BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1074 (Hueso) - Energy: Federal Trust Fund ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: March 28, 2016 |Policy Vote: | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 2, 2016 |Consultant: Narisha Bonakdar | | | | ----------------------------------------------------------------- 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 ? 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 ? 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. -- END -