BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                               Senator Wieckowski, Chair
                                 2015 - 2016  Regular 
           
          Bill No:            AB 2222
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          |Author:    |Holden                                               |
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          |Version:   |5/31/2016              |Hearing      | 6/29/2016      |
          |           |                       |Date:        |                |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Rebecca Newhouse                                     |
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          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  







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             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  








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             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  








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             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.









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          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? 








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          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  








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             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,  








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             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








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          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








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           OPPOSITION:    

          California Taxpayers Association
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