BILL ANALYSIS Ó SB 39 Page 1 Date of Hearing: August 21, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 39 (De León) - As Amended: August 5, 2013 Policy Committee: Natural ResourcesVote:8-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill extends the sunset for the Energy Conservation Assistance Act (ECAA) administered by the California Energy Commission (CEC) from 2018 to 2022. FISCAL EFFECT 1)Delayed reversion of $44 million to $70 million of non-federal and non-bond monies in the ECAA to the GF over 17 years. 2)Unknown annual costs in the several million dollar range to the ECAA to administer the program four additional years. All unexpended funds in the State Energy Conservation Assistance Account revert to the GF on January 1, 2018 with exceptions for bond-obligated funds and federal funds. The current breakdown of these loan monies is shown below: a) The American Recovery and Reinvestment Act restricted loans: 30 loans, $17.4 million outstanding loan balance ($15.9 million principal, $1.5 million interest, repayment term until June, 2027) b) Bond restricted loans: 101 loans, $88.4 million outstanding loan balance ($76.3 million principal, $12.1 million interest, repayment term until December, 2030) c) Unrestricted loans: 32 loans, $44.4 million outstanding loan balance ($39.4 million principal, $5 million interest, repayment term until June, 2030). Based on the above, this bill has a GF impact of $44.4 million SB 39 Page 2 (the outstanding unrestricted loans listed above) over 17 years, or an annual average of about $2.6 million, as a result of delayed reversion of funds remaining in the Energy Conservation Assistance Account. Additionally, the 2013-14 Budget Act appropriated $28 million to a new Education Subaccount within the Energy Conservation Assistance Account. The Energy Commission will make Proposition 39-related low- and zero-interest loans to schools and colleges from this Education Subaccount. It is not clear whether any funds remaining within the Education Subaccount on the sunset date would revert to the Job Creation Fund or to the GF. COMMENTS 1)Rationale. Earlier this year a budget trailer bill, SB 73 (Chapter 29, statutes of 2013), appropriated $28 million in Proposition 39 (The Clean Energy and Energy Efficiency Funding Initiative) revenues to the ECAA program. In 2013-14, the funds are available for K-12 local educational agencies (LEAs) and California community college districts (CCCs). Of the $28 million appropriated in SB 73, the 2013-14 Budget identifies $25 million (89%) for K-12 LEAs and $3 million (11%) for CCCs. In 2014-15 through 2017-18, the amount available shall be determined through the annual budget process. According to the author, since SB 73 also extended the terms for ECAA loans from 15 to 20 years, it is important to extend the sunset of the program to ensure loan proceeds continue to be available for future ECAA eligible projects. This bill was originally a Prop 39 funding bill, but was amended in the Assembly after the Budget was enacted. 2)Background. Funding for ECAA loans has been from a variety of sources over the years, including the GF, the federal Petroleum Violation Escrow Account, and tax-exempt revenue bonds. Funding levels have generally been adequate to meet demand for SB 39 Page 3 loans. More recently, the American Recovery and Reinvestment Act of 2009 (ARRA) provided $25 million for ECAA loans and about $34 million for CEC to award as grants to 279 small cities and counties for energy efficiency projects. 3)Similar Legislation. AB 39 (Skinner) is currently in the Senate Appropriations Committee on suspense. This bill extends the sunset date for the ECAA from 2018 to 2020. Analysis Prepared by : Jennifer Galehouse / APPR. / (916) 319-2081