BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1074 (Hueso) - Energy:  Federal Trust Fund
          
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          |Version: March 28, 2016         |Policy Vote:                    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 2, 2016       |Consultant: Narisha Bonakdar    |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  SB 1074, in Fiscal Year 2016-17, appropriates $13  
          million from the Federal Trust Fund (fund) to the State Energy  
          Resources Conservation and Development Commission (CEC) to award  
          contracts, grants, and loans for energy-related projects. The  
          bill also annually appropriates $2.5 million for this purpose  
          until all moneys in the fund have been encumbered or expended.


          Fiscal  
          Impact:  

           One-time appropriation of $13 million (special fund).
           Annual appropriation of $2.5 million (special fund) until  
            funds have been encumbered or expended.
           Unknown, but potentially significant, costs to the CEC. 

          Background: 
          
          American Recovery and Reinvestment Act (ARRA) Investments: On  
          February 17th, 2009, President Obama signed the American  







          SB 1074 (Hueso)                                        Page 1 of  
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          Recovery and Reinvestment Act (ARRA), otherwise known as the  
          Stimulus Package, to restart the economy. The package contains  
          extensive funding for science, engineering research and  
          infrastructure, and more limited funding for education, social  
          sciences and the arts. States received discretionary funding  
          through the ARRA for a variety of programs, and certain programs  
          received funding through block grants. 

          Through 2013, the CEC administered $314 million in energy  
          efficiency and renewable energy pilot programs under ARRA. These  
          pilot programs influenced the administration of current and  
          ongoing programs, and budget proposals under other funding  
          sources, such as the Greenhouse Gas Reduction Fund (GGRF). When  
          ARRA ended in 2013, over $30 million of funds remained with  
          sub-recipients who administer the programs, mainly in revolving  
          loan funds. The CEC, as part of its evaluation of these  
          programs, determined that certain programs were under-performing  
          and is now proposing to use the funds for a different purpose. 

          Governor's Proposal. The CEC is requesting $8 million in federal  
          fund authority in the budget year, and $2.5 million through  
          2026-27, to implement both voluntary and mandatory programs to  
          increase energy efficiency in existing buildings, and to conduct  
          a competitive grant program to facilitate more effective use of  
          local government knowledge and authority to promote and conduct  
          energy efficiency improvements in existing buildings. The  
          proposal also requests federal fund transfer authority to shift  
          $5 million (ARRA funds) to the Department of General Services  
          for the Energy Efficiency State Property Revolving Fund loan  
          program. Staff Comments: The need to promote energy efficiency  
          at the local level is critical to making the state more energy  
          efficient. 

          The CEC has multiple programs that address this need, and the  
          Legislature has weighed in on many through statute. Over the  
          past year, several ideas have arisen including the idea that  
          this type of program should be directed toward education of  
          public and private entities, and with the idea of lasting  
          benefits to a broad spectrum of the state's energy users. To  
          that end, the Legislature should consider whether or not the CEC  
          should create a new program to allocate the funding, or rather  
          establish a legislatively-directed program that may be more  
          cross-cutting across all aspects of the local jurisdictions,  
          small and medium businesses, and state agencies. 








          SB 1074 (Hueso)                                        Page 2 of  
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          Proposed Law:   This bill:

           Appropriates, in FY 2016-17, $13 million from the fund to the  
            CEC to award contracts, grants, and loans for energy-related  
            projects. 

           Annually appropriates $2.5 million for this purpose until all  
            moneys in the fund have been encumbered or expended.


          Related  
          Legislation:  
          SBX 11 (Evans, Chapter 11, Statutes of 2009), among other things  
          allowed the transfer of American Recovery and Reinvestment Act  
          of 2009 (ARRA) funds into the Orphan Underground Storage Tank  
          Cleanup Fund and allows those ARRA funds to be used in lieu of  
          state funds for orphan site cleanup.




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