BILL ANALYSIS Ó SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Wieckowski, Chair 2015 - 2016 Regular Bill No: SB 951 ----------------------------------------------------------------- |Author: |McGuire | ----------------------------------------------------------------- |-----------+-----------------------+-------------+----------------| |Version: |3/17/2016 |Hearing |4/20/2016 | | | |Date: | | |-----------+-----------------------+-------------+----------------| |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Rebecca Newhouse | | | | ----------------------------------------------------------------- SUBJECT: Transportation: Golden State Patriot Passes 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) This bill: SB 951 (McGuire) Page 2 of ? 1)Creates the Golden State Patriot Passes Program administered by the state Department of Transportation (Caltrans) to provide free access to transit services for veterans, as specified. 2)Provides an annual appropriation of $3 million in GGRF moneys for fiscal years 2017-18 to 2020-21 for this program. 3)Requires Caltrans, in coordination with ARB, to develop guidelines for participating transit providers to demonstrate that proposed expenditures will reduce GHG emissions and increase veteran mobility. 4)Requires Caltrans, by January 1, 2018, to select three transit operator applicants to receive program funding. Specifically: a) Prohibits Caltrans from selecting an applicant that already provides veterans with free access to transit services in its service area. b) Requires Caltrans to select applicants that serve entirely different counties. c) Provides that Caltrans shall select one applicant that primarily serves an urban area, one that primarily serves a suburban area, and one that primarily serves a rural area (to be defined by Caltrans based on Census data). Sets maximum allocations of $2 million for an urban area applicant, $900,000 for a suburban area applicant, and $100,000 for a rural area applicant. 5)Limits applicants to public agencies including, but not limited to, transit operators within a city or county. 6)Requires a transit operator that is selected for the program to provide a local match for any state funding it receives. 7)Requires Caltrans to ensure that benefits are provided by the program to disadvantaged communities. 8)Requires participating transit operators to submit a report to Caltrans by February 1, 2021 and requires Caltrans to submit a report to the Legislature by August 1, 2021. The reports SB 951 (McGuire) Page 3 of ? shall include, but not be limited to, cost, use of moneys, estimated reduction in GHG emissions, and ridership. 9)Provides that in order to participate in the program, a veteran must provide a veterans identification card issued by a veterans service organization, or a driver's license or identification card identifying the holder as a veteran. 10)Sunsets the program on January 1, 2022. SB 951 (McGuire) Page 4 of ? Background 1) Sonoma County Veterans Subsidized Fare Program. Sonoma County launched a pilot program on January 1, 2015 to provide veterans free use of Sonoma County Transit. Specifically, a veteran showing a VA identification card or a Sonoma County Veterans identification card upon boarding a bus rides free, and Sonoma County Transit is reimbursed by the county. The county budgeted $45,000 (general fund) for this program for the year and came in under budget. The county board of supervisors unanimously voted in November to make the program permanent as of January 1, 2016. From January through June 2015, nearly 14,000 veteran trips were provided through this program, with the majority of trips occurring on weekdays. During this period, veteran ridership increased by 34%. Approximately 19% of trips occurred on the route that serves the VA Outpatient Clinic. During this period, 845 Sonoma County Veterans identification cards were issued. County staff estimated that about half of these ID cards were issued specifically in relation to this program. 2) Cap-and-trade auction revenue. Since November 2012, ARB has conducted 14 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. Statute further requires the Department of Finance, in consultation with ARB and any other relevant state agency, to develop a three-year investment plan for the auction proceeds, which are deposited in the GGRF. ARB is required to develop guidance for administering agencies on reporting and quantifying methodologies for programs and projects SB 951 (McGuire) Page 5 of ? funded through the GGRF to ensure the investments further the regulatory purposes of AB 32. Disadvantaged communities. SB 535 (de León, Chapter 830, Statutes of 2012) requires the Department of Finance, in the investment plan, to allocate at least 25% of available moneys in the GGRF to projects that provide benefits to disadvantaged communities, and at least 10% to projects located within disadvantaged communities. To meet the SB 535 mandate, the Office of Environmental Health Hazard Assessment, under the California Environmental Protection Agency's (CalEPA) guidance, developed a tool (termed CalEnviroScreen) to assess and rank census tracts across the state that are disproportionately affected by multiple types of pollution and areas with vulnerable populations. CalEPA has designated 25% of census tracts in California as disadvantaged communities for the purpose of investing cap-and-trade proceeds. Additionally, SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) requires ARB to develop guidelines on maximizing benefits for disadvantaged communities by agencies administering GGRF funds. Legal consideration of cap-and-trade auction revenues. SB 951 (McGuire) Page 6 of ? 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, subject to the "Sinclair Nexus Test." This test requires that a clear nexus must 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. The LAO concluded, based on the opinion, that 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. In February of 2014, the plaintiffs filed an appeal with the 3rd District Court of Appeal in Sacramento. That case is currently pending. Budget allocations. SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) 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 Intercity Rail Capital Program, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature. SB 951 (McGuire) Page 7 of ? 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. Comments 1) Purpose of Bill. According to the author there is a significant need to not only provide better services for California's roughly two million veterans, but also to make sure all our veterans, especially the most vulnerable, have access and transportation to these services. Only 19% of veterans in California utilize the benefits to which they are entitled. Approximately 26% of veterans report having a disability; of these, 32% indicate that their disability has interfered with obtaining or holding a job. Additionally, 18-30 year-old veterans living in poverty are 3.5 times more likely to become homeless as compared to non-veteran adults living in poverty. The author states that, with veterans being more vulnerable to unemployment and homelessness, it is paramount to provide them with affordable means to succeed. 2) Does This Bill Advance the Goals of AB 32? Any projects funded through GGRF moneys are required to facilitate the achievement of GHG emission reductions and advance the regulatory purposes of AB 32. It is not clear that the appropriation in SB 951 advances the regulatory purposes of AB 32 and reduces GHG emissions. Only in cases where a veteran was switching from car travel to bus travel might there be a reduction of GHG emissions. However, it is unclear what that level of GHG emissions reductions might be, and whether that transit shift is taking place for veterans participating in the Sonoma County pilot program. In fact, it seems that the intent of the author with this bill is to provide services to veterans who currently do not have the means to transport themselves, or pay for public transportation. In these cases where veterans were already SB 951 (McGuire) Page 8 of ? using public transit but having to pay, or walking or riding bicycles, there would not be GHG emissions reductions under this program. Legal risk. As noted in the background, the issue of whether auction proceeds constitute an illegal tax is currently under appeal. The more tenuous the nexus between GGRF investments and GHG emissions reductions, the greater the legal risk that future court decisions may find those GGRF revenue allocations illegitimate, with possible consequences including invalidation of that particular appropriation or of the overall legislative allocation of GGRF. 3) Amendment needed. Although the program created in SB 951 has a laudable goal of helping veterans access transit, it is not clear that the program would result in GHG emissions reductions. An amendment is needed to strike the $3 million appropriation from the GGRF, as well as other provisions relating to funding from GGRF, from the bill. The author should work to find a more appropriate funding source as the bill moves forward. Related/Prior Legislation AB 2222 (Holden) provides a continuous appropriation of $50 million per year from the GGRF for the Transit Pass Program, to be administered by Caltrans. This program would support transit pass programs of public agencies that provide free or reduced-fare transit passes to public school students and community college, California State University, and University of California students. AB 2222 requires at least 50% of program funding to benefit disadvantaged communities. This bill is pending in the Assembly Transportation Committee. SOURCE: Author SUPPORT: American GI Forum of California AMVETS - Department of California California Association of County Veterans Service Officers Gamaliel of California Military Officers Association of America, California Council of Chapters SB 951 (McGuire) Page 9 of ? Military Order of the Purple Heart of the U.S.A., Inc., Department of California Sonoma County Board of Supervisors VFW - Department of California Vietnam Veterans of America - California State Council OPPOSITION: CalTax DOUBLE REFERRAL: This measure was heard in the Senate Transportation and Housing Committee on March 29, 2016, and passed out of committee with a vote of 10-0. -- END --