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 30, 2013 Consultant: Marie Liu SUSPENSE FILE. AS AMENDED. 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 (as approved on August 30, 2013): One-time costs of up to $120,000 from the Tire Recycling Management Fund (special) to modify program requirements. 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 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 AB 513 (Frazier) Page 1 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. Proposed Author Amendments: Amend to reduce the annual appropriation to $7 million annually and require the total program spending to be $10 million, thereby statutorily requiring CalRecycle to continue to dedicate $3 million of its existing budget on the RAC grant program. Committee Amendments: Amend to delete the annual appropriation. AB 513 (Frazier) Page 2