BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1464 (De León) - California Global Warming Solutions Act of 2006: greenhouse gas emissions reduction ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 11, 2016 |Policy Vote: E.Q. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 9, 2016 |Consultant: Narisha Bonakdar | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1464 requires the Department of Finance (DOF) and the Air Resources Board (Board), in identifying priority programmatic investments using Greenhouse Gas Reduction Fund (GGRF) monies, to assess how proposed investments interact with current state regulations, policies, and programs, and evaluate if and how the proposed investments could be incorporated into existing programs. The bill also requires the investment plan to recommend metrics that would measure progress and benefits from the proposed programmatic investments. Fiscal Impact: Approximately $145,000 (GGRF) annually for two years to Air Resources Board for limited-term staffing costs. Approximately $150,000 (GGRF) annually for contracts for modeling GGRF investments interactions with existing state policies and analyzing emissions impacts from investment concepts. SB 1464 (De León) Page 1 of ? Background: The California Global Warming Solutions Act of 2006 (referred to as AB 32, HSC §38500 et seq.) requires the ARB to determine the 1990 statewide greenhouse gas (GHG) emissions level, to approve a statewide GHG emissions limit equivalent to that level that will 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 the regulations. Under this authority, the ARB initiated the cap-and-trade program. All monies, except for fines and penalties, collected pursuant to the cap-and-trade program deposited in the GGRF (Government Code §16428.8). Existing law requires that the GGRF only be used to facilitate the achievement of reductions of GHG emissions consistent with AB 32 (HSC §39710 et seq.). To this end, the DOF, in consultation with the ARB and any other relevant state agencies, is required to develop, as specified, a three-year investment plan for the moneys deposited in the GGRF. The investment plan must allocate a minimum of 25% of the funds to projects that benefit disadvantaged communities and to allocate 10% of the funds to projects located within disadvantaged communities. Additionally, the ARB, in consultation with CalEPA, is required to develop funding guidelines for administering agencies receiving allocations of GGRF funds that include a component for how agencies should maximize benefits to disadvantaged communities. Proposed Law: This bill requires the Investment Plan to recommend metrics that would measure progress and benefits from the proposed programmatic investments, and, in identifying priority programmatic investments, requires the Investment Plan to do both of the following: 1) Assess how proposed investments interact with current state regulations, policies, and programs. 2) Evaluate if and how proposed investments could be SB 1464 (De León) Page 2 of ? incorporated into existing programs. Related Legislation: AB 1532 (Pérez, Chapter 807, Statutes of 2012) required DOF, in consultation with ARB and any other relevant state entity, to develop a 3-year investment plan that includes specified analysis and information and to submit the plan to the Legislature. The bill also required the DOF to submit a report no later than March 1, 2014, and annually thereafter, to the appropriate committees of the Legislature containing specified information. Staff Comments:1) According to the author, "Cap-and-trade auction revenue, with proceeds to the state of over $4 billion since the initial auction, has been appropriated to more than 12 different agencies to administer a variety of programs to reduce GHG emissions and provide co-benefits, including benefits to disadvantaged communities. In 2012, the Legislature directed the Department of Finance to prepare an investment plan every three years to help guide Legislative appropriation of the proceeds. The Investment Plan is required to assess gaps in the state's strategies to meet climate goals, and identify priority investments. However, as the Legislative Analyst's Office has noted in their recent budget report, the Investment Plan does not provide a robust analysis with which to evaluate proposals for GGRF spending, including how proposed investments interact with the current state programs. Additionally, the LAO reports the lack of specificity of benefits assigned to administration budget proposals, and the difficulty this poses in evaluating these proposals for funding. On top of this, the GGRF fund keeps growing, with the potential to fund a variety of new programs. SB 1464 requires the Investment Plan to consider how proposed investments interact with current state programs, and if those investments and programs can be incorporated into current state programs. SB 1464 also requires the investment plan recommend metrics that would measure progress and benefits from the proposed programmatic investments. In this way, the Investment Plan will better serve its original statutory intent-to guide the Legislature in funding an optimized strategy SB 1464 (De León) Page 3 of ? of complementary investments to maximize GHG emissions reductions and co-benefits from the GGRF, especially in those communities disproportionately burdened by pollution." -- END --