BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 2636 (Gatto) - CalConserve Water Use Efficiency Revolving  
          Fund.
          
          Amended: June 30, 2014          Policy Vote: EQ 6-0, NR&W 8-0
          Urgency: No                     Mandate: No
          Hearing Date: August 14, 2014                     Consultant:  
          Marie Liu     
          
          SUSPENSE. AS AMENDED.
          
          
          Bill Summary (as approved on August 14, 2014): AB 2636 would  
          establish the CalConserve Water Use Efficiency Revolving Fund  
          which would be administered by the Department of Water Resources  
          (DWR) for the purpose of providing financial assistance for  
          projects that reduce urban per capita water use, reduce  
          agricultural water use, increase the use or availability of  
          recycled water supply, or reduce greenhouse gas (GHG) emissions  
          and water and energy use. 

          Fiscal Impact (as approved on August 14, 2014): 
              Cost pressures, likely in the millions of dollars, to the  
              General Fund to fund the CalConserve Fund.
              Cost pressures in the hundreds of thousands of dollars to  
              the General Fund/CalConserve Fund to DWR to administer the  
              program.
               
          Background: Existing law requires the state to achieve a 20%  
          reduction in urban per capita water use by December 31, 2020.  
          Existing law also requires agricultural water suppliers to adopt  
          a volumetric water pricing system and to implement locally cost  
          effective and technical feasible water use efficiency measures,  
          as specified.  (SBx7 7 (Steinberg) Chapter 4, Statutes of 2009.

          Proposition 13, which was approved by the voters in 2000, made  
          available $35 million to DFW to make loans to local agencies to  
          aid in the acquisition and construction of agricultural water  
          conservation projects and grants for feasibility studies.

          Proposed Law: This bill would create the CalConserve Water Use  
          Efficiency Revolving Fund which would be available to DWR, upon  
          appropriation by the Legislature, to fund projects that have at  








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          least one of the following benefits:
           Measurably reduce urban per capita potable water use.
           Measurably reduce agricultural water use.
           Increase the use or availability of recycled water supply
           Reduce greenhouse gas emission and water and energy use.

          DWR would be authorized to adopt rules and guidelines to  
          administer the program.

          This bill would transfer Proposition 13 funds that were marked  
          for agricultural water conservation projects to the CalConserve  
          Fund and allows the Legislature to appropriate monies from the  
          Greenhouse Gas Reduction Fund (GGRF) to the CalConserve Fund.  
          DWR could not encumber any funds from the GGRF in this program  
          until the ARB publishes findings and reports on how all  
          operational aspects of the projects result in greenhouse gas  
          emission reductions.

          Related Legislation: AB 2011 (Gatto, 2012) and AB 1349 (Gatto,  
          2013) both would have also created CalConserve. Both bills were  
          held in submission on the Assembly Appropriation's suspense  
          file.

          Staff Comments: This bill would establish a new financial  
          assistance loan program to be administered by DWR. It is unclear  
          how much the administrative cost will be as it will depend on  
          the size and design of the program. However, staff anticipates  
          that minimum level of staffing will probably be in the hundreds  
          of thousands of dollars to develop the program with potentially  
          lower ongoing costs. Staff notes that the administration of a  
          revolving loan program has unique administrative costs compared  
          to a grant program. According to the Senate Natural Resources  
          Committee, DWR has not administered a revolving loan account in  
          several decades. Therefore the development of the program will  
          likely necessitate some assistance from Department of Finance  
          and other agencies that could manage revolving loan accounts.

          This bill would direct proceeds from Proposition 13 that were  
          for the purpose of agricultural water conservation (§79157) to  
          be transferred to the CalConserve Fund. However, all remaining  
          Proposition 13 funds were appropriated in budget actions this  
          year.

          This bill would also allow the GGRF to be used to the  








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          CalConserve Fund, which would place cost pressures on the GGRF  
          for this program. Furthermore, should the GGRF be used to  
          support this program, the ARB would be required to publish  
          findings and reports on how the projects result in GHG emission  
          reductions, which would require additional workload. In the  
          approved 2014-15 Budget, the ARB was allocated $1 million for  
          various responsibilities associated with the spending of the GHG  
          Reduction Fund, including the development of reduction metrics.  
          Some of this work is likely to overlap the required actions  
          under this bill. As such, staff believes ARB costs will likely  
          be no more than $500,000 from the GGRF. 

          Committee Amendments: Delete ability to use GGHF moneys for the  
          CalConserve program and associated requirements (all of §81023).