BILL ANALYSIS Ó
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Date of Hearing: April 15, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 114 (Salas) - As Amended: April 9, 2013
SUBJECT : Proposition 39: implementation: workforce development
SUMMARY : Establishes the Clean Energy Jobs and Workforce
Development Program (Workforce Program) within the Labor Agency
and continuously appropriates an unspecified amount from funds
allocated by the Clean Energy Jobs Act (Prop 39) to clean energy
projects.
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 Citizens Oversight Board (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 percent of the annual increase
in revenues from the SSF, whichever is less, annually for five
fiscal years (2013-13 through 2017-18) to the Clean Energy Job
Creation Fund (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 Property
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Assessed Clean Energy (PACE) programs.
THIS BILL :
1)Establishes the Workforce Program within the Labor Agency to
provide competitive grants organizations with existing
workforce development programs to train and employ
disadvantaged youth, veterans, and others on energy efficiency
and clean energy projects, including the California
Conservation Corps, certified community conservation corps and
YouthBuild.
2)Requires funded projects to be located in an economically
disadvantaged community with a higher unemployment rate than
the state unemployment rate.
3)Appropriates an unspecified amount for five fiscal years
(2013-13 through 2017-18) to the Labor Agency.
4)Establishes related definitions, findings and declarations.
FISCAL EFFECT : Unknown
COMMENTS :
1)The voters give Props. 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.
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An increase in state corporate tax revenues due to Prop 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 percent 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 2013-2014 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 2013-2014 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.
2)Related legislation. In addition to the Governor's budget
proposal described above, the following bills propose various
approaches to distributing Prop 39 energy funds. Each of the
bills has policy and technical conflicts with the rest.
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AB 29 (Williams), pending in this committee, appropriates $152
million per year to public higher education clean energy
projects from Prop 39 clean energy funds, with 50 percent to
be awarded as grants and 50 percent to fund loans.
AB 39 (Skinner), pending in this committee, establishes a
program to be administered by the CEC for the distribution of
funds to clean energy projects undertaken by public schools,
with 75 percent to be awarded as grants and 25 percent to fund
revolving loans.
AB 239 (Hagman), pending in this committee, transfers 50
percent of Prop 39 clean energy funds to the Clean Energy
School Fund to be expended by the Office of Public School
Construction (OPSC) to fund energy efficiency retrofit or
clean energy installation projects at public schools, with 60
percent reserved for grants and 40 percent for loans.
AB 293 (Allen), pending in this committee, requires the CEC to
develop a program to award funding on a competitive bases for
the purposes of Prop 39.
SB 39 (De Leon), pending in the Senate Education Committee,
requires OPSC to distribute Prop 39 clean energy funds to K-12
public schools through competitive grants for energy
efficiency upgrade projects, with priority given to
"disadvantaged school communities."
SB 64 (Corbett), pending in the Senate Energy, Utilities and
Communications Committee, requires the CEC to provide
financial assistance to K-12 public schools or municipal
facilities.
3)Five-year, blank appropriation undermines legislative
oversight. In addition to reconciling the conflicts with the
related legislation, the author and the committee may wish to
consider removing the provision appropriating funds for five
years to preserve legislative oversight through the annual
budget process. The author and the committee may also wish to
consider authorizing a specific amount for the Workforce
Program, subject to appropriation, rather than leaving the
amount blank.
4)Is statewide unemployment rate the appropriate threshold for
eligibility? To be eligible for funding, this bill would
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require a workforce project be located in an "economically
disadvantaged community" with an unemployment rate higher than
the statewide average. The bill does not define "community,"
but using county unemployment rates as a guide, 22 of 58
counties would ineligible. The author and the committee may
wish to consider that there may be pockets of high
unemployment and workforce training needs even within counties
with relatively low average unemployment. There may also be
job training programs in counties with low unemployment, but
that serve adjacent counties with high unemployment,
particularly in rural areas. There are also several counties
with unemployment rates very close to the statewide average
that may toggle in and out of eligibility as local employment
fluctuates. Cities and unincorporated "Census Designated
Places" could be used to provide a finer indication of
unemployment than county rates, but that wouldn't resolve the
issue of job training programs that serve multiple
communities.
5)Double referral. This bill has been double-referred to the
Assembly Utilities and Commerce Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Youthbuild Coalition
Center for Employment Training
Emerald Cities Bay Area Oakland Council
Green for All
Greenlining Institute
La Cooperativa Compesina de California
Metropolitan Education District
PolicyLink
Profile Research & Marketing
Proteus, Inc.
Opposition
None on file
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
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