BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE  
          DEVELOPMENT
                              Senator Jim Beall, Chair
                           2015 - 2016 First Extraordinary

          Bill No:          SBX1 8            Hearing Date:     9/1/2015
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          |Author:   |Hill                                                  |
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          |Version:  |7/16/2015                                             |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Erin Riches                                           |
          |:         |                                                      |
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          SUBJECT:  Greenhouse Gas Reduction Fund:  transit expenditures


            DIGEST:  This bill increases the continuous appropriation  
          amounts of Greenhouse Gas Reduction Fund (GGRF) monies for  
          transit programs.

          ANALYSIS:
          
          Existing law: 

          1)AB 32, Núñez, Chapter 488, Statutes of 2006, requires the  
            state Air Resources Board (ARB) to develop a plan to reduce  
            emissions to 1990 levels by 2020.  It also requires ARB to  
            ensure that programs to reduce greenhouse gas (GHG) emissions  
            are targeted, to the extent feasible, to the most  
            disadvantaged communities in the state.  AB 32 authorizes ARB  
            to deposit any fees paid by GHG emission sources into the  
            GGRF.  

          2)AB 1532, Pérez, Chapter 807, Statutes of 2012, specifies that  
            GGRF revenues must be used to facilitate the achievement of  
            GHG emissions reductions.  

          The 2014-15 budget agreement allocated $832 million in GGRF  
          revenues to a variety of GHG emission reduction programs.   
          Beginning in 2015-16, the budget agreement appropriates 25% of  
          GGRF revenues to the state's high-speed rail project, 20% to  
          affordable housing and sustainable communities grants, 10% to  







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          intercity capital rail projects, and 5% to low-carbon transit  
          projects.  The remaining 40% of GGRF revenues are available for  
          annual appropriation by the Legislature.  

          The 2014-15 budget agreement established the Transit and  
          Intercity Rail Capital Program (TIRCP).  This program provides  
          grants to fund capital improvements and operational investments  
          to modernize transit systems and intercity, commuter, and urban  
          rail systems to reduce GHG emissions by reducing vehicle miles  
          traveled throughout California.  Eligible projects include  
          expansion and improvement of rail service to increase ridership;  
          integration of rail service of various rail operations,  
          including integration with the high-speed rail system; and  
          safety improvements.  The 2014-15 budget agreement provides for  
          a continuous appropriation of 10% of cap-and-trade funds to  
          TIRCP beginning in 2015-16.

          In addition, the 2014-15 budget agreement established the Low  
          Carbon Transit Operations Program (LCTOP) under the California  
          State Transportation Agency.  This program provides operating  
          and capital assistance to transit agencies to reduce GHG  
          emissions and improve mobility.  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 2014-15  
          budget agreement provides for a continuous appropriation of 5%  
          of cap-and-trade funds to LCTOP beginning in 2015-16 (about $200  
          million annually).

          This bill increases the continuous appropriations of GGRF monies  
          from 10% to 20% for the TIRCP and from 5% to 10% for the LCTOP.

          COMMENTS:

          1)Purpose. The author states that the current 15% allocation to  
            TIRCP and LCTOP, though sizeable, does little to overcome the  
            $27 billion transit shortfall faced by the state over the next  
            10 years.  It also falls short of providing the support for  
            public transit necessary to ensure that it becomes - and in  
            some areas, remains - a fast, reliable, and convenient  
            alternative to personal vehicle travel.  This bill provides an  
            additional $100 million annually for public transit with the  
            goal of building the capacity necessary to move a growing and  
            aging population around our state in a manner that supports  








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            our ambitious environmental objectives.  The author states  
            that because the transportation sector is responsible for an  
            overwhelming majority of the revenues flowing to the  
            cap-and-trade program, it is warranted that a larger share of  
            the revenues should be used for programs that mitigate the use  
            of these fuels.   

            The author also states that according to an analysis conducted  
            by CH2M HILL on behalf of the California Transit Association,  
            the state requires approximately $72 billion in new transit  
            funding over the next decade to maintain existing transit  
            infrastructure and build the capacity needed to meet the  
            mobility needs of our state's growing population, as well as  
            AB 32 objectives.  Additionally, the Administration's draft  
            California Transportation Plan 2040 posits that drastic  
            changes in transit service levels and travel patterns are  
            vital to meet the state's 2050 GHG emissions reduction  
            targets.  The plan recommends that the state provide  
            additional funding for transit improvements.  
          2)Winners and losers?  Currently, 60% of GGRF revenues are  
            continuously appropriated.  This bill would increase that  
            amount to 75%, leaving just 25% to be allocated by the  
            Legislature each year.  The author states that this bill would  
            not impact any other program subject to an ongoing  
            appropriation.  However, by reducing the unallocated share of  
            GGRF revenues, this bill restricts the flexibility of the  
            Legislature to allocate GGRF revenues to programs outside the  
            current GGRF structure.

          3)Letter to the Senate President Pro Tempore.  On June 22, 2015,  
            17 Senators and Assemblymembers, including six members of this  
            committee, sent a letter to Senate President Pro Tempore Kevin  
            de León urging a minimum of $500 million in GGRF funding to  
            TIRCP, or an increase in TIRCP funding from 10% to 20% of GGRF  
            revenues.  

          4)A question of priorities.  There are currently a variety of  
            bills before the Legislature relating to GGRF revenues.  It is  
            difficult to determine what suite of measures best meets the  
            requirements of the GGRF, uses resources most efficiently, and  
            maximizes policy objectives, when bills are scattered across  
            various committees and even in different sessions.  Budget  
            discussions on a cap-and-trade investment strategy provide an  
            opportunity for a comprehensive look at the universe of GGRF  
            proposals.  The committee may wish to consider whether the  








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            subject of this bill is more appropriate to the budget  
            discussion than the transportation special session.
          
          Related Legislation:
          
          SBX1 7 (Allen) - increases funding for the State Transit  
          Assistance program by raising the portion of sales and use tax  
          on diesel fuel that is dedicated to transit, from 1.75% to  
          5.25%, effective July 1, 2016.  SBX1 7 will also be heard by  
          this committee today.  

          ABX1 8 (Chiu and Bloom) - is identical to SBX1 7 (Allen).  ABX1  
          8 is pending committee assignment in the Assembly Rules  
          Committee.

          FISCAL EFFECT:  Appropriation:  Yes    Fiscal Com.:  Yes     
          Local:  No


            POSITIONS:  (Communicated to the committee before noon on  
                       Thursday, August 27, 2015.)
          
            


          SUPPORT:  

          California Intercity Passenger Rail Leadership Coalition
          California Transit Association 
          Golden Empire Transit District 
          Metropolitan Transportation Commission
          Monterey-Salinas Transit
          Peninsula Corridor Joint Powers Board 
          Sacramento Regional Transit
          San Francisco Mayor Edwin M. Lee
          San Mateo City/County Association of Governments 
          San Mateo County Transit District 
          San Mateo County Transportation Authority 
          Santa Cruz Metropolitan Transit District
          Solano County Transit 
          Southern California Regional Transit Training Consortium 

          OPPOSITION:

          None received








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