BILL ANALYSIS Ó SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Wieckowski, Chair 2015 - 2016 Regular Bill No: AB 2222 ----------------------------------------------------------------- |Author: |Holden | ----------------------------------------------------------------- |-----------+-----------------------+-------------+----------------| |Version: |5/31/2016 |Hearing | 6/29/2016 | | | |Date: | | |-----------+-----------------------+-------------+----------------| |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Rebecca Newhouse | | | | ----------------------------------------------------------------- SUBJECT: Greenhouse Gas Reduction Fund: Transit Pass Program. ANALYSIS: 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 the Low Carbon Transit Operations Program (LCTOP), funded through a continuous appropriation of the GGRF, to fund AB 2222 (Holden) Page 2 of ? capital improvements and operational investments that reduce GHG emissions and modernize California's intercity, commuter, and urban rail systems to achieve specified goals. This bill: 1) Creates the Transit Pass Program, to be funded from the GGRF upon appropriation by the Legislature, and administered by the state Department of Transportation (Caltrans). 2) Requires the program to support new or existing programs that provide free- or reduced-fare transit passes to any of the following: a) Students attending public middle schools or high schools that are eligible for funding under the federal No Child Left Behind Act. b) Students attending a community college who qualify for a waiver of student fees. c) Students attending a California State University (CSU) or University of California (UC) campus who receive an award under the state Cal Grant or federal Pell Grant program. 3) Defines an eligible transit provider as a transportation agency, transportation planning agency, or county transportation commission that is eligible to receive State Transit Assistance program funds. 4) Defines an eligible participant as a public agency, including, but not limited to, a transit operator, school district, community college district, CSU, or UC. 5) Authorizes an eligible transit provider to consider prioritizing an application from an eligible participant with an existing, successful transit pass program, provided the participant can demonstrate that additional funding will further reduce the cost of the transit pass or expand program eligibility. 6) Requires Caltrans, in coordination with ARB, to develop guidelines and reporting requirements for the program, including, but not limited to, requiring participants to AB 2222 (Holden) Page 3 of ? demonstrate that proposed expenditures will reduce GHG emissions; ensuring program funds are used to expand eligibility or further reduce the cost of a transit pass; and developing performance measures to evaluate whether the program is increasing transit ridership among students. 7) Requires transit providers and participants to enter into agreements to ensure that free or reduced-fare transit passes are distributed to students. 8) Authorizes funds from the Affordable Housing and Sustainable Communities Program (AHSC), LCTOP, and other low carbon transportation programs to be used to augment a free or reduced-fare transit pass program. 9) Requires that free or reduced-fare transit passes offered under the program are counted at full retail value for the purposes of the transit provider's eligibility for State Transit Assistance funding. 10)Provides that each eligible transit provider shall receive $20,000 from the program. After the initial $20,000 amount is allocated, remaining program funds shall be distributed pursuant to the State Transit Assistance formula. Any funds allocated, but not distributed, during a fiscal year shall be distributed the following fiscal year. Background 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 AB 2222 (Holden) Page 4 of ? Intercity Rail Capital Program, and 5% for the Low-Carbon Transit Operations Program. The remaining 40% is available for annual appropriation by the Legislature. 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) GGRF public transportation funding. The Transit and Intercity Rail Capital Program (TIRCP) funds transformational capital improvements for GHG emission reductions that expand and improve rail service, and integrate state and local rail and other transit systems, including the high-speed rail system. The TIRCP has received $265 million to date, with $200 million estimated for the 2016-17 fiscal year. The LCTOP provides operating and capital assistance to transit agencies to reduce GHG emissions and improve mobility, with a priority on serving disadvantaged communities. The program requires transit agencies to demonstrate that each expenditure directly enhances or expands transit service to increase mode share and that each expenditure reduces greenhouse gas emissions. Eligible projects include expanded, new, or enhanced transit services; conversion or retrofit of transit vehicles and equipment to zero-emission; expanded intermodal transit facilities; and infrastructure to support zero-emission or plug-in hybrid vehicles. The program guidelines also specify that free or reduced-fair transit vouchers are eligible projects under LCTOP. For agencies whose service area includes disadvantaged communities, at least 50% of the total moneys received is required to benefit disadvantaged communities. The LCTOP is not a competitive program, but based on project eligibility according to statute, program guidelines, and an established transportation funding formula. This program is administered by Caltrans in coordination with ARB and the State Controller's Office. LCTOP funding to date is $145 million, with $100 million estimated for the 2016-17 fiscal year. AB 2222 (Holden) Page 5 of ? 3) Transit passes. Currently, many transit agencies in California provide free or reduced fare transit passes to students for use on their systems. For example, the San Francisco (SF) Muni offers the Free Muni for Youth program that gives free access to Muni to low and moderate income youth, from five to 18 years old. Sacramento Regional Transit also offers students from age five to 18 a 50% discounted fare for monthly passes. The Los Angeles County Metropolitan Transportation Authority (Metro) has been offering reduced fares for both K-12 and college students since the early 1990s. Specifically, Metro has programs for both college students, with a 54% discount on a monthly pass, and a 76% discount for the K-12 program. Most of the programs require proof of the students being registered in school; however the SF Muni program is based upon family income level. Additionally, transit agencies have developed agreements directly with schools in their jurisdictions to partner and provide free or reduced passes to all students. The University of California Los Angeles (UCLA) and the University of Southern California (USC) provide free passes for their students in partnership with Metro. In the Sacramento area, the University of California at Davis offers a variety of travel options at reduced rates for students and faculty. Comments 1) Purpose of Bill. According to the author, "In order to achieve California's greenhouse gas reduction goals, our state must take steps to reduce automobile trips and promote the use and growth of our mass transit systems. AB 2222 targets one of the largest 'drive-alone' populations in our state, students, and provides meaningful financial incentives to promote transit ridership. AB 2222 not only reduces the financial burden of transportation on California students but will promote active transportation and transit usage in the next generation of Californians." 2) Will funds be additional, or replacement? As noted in the background, there are numerous reduced fare programs across the state for colleges in California, as well as reduced fare programs for youth populations. Will this program add to and enhance those existing programs, or will moneys from the program created through this bill be used to simply displace current funding for reduced fare programs, so that those general funds can be used by participants for other purposes? AB 2222 (Holden) Page 6 of ? 3) Middle and high school students. According to the author, AB 2222 is intended to address GHG and other transportation impacts from "drive alone" populations of college and high-school students, and cites an article written about results of a program providing unlimited access to transit at UCLA. The article states that bus ridership for commuting to campus increased by 56% during the first year, and solo driving fell by 20%. In addition to targeting college students, AB 2222 includes middle school students, who are too young to drive to school, and high school students, many of whom are also too young to drive. TransForm, one of the sponsors of this bill, states that parents of schoolchildren add to traffic congestion by dropping off and picking up their children, and that teenagers often skip school because it is too difficult to get to and from school. Other supporters state that early and regular interaction with transit is likely to create lifetime transit users. By including school districts (over 1800 in California), and targeting low-income middle school and high school students, the scope is significantly expanded beyond "drive alone" populations, such as college students. 4) Creating another grant program. Establishing a new program takes effort and money to administer. For example, public engagement/outreach and workshops are necessary to create the program; staff time is required to review proposals and process funds. Also, anytime a new program is created, and funded through GGRF, there are various requirements that need to be met by the agency administering the program as well as ARB. ARB must provide new program guidance on how to report and quantify GHG reductions and on how to maximize benefits to disadvantaged communities. Each administering agency has to do an expenditure report to document how the program will reduce GHG emissions. Creating new programs that overlap with existing programs that serve the same purpose may create governmental inefficiencies and avoidable expenses. Specifically, AB 2222 creates a new program using a similar framework to current state law that establishes the LCTOP. Like LCTOP, guidelines for the program are developed by AB 2222 (Holden) Page 7 of ? Caltrans in coordination with ARB, moneys are allocated by the Controller, and transit agencies are allocated funds. In fact, the guidelines for LCTOP specify that eligible projects under the program include reduced fare transit vouchers. The list of LCTOP projects includes several expenditures for reduced transit fares targeting various populations, including reduced fares for Mendocino college students, students in the City of LA, and a student transit pass program in the North County Transit District. Is an additional program needed when these types of projects are eligible, and already being funded, under LCTOP? It may instead be more prudent to increase the appropriation for LCTOP to accommodate a greater number of reduced fare transit pass programs. Additionally, a program that integrates reduced fares with new or expanded transit routes, such as LCTOP, instead of a program focused solely on reduced fares, may work even more effectively to increase ridership and change behaviors. 5) Existing programs qualify. Existing programs are eligible for funding through this program if moneys used for those programs increase eligibility or further reduce the cost of a transit pass. It follows, then, that AB 2222 allows existing programs to qualify for funding even with the most modest of fare decreases. This raises questions with regard to the additionality of GHG emissions reductions in those situations, and to what extent the program will result in GHG emissions reductions. How significant do fare decreases need to be to change behaviors and result in GHG emissions reductions? Additionally, authorizing existing transit fare programs under the bill raises implementation questions. For example, moneys received pursuant to this bill can be used for existing reduced transit fare programs, but only for low-income students as defined in the bill. It is unclear how this requirement will be implemented and seems to create administrative difficulties for ensuring the moneys are only spent to subsidize transit passes for low-income students. 6) Prioritization of GHG emissions reductions? AB 2222 does not specify how a transit provider prioritizes which participants, including transit operator, school district, community college, AB 2222 (Holden) Page 8 of ? a CSU, or a UC, receive reduced or free transit passes. The only mention of prioritization in the bill is a provision authorizing eligible transit providers to consider granting priority to applicants with existing successful transit pas programs. 7) Amendment. Although the program created in AB 2222 has a laudable goal of increasing transit ridership, it is unclear that the program is structured in a way to ensure significant GHG emissions reductions. An amendment is needed to remove provisions related to the use of GGRF moneys to fund the program. Related/Prior Legislation SB 951 (McGuire) would have created a pilot program to provide veterans with free access to transit services. This bill was held on the suspense file in Senate Appropriations Committee. 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 7-0. SOURCE: TransForm, MoveLA SUPPORT: Amigos de los Rios Aspiranet Association for Commuter Transportation, Southern California Chapter Bike San Gabriel California Bicycle Coalition California Federation of Teachers California Housing Partnership Corporation California Pan Ethnic Health Network California ReLEAF California State Polytechnic University, Pomona California State Student Association California State University CalPIRG Catholic Charities of the diocese of Stockton AB 2222 (Holden) Page 9 of ? Center for Community Action and Environmental Justice Circulate San Diego Climate Resolve Coalition for Clean Air East LA Community Corporation East Los Angeles College FAST Gamaliel of California Housing California Investing in Place Kings Canyon Unified School District LA Mas LAANE Leadership Council for Justice and Accountability Long Beach Community College District Los Angeles Business Council Los Angeles Community College District Los Angeles County Bicycle Coalition Los Angeles County Metropolitan Transportation Authority Los Angeles Neighborhood Initiative Los Angeles Urban League Los Angeles Walks Los Rios Community College District Mt. San Antonio College Orange County Transportation Authority Pacoima Beautiful Pasadena Area Community College District Peralta Community College District PolicyLink Prevention Institute Public Advocates Safe Routes to School San Diego Community College District San Francisco Bay Area Rapid Transit District San Jose Evergreen Community College District SLATE Z Southeast Asian Community Alliance The Trust for Public Land Union of Concerned Scientists University of California, Los Angeles University of Southern California (USC) Ventura County Transportation Commission Youth Policy Institute 1 Individual AB 2222 (Holden) Page 10 of ? OPPOSITION: California Taxpayers Association -- END --