BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 513 (Frazier) - Tire recycling program: rubberized asphalt.
          
          Amended: August 13, 2013        Policy Vote: EQ 8-1
          Urgency: No                     Mandate: No
          Hearing Date: August 19, 2013                     Consultant:  
          Marie Liu     
          
          This bill meets the criteria for referral to the Suspense File.
          
          
          Bill Summary: AB 513 would appropriate $10 million to the  
          Department of Resources Recycling and Recovery (CalRecycle) to  
          award grants to the state and local governments for the use of  
          rubberized asphalt concrete (RAC). 

          Fiscal Impact: 
              Ongoing costs of approximately $350,000 annually for 3.5  
              PYs from the California Tire Recycling Management Fund for  
              CalRecycle for the administration of the new RAC grant  
              program. 
              Annual appropriation of $10 million from the California  
              Tire Recycling Management Fund beginning FY 2014-15 through  
              FY 2018-19 to the grant program.

          Background: The California Tire Recycling Act requires  
          CalRecycle to manage and regulate waste tires within the state  
          and requires the collection of a tire fee on each new tire  
          purchased in the state. Of the $1.75 fee per tire, $1 is  
          deposited into the Tire Recycling Management Fund for oversight,  
          enforcement, and market development grants related to waste tire  
          management and recycling. The fee is scheduled to be reduced to  
          $0.75 per tire on January 1, 2015.

          CalRecycle is required to have a five-year plan, which is  
          updated every two years, that establishes goals and priorities  
          for the waste tire program. The current five-year plan includes  
          $3 million in grants for the use of RAC. While this program has  
          been oversubscribed, CalRecycle also has received many of the  
          awarded money back for projects that did not go forward. The  
          current RAC program requires a match from the grantee.

          Proposed Law: This bill would require CalRecycle to award grants  








          AB 513 (Frazier)
          Page 1


          to local governments for the funding of public works projects  
          that utilize rubberized asphalt concrete and to state and local  
          governments for the funding of disability access projects at  
          parks and bikeways that utilize rubberized asphalt concrete. The  
          grant rate must be at least $2 for every 12 pounds of crumb  
          rubber used, though the rate may be adjusted higher or lower as  
          CalRecycle sees appropriate.

          This bill appropriates $10 million annually from the California  
          Tire Recycling Management Fund for this purpose from FY 2014-15  
          until FY 2018-19.

          This bill's provisions would sunset on June 30, 2019.

          Related Legislation: AB 8 (Perea) and SB 11 (Pavley) extends the  
          collection of the $1.75 per tire fee until January 1, 2024.

          Staff Comments: The Tire Recycling Management Fund currently has  
          a projected balance of over $30 million and is scheduled to  
          receive repayment of a General Fund loan of $27 million plus $5  
          million in interest at the end of FY 2016-17. 

          However, current program expenditures exceed revenues by  
          approximately $3 million a year, which is slowly decreasing the  
          reserve. Spending of the reserve will dramatically speed up  
          should the $1.75 tire fee sunset and revert to $0.75 in 2015. 

          Staff notes that there will be insufficient revenue in the Tire  
          Recycling Management Fund fulfill the appropriation in this  
          bill, even presuming the extension of the $1.75 fee. Assuming  
          the fee extension, over the next five years, the fund will have  
          a total reserve of approximately $62 million, of which $15  
          million will be needed to cover the deficit between existing  
          expenditures and revenues, leaving $47 million for other  
          purposes. However, this bill would appropriate $50 million over  
          five years, exceeding the available reserve and necessitating  
          program cutbacks at CalRecycle no later than FY 2018-19.