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  








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          (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  








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            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