BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                    AB 2090

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          Date of Hearing:  April 11, 2016


                                 Jim Frazier, Chair

          AB 2090  
          (Alejo) - As Amended  April 7, 2016

          SUBJECT:  Low Carbon Transit Operations Program

          SUMMARY:  Allows funding from the Low Carbon Transit Operations  
          Program (LCTOP) to be expended to support the operation of  
          existing transit service if the agency declares a fiscal  
          emergency under the California Environmental Quality Act (CEQA).  
           Specifically, this bill:  

          1)Allows funds from the LCTOP be expended to support the  
            operation of existing bus or rail service if the following  
            criteria are met:

             a)   The governing board of the transit agency declares a  
               fiscal emergency, as defined by CEQA, within 90 days of the  
               agency requesting LCTOP funds;

             b)   The expenditure of the LCTOP funds is necessary to  
               sustain the transit agency's transit service in the year in  
               which the funds would be expended;

             c)   The governing board of the transit agency would be  


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               forced to reduce or eliminate transit service if the  
               requested LCTOP funds are not received; and,

             d)   The governing board of the transit agency makes a  
               finding that a reduction in or elimination of existing  
               transit service would increase greenhouse gas (GHG)  
               emissions because customers would choose other  
               less-efficient modes of transportation.

          2)Defines the criteria for which funds from LCTOP can be  
            expended by the transit agency after they declare a fiscal  
            emergency under CEQA, including:

             a)   The expenditures support current bus or rail service  
               operating costs, including labor, fueling, maintenance, and  
               other costs to operate;   

             b)   The transit agency demonstrates that each expenditure  
               directly sustains transit service that would otherwise be  
               reduced or eliminate in the upcoming year without the LCTOP  
               funds; and, 

             c)   Transit agencies may not request LCTOP to support  
               existing transit service unless the agency declares a  
               fiscal emergency in each year under CEQA and for not more  
               than three consecutive years.

          EXISTING LAW:  

          1)Requires the California Air Resources Board (ARB), pursuant to  
            AB 32 (Núñez), 
          Chapter 488, Statutes of 2006, to develop a plan of how to  


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            reduce statewide GHG emissions to 1990 levels by 2020.  Under  
            AB 32, ARB is authorized to include the use of market-based  
            mechanisms to comply with these regulations (cap and trade).

          2)Requires, pursuant to the SB 375 (Steinberg), Chapter 728,  
            Statutes of 2008, regions must prepare a regional  
            transportation plan that includes a sustainable communities  
            strategy (SCS) designed to achieve the regional targets for  
            GHG emission reduction.  

          3)Establishes the Greenhouse Gas Reduction Fund (GGRF) in the  
            State Treasury and requires all money collected pursuant to  
            cap and trade, with limited exceptions, be deposited into the  
            fund and makes the GGRF funds available for appropriation by  
            the Legislature.

          4)Establishes the LCTOP, administered by the California  
            Department of Transportation (Caltrans), and continuously  
            appropriates 5% of GGRF fund proceeds for transit operations  
            to expand service, with a priority on serving disadvantaged  

          5)Requires, pursuant to SB 535 (de León), Chapter 830, Statutes  
            of 2012, that a minimum of 25% of the moneys available in GGRF  
            be used to benefits disadvantaged communities.

          6)Provides funding for public transportation through the  
            Transportation Development Act (TDA), including State Transit  
            Assistance (STA) which is derived from the statewide sales tax  
            on diesel fuel.  STA funds are appropriated by the Legislature  
            and are allocated by a formula with 50% being allocated  
            according to population and 50% being allocated according to  
            transit operator revenues from the prior fiscal year.  


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          7)Requires transit operators to maintain a specified ratio of  
            fare revenues to operating costs in order to be eligible to  
            receive TDA funds.  

          FISCAL EFFECT:  Unknown


          COMMENTS:  LCTOP was created by SB 862 (Committee on Budget and  
          Fiscal Review), Chapter 862, Statutes of 2014, as part of a  
          comprehensive package of programs to target GHG reductions in  
          California using funds generated by the state's cap and trade  
          program.  These programs include affordable housing and  
          sustainable communities, transit and intercity rail capital  
          projects, and high-speed rail.  LCTOP is administered by  
          Caltrans and is continuously appropriated 5% of GGRF of funds.   
          In 2014-15, LCTOP received $25 million, and in 2015-16 it was  
          funded at $100 million.  The Governor's January 2016-17 Budget  
          proposes $100 million for the program.
          Specifically, LCTOP was created to provide operating and capital  
          assistance for transit agencies to reduce GHG emission and  
          improve mobility, with a priority on serving disadvantaged  
          communities.  Approved projects in LCTOP support new or expanded  
          bus or rail services and expand intermodal transit facilities  
          and may include equipment acquisition, fueling, maintenance, and  
          other costs to operate those services or facilities, with each  
          project reducing GHG emissions. For transit agencies whose  
          service area includes disadvantaged communities, at least 50% of  
          the total moneys received shall be expended on projects that  
          will benefit disadvantaged communities.


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          LCTOP's purpose is to support new and expanded transit service  
          that increase mode share - shift new riders out of their cars -  
          to reduce GHG emissions.  Prior to receiving an allocation,  
          which is distributed by the State Controller following the STA  
          formula, eligible transit agencies must submit a description of  
          their proposed expenditures and demonstrate how each expenditure  
          will reduce GHG emissions. 

          As noted by the author, some transit agencies in the state are  
          facing fiscal challenges that prevent them from putting more new  
          bus or rail service out on the street, and they are currently  
          prohibited from using these vital state funds to supplement  
          their transit service.  He adds that not only are these agencies  
          unable to provide new transit services, they are struggling to  
          maintain the level of service out on the street today.  And  
          without sources of revenue, transit agencies may have to cut  
          back service, thus forcing some transit riders onto less  
          efficient, dirtier modes of transportation, which could in turn  
          actually increase GHG emissions.  

          This bill is sponsored by Santa Cruz Metropolitan Transit  
          District (METRO).  The district asserts it is experiencing a  
          significant and growing structural deficit caused by rising  
          operations costs and flat ridership amidst diminishing local,  
          state, and federal support.  It further contends that the  
          flexibility provided by this bill will allow it to avoid making  
          a counterproductive 25% reduction in service that would impact  
          46% of their core ridership.  

          Under this bill, to be able to use LCTOP funds to support  
          existing service, a transit agency would have to declare a  
          fiscal emergency under CEQA.  Current law allows transit  
          agencies to be exempted from CEQA review of the reduction or  
          elimination of transit services and increases to fares, fees,  
          fines, rates and charges that support transit service when such  
          actions are undertaken as a result of a declared fiscal  


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          emergency caused by  the  failure  of  revenues  to  adequately   
          fund  agency  programs, facilities, and operations.  Under CEQA,  
          a "fiscal emergency" means that the agency is projected to have  
          negative funding within one year from the date of declaration.   
          The transit agency must conduct a public hearing to consider the  
          action prior to declaring the fiscal emergency.   

          In writing support of this bill, the California Transit  
          Association states that it supports AB 2090 because it would  
          provide a recipient transit agency with a targeted new tool for  
          maintaining current transit service levels in a fiscal  
          emergency.  At the same time, the stringent requirements ensure  
          that the core function of LCTOP remains i.e., advancing transit  
          services and initiatives that reduce GHG emissions.  

          As the state and regions continue to work toward the goal  
          reducing GHG emissions, as well as cutting other forms of air  
          pollution, as set forth in AB 32 and SB 375, increasing the mode  
          shift from single occupant car trips to public transportation is  
          critical for success in reaching this goal. LCTOP is an  
          important funding source to support new and expanding transit  
          services throughout the state.  However, if a transit agency is  
          forced to increase fares and reduce or eliminate services due to  
          budget problems, not allowing the agency to access and utilize  
          this funding source seems counterproductive.  Eliminating  
          service will eliminate transportation options for the affected  
          communities and will likely shift people back to their cars for  
          commuting and other uses, which will serve to increase GHG  
          emissions.  If a transit agency declares a fiscal emergency, the  
          use of LCTOP funds may not fully offset all of the reductions or  
          changes needed to regain balance, but will help mitigate the  


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          situation.  This bill also includes a three-year limit on the  
          time one agency can use LCTOP for this purpose, which will help  
          ensure the funds serve only as temporary assistance.  

          Related legislation:  SB 824 (Beall), would authorize a transit  
          agency that does not submit a project for funding under LCTOP in  
          a particular fiscal year to retain its funding share for  
          expenditure in a subsequent fiscal year or loan or transfer it  
          to another eligible agency in the same region.  SB 824 is  
          scheduled to be heard by the Senate Transportation and Housing  
          Committee on April 19, 2016.

          Previous legislation:  SB 862 (Committee on Budget and Fiscal  
          Review), Chapter 36, Statues of 2014, created and funded the  
          Affordable Housing and Sustainable Communities, the Low Carbon  
          Transportation, and the Low Carbon Transit Operations programs.

          SB 535 (de León), Chapter 830, Statutes of 2012, required, among  
          other things, that a minimum of 25% of the moneys available in  
          GGRF be used to benefits disadvantaged communities.

          AB 32 (Núñez), Chapter 488, Statutes of 2006, created the  
          California Global Warming Solutions Act of 2006 and required ARB  


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          to adopt GHG reduction measures to ensure that statewide  
          emissions are reduced to 1990 levels by 2020.  




          Santa Cruz Metropolitan Transit District (Sponsor)

          Association of Monterey Bay Area Governments

          California Transit Association

          Honorable Cynthia Mathews, Mayor, city of Santa Cruz

          Monterey-Salinas Transit

          Orange County Transportation Authority

          Riverside Transit Agency



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          None on file

          Analysis Prepared by:Melissa White / TRANS. / (916) 319-2093