said they would consider
paying 25 cents more for a gallon of gasoline if it would be
used to limit or reduce global warming."
It is the author's intentions "to address exponentially
increasing greenhouse gas emissions related to transportation in
the Bay Area through better public transportation alternatives
and actions that reduce vehicle miles traveled. This bill
simply asks the state to give the Bay Area the tools it needs to
implement climate change reduction projects and programs Bay
Area residents want and support. In this regard, the Bay Area
has an opportunity to be a model for the rest of the state and
for forward-thinking regions around the country."
MTC Report : The"MTC March 2008 Annual Report to Congress"
indicates that they will propose a 10 cents per-gallon regional
road-use fee for local road improvements. This "pennies for
potholes" concept will address roughly 80% of the region's $11
billion 25-year shortfall for local streets and roads. As the
expenditure plan must be devoted to programs and projects to
cost effectively reduce greenhouse gas emissions directly
associated with the operation of motor vehicles, it is not known
how much, if any, funds can be used to address local road
improvement needs as identified in the MTC report.
Impact on future motor vehicle fuel tax increases : The
California Office of the Legislative Analyst (LAO) indicates in
their analysis of the current state budget that "The state faces
increasing costs to maintain and rehabilitate its highways as
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the system ages. However, the revenues which traditionally pay
for these costs have grown at a much slower pace than vehicle
travel, resulting in an estimated annual shortfall of over $3
billion for highway maintenance and rehabilitation. We
recommend legislative actions to address this shortfall,
including increasing and indexing the gasoline tax." As
authorized by this bill, imposition of a per gallon motor
vehicle fuel fee for Los Angeles area residents could possibly
affect any future statewide attempt to impose a per gallon fuel
tax as recommended by LAO.
Arguments in support : The American Lung Association of
California expresses that "In the Bay Area, the transportation
sector is responsible for the largest source of greenhouse gas
emissions and residents overwhelmingly depend on automobiles for
travel. Despite the funding and planning to increase regional
transportation use, nearly 70% of Bay Area commuters still drive
alone to work. And, according to MTC, the average weekday
vehicle miles traveled is projected to increase 41% between 2000
and 2030."
The Natural Resources Defense Council (NRDC) indicates that
"this session, NRDC is co-sponsoring SB 375 (Steinberg) which
provides incentives for California's local and regional agencies
to provide housing choices and balanced transportation systems
to reduce transportation sector global warming emissions. Under
SB 375, the Bay Area would create a Sustainable Communities
Strategy - a long term vision for regional growth that achieves
a state-allocated regional emissions target. AB 2744 would
directly support regional global warming emissions reductions by
allowing voters to approve dedicated funding for transportation
alternatives in the Bay Area. These investments would provide
choices to Bay Area residents, thereby reducing traffic
congestion and helping the state meet its global warming
emission targets."
Arguments in opposition : In opposition, the California Motor
Car Dealers Association indicates that "whether California's GHG
rules or newly adopted federal CAFE standards become the
national policy, fleet averages for vehicles will dramatically
increase by at least 40% to 35 m.p.g. by 2020. Moreover,
California has also adopted AB 32 (Nu?ez) Chapter 488, Statutes
of 2006, the Global Warming Solutions Act which will decrease
GHG emissions to 1990 levels by 2020 for all sectors of the
economy; Governor Schwarzenegger issued an Executive Order
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creating a new low carbon fuel standard; and AB 118 (Nu?ez) of
2007 raises over $1 billion over the next decade for alternative
fuels research and air quality improvement programs (including
nearly $250 million earmarked specifically for fleet
modernization). Taken together, these federal and state
policies will yield dramatic changes in California's economy at
large and specifically in the new product mix for cars and
trucks in the next decade. Piecemeal adoption of local
programs, whether approved by voters or not, risks contradicting
these state and national policies and potentially undermines
their projected positive impacts. In short, these previously
enacted policies need to be implemented before we enact
additional GHG or air quality fee-related measures."
AAA Northern California indicates that "The fuel surcharge as
proposed in this bill would appear to be used for a specific
purpose, which is transportation/climate protection in the nine
Bay Area counties. When the surcharge is used for a specific
purpose, it is a special tax according to the California
Constitution and requires two-thirds local voter approval
(Article XIII C, Section 1(d) and 2(d)). Any effort to increase
a gasoline tax by calling it a "fee," as does AB 2744,
circumvents the two-third voting requirement."
Committee comments :
1)Subsequent to regional voter approval, this bill authorizes
but does not require MTC to impose the fee. MTC should be
required to carry out the will of the voters without any
discretion on their part. The committee suggests that the
bill be amended to change "may" to "shall" on page 6, line 4 .
2)The expenditure plan is to have a stated goal "to select
projects that cost-effectively reduce climate emissions and
provide at least as much benefit to low-income households, on
average, as may be imposed in costs." Are there any other
considerations for mitigating disproportionate impacts upon
lower income residents upon the imposition of the motor
vehicle fuel fee?
3)By inference in the definitions, fuels dispensed for non-motor
vehicle and not used for propulsion of motor vehicles are
excluded from the fee, such as gas/diesel powered generators,
powered lawn and garden equipment, power washers, marine
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vessels, etc. Is this the intention? If so, how will this be
calibrated at the pumps?
4)This bill caps the ongoing reimbursed administrative costs of
MTC at 5% of annual net revenues (after reimbursements for
initial implementation work to District and MTC have been
made). However, another bill (AB 2558, Feuer-2008) authorizing
the imposition of a countywide climate change mitigation and
adaptation fee (potentially a similar motor vehicle fuel fee)
caps the administrative rate at 2%. As MTC is the sole
administering entity after the initial implementation period,
the committee suggests that the reimbursement rate be reduced
to 2%, consistent with the other legislation .
Related bills : AB 595 (Brown), Chapter 878, Statutes of 1997
authorizes MTC to impose, with voter approval, a regional tax on
gasoline in the Bay Area region of up to 10 cents per gallon for
specified transportation purposes.
AB 2388 (Feuer-2008) would impose separate fees, statewide, upon
the registration of passenger vehicles according to vehicle
weight and CO2 emissions. That bill is scheduled to be heard in
the Assembly Transportation Committee today.
AB 2558 (Feuer-2008) would authorize, upon voter approval, Los
Angeles County Metropolitan Transportation Authority to impose a
fee on either motor vehicle fuels or vehicle registrations to
fund countywide climate change mitigation. That bill is
scheduled to be heard in the Assembly Transportation Committee
today.
SB 1731 (Yee-2008) would authorize MTC to impose a $1 vehicle
registration fee increase for implementing congestion mitigation
strategies within the region. That bill passed the Senate
Transportation and Housing Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
AFSCME Local 3916 of AC Transit
American Lung Association of California
Bay Area Air Quality Management District
Bay Area Bicycle Coalition
California Bicycle Coalition
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Communities for Clean Ports
East Bay Bicycle Coalition
End Oil
Environment California
Marin County Bicycle Coalition
Natural Resources Defense Council
Planning and Conservation League
Public Health Law and Policy Planning for Healthy Places
San Francisco Bicycle Coalition
Sierra Club California
Transportation and Land Use Coalition
Opposition
AAA Northern California
California Independent Oil Marketers Association
California Motor Car Dealers Association
Howard Jarvis Taxpayers Association
STOP Hidden Taxes Coalition (representing over 60 businesses and
consumers)
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093