BILL ANALYSIS �
AB 114
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ASSEMBLY THIRD READING
AB 114 (Salas and V. Manuel P�rez)
As Amended May 8, 2013
Majority vote
NATURAL RESOURCES 6-0 UTILITIES & COMMERCE 14-0
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|Ayes:|Chesbro, Garcia, |Ayes:|Bradford, Patterson, |
| |Muratsuchi, Skinner, | |Bonilla, Buchanan, |
| |Stone, Williams | |Ch�vez, Fong, |
| | | |Beth Gaines, Garcia, |
| | | |Gorell, Jones, Quirk, |
| | | |Rendon, Skinner, Williams |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 16-0
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|Ayes:|Gatto, Harkey, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, Eggman, | | |
| |Gomez, Hall, Ammiano, | | |
| |Linder, Pan, Quirk, | | |
| |Wagner, Weber | | |
| | | | |
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SUMMARY : Establishes the Clean Energy Jobs and Workforce
Development Program (Workforce Program) within the Labor Agency
and allocates 9.6% of the funds allocated by the Clean Energy
Jobs Act (Prop 39) to clean energy projects. Specifically, 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 serve low-income or unemployed
residents of an economically disadvantaged community.
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3)Requires 9.6% of revenue deposited in the Clean Energy Job
Creation Fund (Fund) created by Prop 39 for fiscal years
2013-14 through 2017-18 to be available to the Labor Agency
for purposes of the bill.
4)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 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% of the annual increase in
revenues from the SSF, whichever is less, annually for five
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 Property
Assessed Clean Energy (PACE) programs.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
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1)Cost pressures in the $50 million range from Prop 39 proceeds
for this program.
2)The Labor Agency would require additional resources to
administer a new program.
Prop 39 prohibits overhead costs in excess of 4% of the total
funding. Using this cap on administration, the Labor Agency
annual costs could be in the $2 million range.
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 2013-18, 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 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% 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
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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.
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
FN: 0000986