BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 2090 (Alejo) - Low Carbon Transit Operations Program ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 27, 2016 |Policy Vote: T. & H. 9 - 0, | | | E.Q. 4 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 2090 would expand the uses for funds allocated to transit agencies pursuant to the Low Carbon Transit Operations Program (LCTOP) to include expenditures for the support the operation of existing bus or rail service under specified circumstances. Fiscal Impact: Unknown, significant cost pressures on LCTOP funds to the extent expenditures that support existing bus or rail operations displace funding for projects that provide new or expanded service. (Greenhouse Gas Reduction Fund - GGRF) Likely minor administrative costs for the Department of Transportation (Caltrans) to revise program guidelines and review additional funding requests. (State Highway Account) AB 2090 (Alejo) Page 1 of ? Potential increased staff costs at the California Air Resources Board (CARB) to determine whether projects that support existing transit operations would result in greenhouse gas reductions and other co-benefits, develop quantification methods, and establish criteria. (GGRF) Background: Existing law establishes the LCTOP to provide operating and capital assistance for transit agencies to reduce greenhouse gas (GHG) emissions and improve mobility, with a priority on serving disadvantaged communities. Funds provided for the program must be expended to provide transit operating or capital assistance that meets all of the following criteria: (1) new or expanded bus, rail, or water transit services, or expanded intermodal facilities, and any other costs to operate those services or facilities, and may include equipment acquisition, fueling, and maintenance; (2) the recipient demonstrates that expenditures directly enhance or expand transit service to increase mode share; and (3) the recipient agency demonstrates that each expenditure reduces GHG emissions. At least 50 percent of the money allocated to transit agencies whose service area includes disadvantaged communities must be spent on projects or services that meet the above requirements and benefit those communities. Caltrans is required to coordinate with CARB to develop guidelines that recipient agencies must use to demonstrate that expenditures meet program criteria. Before authorizing disbursement of funds, Caltrans and CARB coordinate to determine eligibility of recipient agencies' proposed expense types. Existing law continuously appropriates five percent of annual GGRF proceeds to LCTOP. Funding is allocated to transit agencies pursuant to existing State Transit Assistance formulas but an agency's proposed project expenditures must be reviewed and approved by Caltrans to ensure they meet program requirements. LCTOP received $25 million in 2014-15 and $100 million in 2015-16. The Governor's 2016-17 Budget proposed $100 million for the program in the budget year. Existing law, the California Environmental Quality Act (CEQA), authorizes a transit agency to declare a "fiscal emergency" if it is projected to have negative funding within one year, and it considers the proposed declaration at a public hearing. When a transit agency declares a fiscal emergency caused by the failure AB 2090 (Alejo) Page 2 of ? of revenues to adequately fund agency programs, facilities, and operations, existing law exempts the agency from conducting a CEQA review of impacts related to a proposed reduction or elimination of transit services and proposed fare, fee, fine, or rate increases that those services. Proposed Law: In addition to existing authorizes LCTOP expenditures, AB 2090 would authorize transit agencies to use LCTOP funds to support the operation of existing bus or rail service if all of the following occur: The transit agency's governing board declares a fiscal emergency, as specified, within 90 days prior to requesting funds. Expenditure of the requested funds is necessary to sustain the agency's transit service in the fiscal year in which funds are proposed to be spent. The agency's governing board would be required to reduce or eliminate transit service if the funds are not provided. The agency makes a finding that reduction or elimination of transit service would result in an increase in greenhouse gas (GHG) emissions, as specified. The agency does not request funds over consecutive years unless the governing board declares a fiscal emergency in each year, and does not request funds for more than three consecutive years. Transit operating assistance provided pursuant to the bill must support bus or rail service operating costs, including labor, fueling, maintenance, and other costs. The recipient agency must also demonstrate that each expenditure would directly sustain service that would otherwise be reduced or eliminated if the funds were not received. Related Legislation: SB 824 (Beall), which is currently pending in the Assembly Appropriations Committee, would make various changes to LCTOP that provide enhanced flexibility to recipient transit agencies for program expenditures, but also require that at least 50 percent of all LCTOP funds are used for projects that AB 2090 (Alejo) Page 3 of ? benefit disadvantaged communities. Staff Comments: Under the existing LCTOP eligibility criteria, transit agencies must prove that a proposed expenditure will expand specified services or facilities, directly enhance or expand service to increase mode share, and reduce GHG emissions. AB 2090 would instead authorize revenues to be used to sustain existing bus or rail operations if a transit agency declares a fiscal emergency and determines that existing service would be reduced or eliminated without the operating subsidy. Rather than reducing GHG emissions and expanding transit services, as the program was originally designed, this bill would provide funding to maintain existing operations and provide a mechanism that avoids potential increases in GHG emissions that may result if consumers of transit services instead chooses a less efficient modes of transportation. By expanding the uses of LCTOP funds, this bill would create significant cost pressures on the program. Under current law, CARB must develop quantification methods for determining GHG emission reductions related to GGRF expenditures. CARB indicates that it would be involved in determining what justifies a fiscal emergency and likelihood of losses of transit services, and will likely be required to develop new quantification methods for determining that expenditures supporting continued operations (as opposed to investments in transit expansion) result in GHG emission reductions. CARB estimates that it may require an additional position, at a cost of $162,000, to perform these functions. Staff notes that both this bill and SB 824 make changes to the LCTOP. Both measures will need to be amended eventually to avoid chaptering conflicts. -- END -- AB 2090 (Alejo) Page 4 of ?