BILL ANALYSIS Ó
AB 39
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ASSEMBLY THIRD READING
AB 39 (Skinner and John A. Pérez)
As Amended May 24, 2013
Majority vote
NATURAL RESOURCES 9-0 UTILITIES & COMMERCE
15-0
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|Ayes:|Chesbro, Grove, Bigelow, |Ayes:|Bradford, Patterson, |
| |Garcia, Muratsuchi, | |Bonilla, Buchanan, |
| |Patterson, Skinner, | |Chávez, Fong, |
| |Stone, Williams | |Beth Gaines, Garcia, |
| | | |Gorell, |
| | | |Roger Hernández, Jones, |
| | | |Quirk, Rendon, Skinner, |
| | | |Williams |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 12-0
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|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Campos, | | |
| |Eggman, Gomez, Hall, | | |
| |Ammiano, Pan, Quirk, | | |
| |Weber | | |
| | | | |
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SUMMARY : Provides for distribution of funds allocated by the
Clean Energy Jobs Act (Prop 39) for clean energy projects
through grant and loan programs administered by the California
Department of Education (CDE), California Community Colleges
(CCC) and California Energy Commission (CEC). Specifically,
this bill:
1)Defines "eligible institution" as a K-12 public school or
school district, or a community college (i.e., K-14).
2)For each fiscal year that Prop 39 revenue is transferred the
Clean Energy Job Creation Fund (Fund) (i.e., the next five
years), requires:
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a) 75% for grants, with 89% administered by CDE for grants
to local educational agencies and 11 administered by the
CCC Chancellor.
b) 25% for low- or no-interest revolving loans to schools
and other public buildings through the Energy Conservation
Assistance Account (ECAA) administered by the CEC.
3)Requires the Fund, to the extent moneys are available, and
upon appropriation by the Legislature, to support:
a) Energy-related job training and workforce development by
the California Conservation Corps or other specified
workforce development programs.
b) Property Assessed Clean Energy (PACE) or similar
programs.
4)Requires all recipients to submit a specified report to the
Citizens Oversight Board (COB) within one year, and requires
the COB to report this information to the Legislature and the
public annually.
5)Establishes related definitions, findings and declarations.
EXISTING LAW , Prop 39, an initiative approved by the voters at
the November 6, 2012, statewide general election:
1)Repeals existing law allowing multistate businesses to choose
a formula for calculating their California income or franchise
tax liability and, instead, requires those businesses,
starting in 2013, to utilize the "single sales factor" (SSF)
method of determining their taxable income.
2)Establishes a COB, composed of nine members appointed by the
State Treasurer, the State Controller, and the Attorney
General, whose expertise may contribute to the effective
execution of energy projects. The COB is intended to ensure
that funds are used appropriately, and to evaluate the cost
effectiveness of projects.
3)Dedicates $550 million, or 50% of the annual increase in
revenues from the SSF, whichever is less, annually for five
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fiscal years (2013-14 through 2017-18) to the Clean Energy Job
Creation Fund for projects that create energy efficiency and
clean energy jobs in California, upon appropriation by the
Legislature. The funding may include:
a) Energy efficiency and clean energy installations at
public schools, universities and colleges, and other public
buildings;
b) Job training and workforce development on clean energy
and energy efficiency programs; and,
c) Financing and technical assistance to fund PACE
programs.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, cost pressures in the hundreds of millions of dollars
from Prop 39 proceeds for this program. Increased costs to CDE
and CCC to administer a new program. Prop 39 prohibits overhead
costs in excess of 4% of the total funding. Previous grant
programs administered by the CEC have cost between 1% and 3% of
the amount appropriated.
COMMENTS : In November 2012, California voters approved Prop 39
to close a corporate tax loophole that previously allowed
multi-state corporations operating in California to choose
between two methods of determining taxable income. This shift
to a single sales factor method is estimated to increase the
state's annual corporate tax revenues by as much as $1.1
billion.
Prop 39 also specified how a portion of this new revenue should
be spent. First, half of the revenue generated from 2013-2018,
up to $550 million, should be transferred to the Fund. The Fund
should support energy efficiency and alternative energy projects
at public schools, colleges, universities and other public
buildings, as well as related public-private partnerships and
workforce training. Second, the funds can only be appropriated
to agencies with established expertise in managing energy
projects and programs. And third, programs must be coordinated
with the CEC and Public Utilities Commission (PUC) to avoid
duplication among agencies, and leverage existing efforts.
An increase in state corporate tax revenues due to Proposition
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39, however, can also affect the state's funding obligations
under Proposition 98. Approved by voters in 1988, Prop 98
assures local school districts and community colleges that they
would receive at least a minimum level of funding from the state
and local governments (roughly equivalent to 40% of General Fund
revenues). Because an increase in corporate tax revenues from
Prop 39 can increase overall General Fund revenues, the Prop 98
minimum guarantee for public education would increase as well.
In his 2013-14 proposed budget, Governor Brown proposes to count
all Prop 39 revenue, including funds allocated to energy
projects, towards the Prop 98 calculations, effectively raising
the minimum guarantee. The same budget plan would also apply
all revenue towards meeting the minimum guarantee: Estimated
Prop 39 energy project revenue for the next five years, $450
million in 2013-14 and $550 million for each of the next four
years, would be distributed to K-12 school districts and
community colleges exclusively. The proposal would allocate
funds on a per student basis, which would be equivalent to $65
for each K-12 student and $45 for each community college
student.
The Legislative Analyst's Office (LAO) has raised a number of
concerns with Governor Brown's Prop 39 proposal. Specifically,
LAO argues that: 1) voter-approved limitations prohibit the use
of all Prop 39 funds for Prop 98 purposes; 2) the Governor's
proposed treatment of funds, which is based on the accounts the
funds are deposited into, is prone to manipulation; and 3) the
proposed allocation of funds is inefficient and does not
maximize potential benefits. Instead, LAO suggests that Prop 39
revenue required for transfer to the Fund should be excluded
from the Prop 98 minimum guarantee. The LAO also suggests
designating the CEC as the lead agency for administering Prop
39's energy funds and directing the CEC to promulgate a
competitive grant process for fund distribution.
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
FN: 0001004
AB 39
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