BILL ANALYSIS                                                                                                                                                                                                    Ó

                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair

          SB 64 (Author: Corbett) - Proposition 39: implementation.
          Amended: April 23, 2013         Policy Vote: EU&C 8-2
          Urgency: No                     Mandate: No
          Hearing Date: May 13, 2013      Consultant: Marie Liu
          This bill meets the criteria for referral to the Suspense File.
          Bill Summary: SB 64 would require the State Energy Resources  
          Conservation and Development Commission (CEC) to provide  
          financial assistance, from monies resulting from the passage of  
          Proposition 39, to school districts, cities, and counties to  
          install energy efficiency or clean energy technology in public  
          schools or municipal facilities.

          Fiscal Impact: 
              Unspecified amounts from the Job Creation Fund (special  
              fund) for financial assistance for energy efficiency or  
              clean energy technology installation.
              Unknown costs to the CEC from the Job Creation Fund for the  
              development and administration of programs. 

          Background: The California Clean Energy Jobs Act of 2012  
          (Proposition 39), which was approved by the voters in November  
          2012, requires most multistate businesses to determine their  
          California taxable income using a single sales factor method.  
          This change has the effect of increasing state corporate tax  
          revenue. For a five year period (FY 2013-14 through FY 2017-18),  
          Proposition 39 requires that half of the annual revenue raised  
          from the measure, up to $550 million, be transferred to a new  
          Clean Energy Job Creation Fund to support projects intended to  
          improve energy efficiency and expand clean energy generation.  
          Proposition 39 caps administrative costs at four percent of  
          total funding. 

          The Governor's proposed budget would exclusively allocate  
          Proposition 39 funds in the Job Creation Fund to energy  
          efficiency and alternative energy projects at K-14 schools. For  
          FY 2013-14, $400.5 million for K-12 schools and $49.5 million to  
          CCC would be appropriated on a per-student basis. 


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          Proposed Law: This bill would require the CEC to develop and  
          administer programs to provide financial assistance from the Job  
          Creation Fund to school districts, cities, and counties to  
          install energy efficiency or clean energy technology in public  
          schools or municipal facilities. Eligible projects would be  
          required to reduce fossil fuel emissions, reduce total energy  
          use, and improve energy efficiency. Eligible projects would also  
          be required to be consistent with the state's loading order  
          which puts a priority on increasing energy efficiency. The CEC  
          would be required to adopt guidelines governing the program at a  
          publically noticed meeting with an opportunity for the public to  
          comment. Guideline adoption would be exempt from the  
          Administrative Procedure Act 

          Related Legislation: 
              SB 35 (Pavley) would require the California State  
              University (CSU) and the California Community Colleges  
              (CCC), and requests the University of California (UC), to  
              develop and implement a near- and long- term strategy for  
              energy savings projects. Status: Sen. Education, hearing  
              SB 39 (de León) would require the Office of Public School  
              Construction to establish a school district assistance  
              program to distribute competitive grants for energy  
              efficiency upgrade projects pursuant to Proposition 39.  
              Status: Sen. Appropriations, May 13th hearing.
              SB 729 (Fuller) states Legislative intent to enact  
              Legislation to implement Proposition 39. Status: Senate  
              Rules Committee.
              AB 29 (Williams) would allocate $152 million over five  
              years to the CEC to administer financial assistance for the  
              UC, CSU, and CCC, to reduce energy demand and consumption.  
              Status: Assembly Utilities and Commerce, hearing canceled.
              AB 39 (Skinner) would direct the CEC to develop and provide  
              financial assistance to K-12 schools and community colleges  
              to improve energy efficiency, install clean energy  
              technology, or make energy system improvements. Status:  
              Assembly Appropriations.
              AB 114 (Salas) would direct the Labor and Workforce  
              Development Agency to award grants to eligible entities for  
              projects to provide job training on energy efficiency and  
              clean energy projects that are located in economically  
              disadvantaged communities. Status: Assembly Appropriations.
              AB 239 (Hagman) would require the Office of Public School  


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              Construction to fund a zero-interest revolving loan program  
              and grant program for school districts to perform energy  
              efficiency retrofit or clean energy installation projects at  
              public schools. Status: Assembly Utilities and Commerce,  
              failed, reconsideration granted.

          Staff Comments: This bill contains an unspecified appropriation  
          to the CEC for FY 2013-14 from the Proposition 39 Job Creation  
          Fund. The Senate Budget Subcommittees #1 and #2 had a joint  
          hearing on April 4, 2013 to discuss Proposition 39 spending,  
          however, no action was taken. Legislative action taken on the  
          Governor's proposed budget and numerous other bills that propose  
          spending of Proposition 39 dollars will determine how much  
          funding, if any, would be actually available for appropriation  
          by this bill. 

          Proposition 39 caps administrative costs from the Job Creation  
          Fund at four percent. If administrative costs exceed the cap,  
          the costs would either need to be absorbed by the administrating  
          agency or paid for with other funds. Staff believes it is a  
          reasonable assumption that four percent of the appropriation  
          would be sufficient for administrative costs unless the CEC is  
          required to run multiple programs from the Fund or if the CEC is  
          appropriated only a small amount of money to allocate. If there  
          are only a small amount of grant funds, administrative costs are  
          likely to be a higher percentage of the available funds. This  
          bill would allow the CEC to create numerous programs, but  
          encourages the CEC to build off of existing programs which can  
          assist with minimizing administrative costs. 

          The Administrative Procedure Act (APA, beginning at Section  
          11340 of the Government Code) prohibits state agencies from  
          issuing or enforcing any rule, regulation, order, or standard of  
          general application unless it has been issued as a regulation  
          under the APA. The purpose of the APA is to provide the public  
          with meaningful opportunity to participate in the adoption of  
          state regulations and to ensure that regulations are clear,  
          necessary, and legally valid. Staff notes that exempting the  
          CEC's guidelines from the APA may reduce administrative costs  
          for the CEC, at least initially, but possibly at the expense of  
          a less vigorous review of the guidelines than is provided under  
          the APA process.


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