BILL ANALYSIS Ó AB 2722 Page 1 ASSEMBLY THIRD READING AB 2722 (Burke) As Amended May 31, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Natural |6-3 |Williams, Cristina |Jones, Hadley, | |Resources | |Garcia, Gomez, |Harper | | | |McCarty, Mark Stone, | | | | |Wood | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |14-6 |Gonzalez, Bloom, |Bigelow, Chang, | | | |Bonilla, Bonta, |Gallagher, Jones, | | | |Calderon, Daly, |Obernolte, Wagner | | | |Eggman, Eduardo | | | | |Garcia, Roger | | | | |Hernández, Holden, | | | | |Quirk, Santiago, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Establishes the Transformative Climate Communities AB 2722 Page 2 Program (Program) in the Strategic Growth Council (SGC) to fund the development and implementation of neighborhood-level transformative climate community plans (plans). Specifically, this bill: 1)Establishes the Program to fund the development and implementation of neighborhood-level transformative climate community plans that include multiple, coordinated greenhouse gas (GHG) emissions reduction projects that provide local economic, environmental, and health benefits that are directly connected to communities most impacted by pollution and vulnerable to climate change. States the intent of the Legislature that private resources can "more effectively be catalyzed to support innovative community and climate transformation in disadvantaged communities." 2)Requires SGC, in coordination with the Assistant Secretary for Environmental Justice and Tribal Affairs at California Environmental Protection Agency (CalEPA), to award competitive grants to eligible entities, as specified. 3)Directs SGC to award grants for plans and projects that implement plans that contribute to the reduction of GHG emissions and demonstrate potential climate, economic, workforce, health, and environmental benefits located in communities that have a demonstrated need for climate, economic, workforce, health, and environmental benefits. 4)Authorizes SGC to award a grant over multiple years. 5)Requires SGC to weigh economic, environmental, and health benefits equally with climate benefits. Defines "economic benefits" as high-quality, well-paid employment opportunities for residents, benefits for small businesses, and benefits for AB 2722 Page 3 minority-, LGBT-, woman-, or disabled veteran-owned small businesses in the plan's region. Defines "LGBT" as lesbian, gay, bisexual, or transgender. 6) Requires SGC to "endeavor to identify" additional public and private sources of funding to sustain and expand the Program and a network of technical assistance providers to assist in plan development, implementation, and project financing. FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill has the following state costs: 1)Cost pressures of up to $250 million (Greenhouse Gas Reduction Fund (GGRF)) to fund the Program. 2)Increased costs of $5 million for SGC to develop and implement the program. This figure is based on the Governor's proposed budget which provides $100 million for an Administration proposed Transformative Climate Communities Program (GGRF) 3)Increased costs to the Air Resources Board (ARB) of less than $150,000 (GGRF) if eligible projects fit within existing GGRF project categories. If eligible projects are outside current existing GGRF project categories, ARB estimates increased initial costs of approximately $670,000 for two years, and ongoing annual costs of $520,000 (GGRF) to develop quantification methodologies, disadvantaged community criteria, reporting criteria, and expenditure records 4)Minor, absorbable costs for CalEPA. COMMENTS: The Global Warming Solutions Act (AB 32 (Núñez), Chapter 488, Statutes of 2006) requires ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and adopt AB 2722 Page 4 regulations, including market-based compliance mechanisms, to achieve maximum technologically feasible and cost-effective GHG emission reductions. As part of the implementation of AB 32 market-based compliance measures, ARB adopted a cap-and-trade program that caps the allowable statewide emissions and provides for the auctioning of emission credits, the proceeds of which are quarterly deposited into the GGRF available for appropriation by the Legislature. SB 535 (De León), Chapter 830, Statutes of 2012, requires no less than 10% of cap-and-trade revenues fund projects located within disadvantaged communities, and that 25% of available revenues fund projects that benefit those communities. The 2014-15 Budget Act allocated cap-and-trade revenues for the 2014-15 fiscal year and established a long-term plan for the allocation of cap-and-trade revenues beginning in fiscal year 2015-16. The Budget continuously appropriates 35% of cap-and-trade funds for investments in transit, affordable housing, and sustainable communities. Twenty-five percent of the revenues are continuously appropriated to continue the construction of high-speed rail. The remaining 40% are to be appropriated annually by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion. An expenditure plan for the 40% was not included in the 2015-16 Budget Act, with the exception of $227 million appropriated to continue funding for specified existing programs. The remaining 2015-16 revenues, along with 2016-17 revenues, totaling $3.1 billion are available for appropriation this year. AB 2722 Page 5 According to the author, this bill is intended to establish a new program to ensure that California is making "comprehensive, cross-cutting, and transformative climate investments that achieve multiple GHG, public health, and economic benefits in our state's most vulnerable communities" to help cities, local jurisdictions, and communities accelerate sustainability plans and help California meet its ambitious climate change goals. Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0003320