BILL ANALYSIS                                                                                                                                                                                                    

                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 2090 (Alejo) - Low Carbon Transit Operations Program
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          |Version: May 27, 2016           |Policy Vote: T. & H. 9 - 0,     |
          |                                |          E.Q. 4 - 0            |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File.

          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  

           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)


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           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  


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          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  
           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. 

          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  


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          benefit disadvantaged communities.

          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.

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