BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1074| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 1074 Author: Hueso (D) Amended: 6/1/16 Vote: 21 SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16 AYES: Lara, Beall, Hill, McGuire, Mendoza NOES: Bates, Nielsen SUBJECT: Energy: Federal Trust Fund SOURCE: Author DIGEST: This bill appropriates, in Fiscal Year 2016-17, $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. This bill also annually appropriates $2.5 million for this purpose until all moneys in the fund have been encumbered or expended. Senate Floor Amendments of 6/1/16 delete recent amendments that allocate $2.5 million for the purpose of recovering beneficial materials from mineralized geothermal brines at an existing facility. ANALYSIS: Existing law authorizes the CEC to administer funds appropriated by the federal American Recovery and Reinvestment Act of 2009 (ARRA) for the federal Energy Efficiency and Conservation Block Grant Program to award contracts, grants, and loans for energy-related projects. This bill: SB 1074 Page 2 1)Appropriates, in FY 2016-17, $13 million from the fund to the CEC to award contracts, grants, and loans for energy-related projects. 2)Appropriates annually $2.5 million for this purpose until all moneys in the fund have been encumbered or expended. Background ARRA Investments: On February 17th, 2009, President Obama signed the American 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. 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 SB 1074 Page 3 $5 million (ARRA funds) to the Department of General Services for the Energy Efficiency State Property Revolving Fund loan program. 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. FISCAL EFFECT: Appropriation: Yes Fiscal Com.:YesLocal:No According to the Senate Appropriations Committee: 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. SUPPORT: (Verified 6/1/16) None received OPPOSITION: (Verified 6/1/16) None received Prepared by:Narisha Bonakdar / APPR. / (916) 651-4101 6/1/16 18:41:46 SB 1074 Page 4 **** END ****