BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 525
                                                                  Page  1

          Date of Hearing:   May 4, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    AB 525 (Gordon) - As Amended:  April 25, 2011 

          Policy Committee:                              Natural 
          ResourcesVote:8-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              No

           SUMMARY  

          This bill requires the Department of Recycling and Resource 
          Recovery (Calrecycle) to dedicate at least 16% of its annual 
          appropriation from the Tire Recycling Management Fund for market 
          development and new technology (MD/NT) activities to local 
          government public work projects that use waste tires and to 
          related outreach efforts.   The bill's provisions sunset as of 
          June 30, 2010.

           FISCAL EFFECT  

          This bill may result in Calrecycle redirecting an unknown 
          amount, potentially in the millions of dollars, to local public 
          works projects from other MD/NT activities eligible to receive 
          funding from the department's Tire Program.  The actual amount 
          of funding that is redirected as a result of this bill in a 
          given fiscal year is unknown but will depend upon (1) the amount 
          the Tire Management Fund MD/NT appropriation included in the 
          budget act for a given year and (2) the non-public works Tire 
          Program projects that would have been funded, absent this bill.

          Calrecycle indicates that its most-recent five-year tire 
          recycling plan calls for funding MD/NT activities in amounts 
          that vary from $21.4 million to $12.5 million per fiscal year.  
          Assuming those MD/NT funding amounts hold true, this bill would 
          result in funding for local public works project that varies 
          from $3.4 million to $2 million per fiscal year.

           COMMENTS  

           1)Rationale  .  The author contends the set aside for local public 








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            works projects that use waste tires, which had been authorized 
            by statute that has since expired, needs to be continued.  
            Public works projects, specifically roadway projects, the 
            author notes, divert waste tires from landfill.  And, the 
            author claims, roadways made with waste tire products are 
            superior to other road surface materials in several ways and, 
            therefore, are the more cost-effective option for local 
            governments.  
             
             The author contends, however, that local governments, most of 
            who are financially strapped, frequently base their capital 
            decisions on up-front expense, not long-term 
            cost-effectiveness.  The author argues for continuing 
            guaranteed funding for such local public works projects so 
            their superiority may be demonstrated to local governments and 
            others who will be making decisions about capital projects in 
            what, hopefully, will be times of greater fiscal health.

           2)Background.   Each year, California produces approximately 40 
            million waste tires.  In the recent past, illegal tire piles 
            have produced significant hazards to human and environmental 
            health, including chronic fires and breeding ground for pests.  

             Consistent with statute, Calrecycle Tire Program grants are 
            designed to encourage activities that reduce the number of 
            waste tires going to landfills for disposal and eliminating 
            the stockpiling of waste tires. Activities that receive 
            funding include tire pile cleanup and enforcement, market 
            development, and demonstration projects. Revenue for the 
            grants is generated from a fee on each new tire sold in 
            California.  

             Until last July, the department's funding activities included 
            the RAC (rubberized asphalt concrete) grant program.  
            Established by SB 1346 (Chapter 671, Statutes of 2002, Kuehl), 
             the RAC grant program provided funding to local governments 
            to promote markets for recycled-content surfacing products 
            derived from waste tires generated in California.  The program 
            was extended by SB 369 (Chapter 300, Statutes of 2006, 
            Simitian) and expired on June 30, 2010.

           3)The Power of Momentum.   This bill was amended in policy 
            committee to specify that 16% of Tire Program MD/NT activity 
            funding will go to local public works projects and related 
            outreach.  That percentage was chosen because, as the policy 








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            committee analysis notes, the now-expired statute that 
            governed Tire Program grants similarly required 16% go toward 
            such public works projects.
             
             According to the admittedly fuzzy memory of staff working at 
            the Integrated Waste Management Board--Calrecycle's 
            predecessor--when the RAC grant program was instituted, the 
            16% figure was chosen based upon the workload needs of the 
            board at that time.  The decision to include the 16% figure in 
            this bill, therefore, was the result of the persistence of 
            past practice, not analytical reasoning.  It may be worthwhile 
            to ask Calrecycle to suggest a percentage for the public works 
            set aside that makes sense, given current conditions.

          4)Support  .  This bill is supported by California Association of 
            Counties and the Regional Council of Rural Counties, whose 
            members oftentimes are the recipients of Tire Program grants, 
            and others who advocate against waste.

           5)Opposition.   The bill is opposed by the Rubber Manufacturers 
            Association, which argues that price supports, such as Tire 
            Program grants, artificially prop up uneconomic uses of 
            tire-derived products that will fail once the price supports 
            are removed.

           Analysis Prepared by  :    Jay Dickenson / APPR. / (916) 319-2081