BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
          Bill No:            AB 2090
          |Author:    |Alejo                                                |
          |Version:   |5/27/2016              |Hearing      |6/29/2016       |
          |           |                       |Date:        |                |
          |Urgency:   |No                     |Fiscal:      |Yes             |
          |Consultant:|Rebecca Newhouse                                     |
          |           |                                                     |
          SUBJECT:  Low Carbon Transit Operations Program.

          Existing law:  
          1) Under the California Global Warming Solutions Act of 2006  
             (also known as AB 32), requires the California Air Resources  
             Board (ARB) to determine the 1990 statewide greenhouse gas  
             (GHG) emissions level and approve a statewide GHG emissions  
             limit that is equivalent to that level, to be achieved by  
             2020, and to adopt GHG emissions reductions measures by  
             regulation.  ARB is authorized to include the use of  
             market-based mechanisms to comply with these regulations.  
             (Health and Safety Code 38500 et seq.) 

          2) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the  
             State Treasury, requires all moneys, except for fines and  
             penalties, collected pursuant to a market-based mechanism be  
             deposited in the fund. (Government Code 16428.8)

          3) Prohibits the state from approving allocations for a measure  
             or program using GGRF moneys except after determining that  
             the use of those moneys furthers the regulatory purposes of  
             AB 32, and requires moneys from the GGRF be used to  
             facilitate the achievement of reductions of GHG emissions in  
             California.  (HSC 39712)

          4) Establishes Low Carbon Transit Operations Program (LCTOP),  
             administered by the California Department of Transportation  


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             (Caltrans), and continuously appropriates 5% of GGRF fund  
             proceeds for transit operations to expand service and reduce  
             emissions of GHGs, with a priority on serving disadvantaged  

          This bill:  

          1)Allows funds from LCTOP  to 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 the California  
               Environmental Quality Act (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  
               forced to reduce or eliminate transit service if the  
               requested LCTOP funds are not received.

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

          2)Defines the criteria for which funds from LCTOP can be  
            expended by the transit agency after it declares a fiscal  
            emergency under CEQA, as specified.



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          1) Cap-and-trade auction revenue.  Since November 2012, ARB has  
             conducted 15 cap-and-trade auctions, generating over $4  
             billion in proceeds to the state.  

             State law specifies that the auction revenues must be used to  
             facilitate the achievement of GHG emissions reductions and  
             outlines various categories of allowable expenditures. 

             Budget allocations.  SB 862 (Committee on Budget and Fiscal  
             Review, Chapter 36, Statutes of 2014), a budget trailer bill,  
             established a long-term cap-and-trade expenditure plan by  
             continuously appropriating portions of the funds for  
             designated programs or purposes.  The legislation  
             appropriates 25% for the state's high-speed rail project, 20%  
             for affordable housing and sustainable communities grants,  
             10% to the Transit and Intercity Rail Capital Program, and 5%  
             for the Low-Carbon Transit Operations Program (LCTOP).  The  
             remaining 40% is available for annual appropriation by the  

             The Governor's 2016-17 proposed budget appropriates over $3  
             billion to a variety of programs and projects in the  
             transportation, energy, natural resources, and waste  
             diversion sectors.

          2) Low Carbon Transit Operations Program.  LCTOP was established  
             to provide operating and capital assistance for transit  
             agencies to reduce GHG emissions and improve mobility, with a  
             priority on serving disadvantaged communities.  LCTOP is  
             administered by Caltrans and is continuously appropriated 5%  
             of GGRF funds.  In 2014-15, LCTOP received $25 million, and  
             in 2015-16 it was funded at $100 million.  LCTOP expenditures  
             are required to support new or expanded transit service,  
             directly enhance or expand transit service to increase mode  
             share, and reduce GHG emissions. 

            Prior to receiving an allocation, which is distributed by the  
            State Controller through the State Transit Assistance formula,  
            eligible transit agencies must submit a description of their  
            proposed expenditures and demonstrate how each expenditure  
            will reduce GHG emissions.  Approved projects in LCTOP may  
            include equipment acquisition, fueling, maintenance, and other  


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            costs to operate new or expanded services and/or facilities.   
            For transit agencies whose service area includes disadvantaged  
            communities, at least 50% of the total moneys received are  
            required to be expended on projects that will benefit  
            disadvantaged communities.  

          1) Purpose of Bill.  According to the author, "This bill would  
             provide transit agencies with an additional tool for  
             maintaining current transit service levels during fiscal  
             emergencies, with the acknowledgement that severe funding  
             challenges hurt transit ridership and jeopardize the state's  
             long-term greenhouse gas emission reduction goals. An  
             important part of meeting the state's greenhouse emission  
             reduction goals is not only to expand existing transit  
             services, but also to maintain existing services to prevent  
             people from having to take on less environmentally safe modes  
             of transportation."

          2) Counter to goals of LCTOP program. LCTOP is funded through a  
             5% continuous appropriation of GGRF. Projects funded through  
             GGRF are required to demonstrate GHG emissions reductions.  
             Because of the statutory and legal requirements with regard  
             to use of GGRF, LCTOP was designed to require new or expanded  
             service to increase ridership in order to provide additional  
             GHG emissions reductions above and beyond base levels of  
             service. The requirements of the program are intended to  
             prevent GGRF moneys be used to subsidize current levels of  
             service, or backfill operating budgets. 

             Because of budget deficits, proponents wish to use LCTOP  
             funds to maintain current levels of transit service. Does  
             that objective run counter to the original policy goals of  
             LCTOP and the statutory mandates for the use of GGRF,  
             intended to fund projects that result in new, additional GHG  
             emissions reductions? 

          3) After three years time. Under the bill, a governing board may  
             use LCTOP moneys to maintain current levels of service for  
             three years, provided they declare a fiscal emergency each of  
             those years. In a situation where a transit agency has no  
             choice but to declare a fiscal emergency and use LCTOP to  


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             subsidize current operations, the funds are being used not to  
             increase sustainability or decrease the structural deficit,  
             but simply to barely maintain the status quo. Will the moneys  
             simply delay the inevitable? How will a three year operating  
             subsidy fix a transit agency's structural funding problems? 

          4) Fiscal emergency. Under AB 2090, transit agencies may use  
             LCTOP moneys to support the operation of existing bus or rail  
             service if the governing board of the transit agency declares  
             a fiscal emergency, and finds that LCTOP funds are necessary  
             to sustain the transit agency's level of service.

             However, once LCTOP funds are available when a fiscal  
             emergency is declared, will transit agencies, frequently  
             strapped for funds, be more likely to declare fiscal  
             emergencies instead of implementing alternative options, such  
             as fare increases, changes in transit service, renegotiations  
             of agreements with universities and cities, and other  
             measures that may improve fiscal sustainability down the  

          DOUBLE REFERRAL:  

          This measure was heard in the Senate Transportation and Housing  
          Committee on June 21, 2016, and passed out of committee with a  
          vote of 9-0.

            Related/Prior Legislation

          SB 824 (Beall) makes various changes related to LCTOP, including  
          requiring expenditures under the LCTOP to fund new or expanded  
          service, increase mode share, or purchase zero-emission buses.  
          SB 824 is set for hearing in the Assembly Transportation  
          Committee on June 27, 2016.  

            SOURCE:                    Santa Cruz Metropolitan Transit District  


          Association of Monterey Bay Area Governments  
           California Transit Association
          City of Santa Cruz
          Monterey-Salinas Transit
          Orange County Transportation Authority


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          Riverside Transit Agency
          Santa Cruz County Regional Transportation Commission
          Transportation Agency for Monterey County
          Ventura County Transportation Commission

          None received  

                                      -- END --