BILL ANALYSIS Ķ
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 9 (Beall) - Greenhouse Gas Reduction Fund: Transit and
Intercity Rail Capital Program.
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: May 5, 2015 |Policy Vote: E.Q. 7 - 0, T. & |
| | H. 10 - 0 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: May 18, 2015 |Consultant: Marie Liu |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 9 would make a number of changes to the Transit and
Intercity Rail Capital Program (TIRCP) in order to refocus the
program to fund large, transformative projects.
Fiscal
Impact:
SB 9 (Beall) Page 1 of
?
Unknown cost pressures, at least in the millions of dollars,
to the Greenhouse Gas Reduction Fund (GGRF, special) by
expanding eligibility of the TIRCP to include ferry transit
systems.
Potential relief of cost pressures to the Greenhouse Gas
Reduction Fund by deleting operational expenditures from
eligibility from the TIRCP.
Background: The Legislature enacted AB 32 (Nuņez, Chapter 488), the Global
Warming Act of 2006, which requires the California Air Resources
Board (ARB) to establish a statewide greenhouse gas (GHG)
emissions limit such that by 2020 California reduces its GHG
emissions to the level they were in 1990. The Cap-and-Trade
Program is one of ARB's key AB 32 implementation programs.
Under this program, ARB establishes an overall limit - or "cap"
- on GHG emissions from specified industries. As part of the
Cap-and-Trade Program, ARB auctions off GHG emission allowances
as mitigation fees. To date, ARB has completed 10 auctions,
taking in a total of $1.6 billion in proceeds. These funds may
only be used to facilitate the achievement of GHG emission
reductions in California consistent with AB 32.
In 2014, the Legislature enacted SB 862 (Committee on Budget and
Fiscal Review, Chapter 36), a budget trailer bill which
establishes a long-term cap-and-trade expenditure plan by
continuously appropriating portions of the funds for designated
programs or purposes. One of these programs is the Transit and
Intercity Rail Capital Program (TIRCP), to which SB 862 commits
10% of the annual cap-and-trade revenues.
Existing law specifies that the TIRCP fund both capital
SB 9 (Beall) Page 2 of
?
improvements and operational investments in order to modernize
California's intercity, commuter, and urban rail systems as well
as achieve the following specific policy goals:
Reduce GHG emissions
Expand and improve rail service to increase ridership
Integrate various rail operators' systems, including
high-speed rail
Improve rail safety
Existing law appropriates the funds to the California
Transportation Agency (agency), and assigns the agency with the
responsibility of evaluating funding applications and adopting a
list of projects. Prior to commencing the program, the agency
is required to develop draft program guidelines containing
selection criteria. Finally, existing law requires the
California Transportation Commission (CTC) to award grants
pursuant to the list of projects chosen by the agency.
In evaluating project applications, SB 862 requires the agency
to consider:
Specified cobenefits, including reduction of auto vehicle
miles traveled, promotion of housing development near rail
stations, expansion of existing rail and transit systems,
implementation of clean-vehicle technology, promotion of
active transportation, and improvements to public health.
Whether the project was developed through the collaboration of
two or more rail operators
Geographic equity
Consistency with the adopted sustainable communities
strategies and the recommendations of regional agencies
SB 9 (Beall) Page 3 of
?
Finally, existing law establishes a programmatic goal for the
TIRCP to provide at least 25% of available funding to projects
that provide a direct, meaningful, and assured benefit to
disadvantaged communities.
Proposed Law:
This bill makes a number of significant changes to the TIRCP,
mostly towards the goal of focusing the program on large,
transformative capital improvements. Specifically, this bill
would:
Recast the TIRCP mission to focus on large, transformative
capital improvements and eliminating operations funding as an
eligible use of the funds.
Specify that the agency dedicate 90% of the funds to projects
with a total cost of $100 million or more, and 10% to projects
costing less than $100 million.
Expand eligible applicants to include ferry transit systems
and clarify that bus systems are eligible.
Add the following specific cobenefits criteria that are to be
considered when the agency is evaluating grants:
o Reducing the number of auto trips in addition to
reducing vehicle miles traveled,
o Enhancing connectivity and coordination of all
transit in a region,
o Providing direct connectivity to the proposed
high-speed rail system
SB 9 (Beall) Page 4 of
?
Require that the agency also consider the following when
evaluating projects:
o The extent to which a project reduces GHG emissions,
o The extent to which a project leverages other
sources of funding,
o The extent to which a project will increase transit
ridership.
Create a process by which the agency may make multiyear
funding commitments for projects.
Require the agency to develop a five-year estimate of revenues
reasonably expected to be available to the program from the
GGRF and to adopt a program of projects for those five years.
Require that the agency to award projects on even-numbered
years for a five year period.
Establish a process by which a grant recipient can receive a
Letter of No Prejudice (LONP) from the agency, which enables
the recipient to spend alternative funds on a project that has
been awarded a TIRCP grant with the promise of future
reimbursement from future cap-and-trade revenues.
Staff
Comments: This bill explicitly adds bus and ferry transit
systems as eligible for funds under the TIRCP. In existing law,
the language used in the policy statements guiding the formation
of the TIRCP in §75220 is very focused on rail. However,
existing law also explicitly includes bus rapid transit in a
list of eligible projects in §75221(a). Therefore, the explicit
addition of buses into various sections of code relevant to the
SB 9 (Beall) Page 5 of
?
TIRCP can be seen as clarifying amendments. However, because
there is no existing mention of ferry transit systems under the
existing law, the explicit addition of ferry service in this
bill can be seen as an expansion of eligibility, which creates
cost pressure on the funding source of the TIRCP, the GGRF.
While there are only a few ferry systems in the state, building
or expanding a ferry terminal can be of significant cost. Thus,
staff estimates that this bill adds cost pressures to the GGRF
in an unknown amount, but at least in the millions of dollars.
This bill also removes operating costs operations funding as an
eligible use of TIRCP funds. As this reduces demand for the
program, it decreases cost pressures. It is unknown how large
this reduction in cost pressures would be relative to the
increase in cost pressures created making ferries eligible for
funding.
The agency estimates that it will have minor and absorbable
costs to update their guidelines and implement the revamped
program as envisioned by this bill. Staff notes that this
estimate is based on the ability for the agency to calculate the
five-year estimate of program funding by assuming past revenues
will be indicative future revenues. Staff notes that this is a
very rough calculation as the revenues to the TIRCP are based on
cap-and-trade auction revenues, which are driven (by design) by
the markets, and therefore are difficult to predict. The bill
requires that the estimate be "reasonable." Assuming that this
estimate is "reasonable," making a five year estimate should not
be workload intensive for the agency.
-- END --
SB 9 (Beall) Page 6 of
?