BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1550 (Gomez) - Greenhouse gases: investment plan:
disadvantaged communities
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: May 31, 2016 |Policy Vote: E.Q. 5 - 1 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: August 8, 2016 |Consultant: Narisha Bonakdar |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1550 requires 25 percent of the AB 32 Greenhouse
Gas Reduction Fund (GGRF) revenues to be spent on projects
located within and benefiting disadvantaged communities, and an
additional 20 percent to be spent on projects that benefit
low-income households or are within low-income communities, as
defined.
Fiscal
Impact:1)
Increased GGRF expenditures in disadvantaged communities (from
10 percent direct investment to 25 percent) and for low-income
households and to low-income communities (from 0 to 20
percent).
Increased annual ongoing costs of up to $465,000 (GGRF) for
the California Air Resources Board (ARB) to modify existing
guidelines and tracking systems, provide guidance to
AB 1550 (Gomez) Page 1 of
?
administering agencies, and conduct outreach.
Unknown cost to administering agencies to update tracking
systems, track GGRF expenditures in in disadvantaged and
low-income communities, and report to ARB regarding
expenditures these communities.
Background:
The California Global Warming Solutions Act of 2006. The
California Global Warming Solutions Act of 2006 (AB 32) requires
ARB to adopt a statewide GHG emissions limit equivalent to 1990
levels by 2020 and adopt regulations, including market-based
compliance mechanisms, to achieve maximum technologically
feasible and cost-effective GHG emission reductions.
As part of the implementation of AB 32 market-based compliance
measures, ARB adopted a cap-and-trade program that caps the
allowable statewide emissions and provides for the auctioning of
emission credits. Auction proceeds are quarterly deposited into
the GGRF, and available for appropriation by the Legislature.
The 2014-15 Budget Act allocated cap-and-trade revenues for the
2014-15 fiscal year and established a long-term plan for the
allocation of cap-and-trade revenues beginning in fiscal year
2015-16.
The Budget continuously appropriates 35 percent of cap-and-trade
funds for investments in transit, affordable housing, and
sustainable communities. Twenty-five percent of the revenues
are continuously appropriated to continue the construction of
high-speed rail. The remaining 40% are to be appropriated
annually by the Legislature for investments in programs that
include low-carbon transportation, energy efficiency and
renewable energy, and natural resources and waste diversion.
An expenditure plan for the 40% was not included in the 2015-16
Budget Act, with the exception of $227 million appropriated to
continue funding for specified existing programs. The remaining
AB 1550 (Gomez) Page 2 of
?
2015-16 revenues, along with 2016-17 revenues, totaling $3.1
billion are available for appropriation this year.
Disadvantaged and Low-income Communities. SB 535 (De León,
Chapter 830, Statutes of 2012) requires that no less than 10
percent of cap-and-trade revenues fund projects located within
disadvantaged communities, and that 25 percent of available
revenues fund projects that benefit those communities.
In October 2014, CalEPA released its list of disadvantaged
communities for the purpose of SB 535. CalEPA relied on
CalEnviroScreen to identify the areas disproportionately
burdened by and vulnerable to multiple sources of pollution.
CalEnviroScreen is a tool that assesses all census tracts in
California to identify the areas disproportionally affected and
vulnerable to multiple sources of pollution.
Areas (census tracts) identified as disadvantaged for SB 535's
purposes by CalEnviroScreen include: the majority of the San
Joaquin Valley; much of Los Angeles and the Inland Empire;
pockets of other communities near ports, freeways, and major
industrial facilities such as refineries and power plants; and
large swaths of the Coachella Valley, Imperial Valley, and
Mojave Desert.
Proposed Law:
This bill:
1)Requires 25 percent of GGRF revenues to be spent on projects
located within and benefiting disadvantaged communities.
2)Requires 20 percent of GGRF revenues to be spent on low-income
households or to projects located within the boundaries of,
and benefiting individuals living in, low-income communities.
3)Defines low-income households as households with incomes at or
below 80% of the statewide median income or with median
incomes at or below the threshold designated by the Department
of Housing and Community Development (HCD), as specified.
AB 1550 (Gomez) Page 3 of
?
4)Defines "low-income communities" as census tracts with median
household incomes at or below 80 percent of the statewide
median income or with median household incomes at or below the
threshold designated as low income by the HCD's list of state
income limits adopted pursuant to Section 50093.
5)Requires funds benefitting disadvantaged communities and funds
benefitting low-income households to be counted separately for
the purposes of meeting the targets.
Staff
Comments:1)
Purpose of Bill. According to the author, "Low-income
communities and communities of color are and will continue to be
disproportionately impacted by the effects of our changing
climate. As we think about how to structure our state's climate
programs - as we discuss percentages and parameters - this is a
reality we cannot ignore and must strive to remedy. AB 1550
builds on the successes of our climate equity efforts to date by
ensuring a greater investment in California's environmentally
and socioeconomically disadvantaged populations. The bill
requires that at least 25% of cap-and-trade funds be spent on
projects located directly within disadvantaged communities, as
identified by the state's environmental health screening tool,
to ensure that the level of investment in DACs equals their
share of the population. The bill also requires an additional
20% of funds to benefit low-income households.
"While CalEnviroScreen is a valuable tool for capturing
cumulative impacts in communities, it is widely recognized that
there are poor and working-class households that lie outside of
DACs - but that struggle to make ends meet and spend a large
portion of their incomes on necessitates - such as energy,
water, housing, and transportation. If we wish to foster a
shared, statewide commitment to tackling pressing environmental
issues, we must take advantage of opportunities to reduce
greenhouse gas emissions and build sustainable communities while
lifting poor and working Californians out of poverty.
AB 1550 (Gomez) Page 4 of
?
"A greater investment in California's environmentally and
socioeconomically disadvantaged populations has the potential to
yield significant climate, public health, and cost benefits
while helping bridge the 'green divide'."
Taking a larger piece out of a smaller pie. The most recent
auction in May of 2016 yielded a sale of only 2% of the state
allowances, resulting in only $10 million of cap-and-trade
revenues for the state (of the $500 million projected). This
bill would result in a larger portion of moneys for
disadvantaged communities and low-income households, which, in
turn, will result in a significant reduction of funds available
for emissions reduction projects in the rest of the state. To
the extent that administering agencies focus on meeting the
requirements outlined in this bill more than funding projects
that yield the greatest GHG emission reductions, this bill could
result in less efficient and effective uses of GGRF monies.
-- END --