BILL ANALYSIS Ó SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Bob Wieckowski, Chair 2015 - 2016 Regular Bill No: SB 698 Hearing Date: 04/15/2015 ----------------------------------------------------------------- |Author: |Cannella | |----------+------------------------------------------------------| |Version: |2/27/2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Rebecca Newhouse | |: | | ----------------------------------------------------------------- Subject: Active Transportation Program: school zone safety projects 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 monies 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. Continuously appropriates 60% of GGRF monies to transit, affordable housing and sustainable communities, including 20% SB 698 (Cannella) Page 2 of ? continuously appropriated to the Strategic Growth Council for the Affordable Housing and Sustainable Communities Program. (HSC §39719) 5. Creates the Active Transportation Program in the California Department of Transportation for the purpose of encouraging increased use of active modes of transportation, such as biking and walking. (Streets and Highways Code §2380) This bill continuously appropriates an unspecified percentage of GGRF monies to the State Transportation Fund to fund school zone safety projects within the Active Transportation Program. Background 1.Safe Routes to Schools and the Active Transportation Program. A. Safe Routes to Schools. State program: AB 1475 (Soto) Chapter 663, Statutes of 1999, created the Safe Routes to School program. The program was subsequently amended to extend the program indefinitely with funding provided from the State Highway Account. The program requires the Department of Transportation, in consultation with the California Highway Patrol (CHP), to make grants available to local governmental agencies under the program based upon the results of a statewide competition and rates those proposals based on need, potential for reducing child injuries and fatalities, potential for encouraging increased walking and bicycling, and other considerations. Federal program: Originally created as a five-year program in 2005, extensions through continuing resolutions have been enacted by Congress extending the federal Safe Routes to School program to fund infrastructure, and non-infrastructure projects for the purposes of enabling and encouraging students to safely walk and bicycle to school, making walking and bicycling to school a more appealing mode choice, and facilitating the planning, design, and implementation of projects that will improve SB 698 (Cannella) Page 3 of ? safety, environment, and overall quality of life. The California Department of Transportation is responsible for developing and implementing the program. B. Active Transportation Program. SB 99 (Committee on Budget and Fiscal Review), Statutes of 2013, Chapter 359, and AB 101 (Committee on Budget), Statutes of 2013, Chapter 354, creates the Active Transportation Program (ATP) in the California Department of Transportation (CalTrans), and consolidates several existing federal and state transportation programs, including the Transportation Alternatives Program, Bicycle Transportation Account, and State Safe Routes to School, into a single program. The purpose of ATP is to encourage increased use of active modes of transportation by achieving goals including increasing the number of biking and walking trips, increased safety and mobility for bikers and walkers, reduced GHG emissions through active transportation, enhanced public health, and benefits to disadvantaged communities. The program is made up of a statewide, small urban or rural, as well as a large Metropolitan Planning Organization component, which, respectively, receive 50, 10, and 40% of the available funds. Additionally, a minimum of 25% of the ATP funds must benefit disadvantaged communities. A total of 265 projects with almost $368 million in ATP funds (from the federal Transportation Alternative Program and Highway Safety Improvements funds as well as State Highway Account funds) were programmed as of December, 2014, and of these projects, about $161 million, or roughly 44%, was programmed for 149 safe-routes-to-school projects. 2.Affordable Housing and Sustainable Communities Program. The Budget Act of 2014 appropriates $130 million from the GGRF to develop and implement the Affordable Housing and Sustainable Communities Program (AHSC). SB 862 (Committee on Budget and SB 698 (Cannella) Page 4 of ? Fiscal Review) Statutes of 2014, Chapter 36, continuously appropriates 20% of GGRF annual proceeds to the AHSC beginning in FY 2015-16. The AHSC, administered by the Strategic Growth Council, is tasked with reducing GHG emissions through projects that implement land use, housing, transportation, and agricultural land preservation practices to support infill and compact development. Additionally, the statute specifies that project objectives include reducing air pollution, improving connectivity and accessibility to jobs, housing and services, and increasing options for mobility, including implementation of the Active Transportation Program. The guidelines specify that the program will provide grants and loans to reduce GHG emissions through increasing accessibility of affordable housing, employment centers and key destinations via low-carbon transportation resulting in fewer vehicle miles traveled through shortened or reduced vehicle trip length or mode shift to transit, bicycling or walking. Key destinations are defined in the guidelines as, "one or more community amenities such as schools, community centers, employment centers, retail, services, parks and other destinations. 3.Use of Cap and Trade Auction Revenue. ARB has conducted ten cap-and-trade auctions, generating almost $1.6 billion in proceeds to the state. Several bills in 2012, and one in 2014, provide legislative direction for the expenditure of auction proceeds including SB 535 (de León) Chapter 830, Statutes of 2012, AB 1532 (J. Pérez) Chapter 807, Statutes of 2012, SB 1018 (Budget Committee) Chapter 39, Statutes 2012, and SB 862 (Budget Committee) Chapter 36, Statutes of 2014. SB 535 (de León) Chapter 830, Statutes of 2012, requires that 25% of auction revenue be used to benefit disadvantaged communities and requires that 10% of auction revenue be invested in disadvantaged communities. AB 1532 (J. Pérez) Chapter 807, Statutes of 2012, directs the Department of Finance to develop and periodically update a three-year investment plan that identifies feasible and SB 698 (Cannella) Page 5 of ? cost-effective GHG emission reduction investments to be funded with cap-and-trade auction revenues. AB 1532 specifies that reduction of greenhouse gas emissions through strategic planning and development of sustainable infrastructure projects, are eligible investments of GGRF. SB 1018 (Budget Committee) Chapter 39, Statutes of 2012, created the GGRF, into which all auction revenue is to be deposited. The legislation requires that before departments can spend monies from the GGRF, they must prepare a record specifying: (1) how the expenditures will be used, (2) how the expenditures will further the purposes of AB 32 (Nuñez, Pavley) Chapter 488, Statutes of 2006, (3) how the expenditures will achieve GHG emission reductions, (4) how the department considered other non-GHG-related objectives, and (5) how the department will document the results of the expenditures. SB 862 (Budget Committee) Chapter 36, Statutes of 2014, requires the ARB to develop guidelines on maximizing benefits for disadvantaged communities by agencies administering GGRF funds, and guidance for administering agencies on GHG emission reduction reporting and quantification methods. Legal consideration of cap-and-trade auction revenues: The 2012-13 budget analysis of cap-and-trade auction revenue by the Legislative Analyst's Office noted that, based on an opinion from the Office of Legislative Counsel, the auction revenues should be considered mitigation fee revenues, and their use requires that a clear nexus exist between an activity for which a mitigation fee is used and the adverse effects related to the activity on which that fee is levied. Therefore, in order for their use to be valid as mitigation fees, revenues from the cap-and-trade auction must be used to mitigate GHG emissions or the harms caused by GHG emissions. In 2012, the California Chamber of Commerce filed a lawsuit against the ARB claiming that cap-and-trade auction revenues constitute illegal tax revenue. In November 2013, the superior court ruling declined to hold the auction a tax, concluding that it is more akin to a regulatory fee. AB 32 auction revenue investment plan: The first three-year investment plan for cap-and-trade auction proceeds, submitted by Department of Finance, in consultation with ARB and other state SB 698 (Cannella) Page 6 of ? agencies in May of 2013, identified sustainable communities and clean transportation as one of the key sectors that provide the best opportunities for achieving the legislative goals and supporting the purposes of AB 32. The plan recommended the aforementioned sector receive the largest allocation of funds from the GGRF, but did not specify a monetary amount. Budget allocations: The 2014-15 budget allocates $832 million in GGRF revenues to a variety of transportation, energy, and resources programs aimed at reducing GHG emissions. Various agencies are in the process of implementing this funding. The budget agreement specifies how the state will allocate most cap-and-trade auction revenues in 2015-16 and beyond. For all future revenues, the legislation appropriates 25% for the state's high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to intercity capital rail projects, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature. The Governor's proposed 2015-16 cap-and-trade expenditures are largely the same as the 2014-15 plan, albeit with larger amounts proposed allocations for programs with continuous appropriations, including the Affordable Housing and Sustainable Communities program ($200 million). Comments 1. Purpose of Bill. According to the author, "In an effort to continue to reduce greenhouse gas emissions, more emphasis needs to be placed on the Active Transportation Program. ATP consolidated several programs to achieve greenhouse gas reduction goals, enhance public health, and ensure that disadvantaged communities benefit from the program. Funding hasn't been adequate to meet these expectations." 2. Do School Zone Safety Projects Advance the Goals of AB 32? Promoting active transportation is an important component of any comprehensive transportation strategy to reduce greenhouse gas emissions, as it fills in the gap for the "last mile" where public transportation only gets the rider most of the way to SB 698 (Cannella) Page 7 of ? the destination. However, it is unclear to what extent a school zone safety project that is not part of a larger project that connects these school zone improvements with other sustainable community features, such as infill development and transit, will result in significant greenhouse gas emissions reductions. Any projects funded through GGRF monies are required to facilitate the achievement of GHG emission reductions and be used to advance the regulatory purposes of AB 32. As an isolated project, without incorporation into a broader development plan, it is unclear to what extent school zone safety projects, called out specifically in SB 698 to receive a continuous appropriation of GGRF monies, meet that requirement. 3. Funding For School Zone Safety. As noted above, safe-route-to-school projects are a key component of the state's Active Transportation Program. Of the $368 million ATP funds programmed for 2014, 44% was programmed for 149 safe-routes-to-school projects throughout the state. Additionally, the Affordable Housing and Sustainable Communities Program receives 20% of cap-and-trade revenue annually (with total GGRF funds at $1.6 billion), and specifies projects that reduce GHG emissions through sustainable housing, land use and transportation developments, including active transportation projects eligible under the ATP, as eligible projects under the AHSC program. To the extent school zone safety projects are able to reduce GHGs through reduced vehicle miles by improving safety along corridors that connect communities to schools, and encouraging active modes of transportation along those corridors, they are currently eligible for cap-and-trade revenue funding as part of sustainable communities projects through that the AHSC program. Does this specific expenditure, school zone safety projects, require another dedicated stream of funding? SB 698 (Cannella) Page 8 of ? 4. Definition. The bill does not define the term "school zone safety projects." Are these projects the same types of projects that qualified under the safe-routes-to-school program and are now included as a component of the Active Transportation Program? This should be clarified. 5. Unspecified Allocation. As noted above, California has dedicated funds specifically for ATP and school zone safety. This bill would allocate an additional amount for school safety, but currently contains a blank line in the bill for that allocation. As the author is currently unable to identify the additional amount needed for this purpose and thereby justification for that amount, it is unclear where an additional appropriation by the Legislature is warranted. 6. Double Referral to Senate Transportation and Housing Committee. If this measure is approved by the Senate Environmental Quality Committee, the do pass motion must include the action to re-refer the bill to the Senate Transportation and Housing Committee. SOURCE: Safe Routes to Schools National Partnership SUPPORT: None on file OPPOSITION: California Chamber of Commerce -- END -- SB 698 (Cannella) Page 9 of ?