BILL ANALYSIS Ó
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Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1464
(De León) - As Amended April 11, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires the AB 32 cap-and-trade revenue investment
plan to include additional assessments and recommended metrics
for proposed investments. Specifically, this bill:
1)Requires the investment plan, when identifying priority
programmatic investments as specified, to:
a) Asses how the proposed investments interact with current
state regulations, policies, and programs; and
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b) Evaluate if and how those proposed investments could be
incorporated into existing programs.
2)Requires the investment plan to recommend metrics to measure
progress and benefits from the proposed programmatic
investments.
FISCAL EFFECT:
Increased Air Resources Board (ARB) costs of approximately
$320,000 per year for two years, and an additional $300,000 in
contracts for modeling investments, interactions with existing
policies, and analyzing emissions impacts from investment
concepts (Greenhouse Gas Reduction Fund).
COMMENTS:
1)Purpose. According to the Legislative Analyst's Office
February 2016 report on the Governor's proposed budget
expenditures, the AB 32 investment plan lacks the necessary
analysis needed to develop a framework for spending.
The report also notes that the investment plan does not
explicitly address how new programs interact with existing
regulations or programs, and that proposals from the
administration lack reliable estimates of benefits, which make
it difficult to evaluate which set of programs are likely to
best achieve state priorities and provide the greatest overall
benefits, compared to alternative strategies.
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According to the author, this bill will result in an
investment plan that will better serve its original statutory
intent - to guide the Legislature in funding an optimized
strategy of complementary investments to maximize greenhouse
gas (GHG) emissions reductions and co-benefits from the
Greenhouse Gas Reduction Fund (GGRF), especially in those
communities disproportionately burdened by pollution.
2)Background. The California Global Warming Solutions Act of
2006 (AB 32, Chapter 488, Statutes of 2006) required ARB to
adopt a statewide greenhouse gas (GHG) emissions limit
equivalent to 1990 levels by 2020 and adopt regulations to
achieve maximum technologically feasible and cost-effective
GHG emission reductions. As part of its AB 32 implementation,
ARB adopted a cap-and-trade program for which the proceeds
from the auction or sale of GHG allowances are deposited in
the GGRF available for appropriation by the Legislature.
AB 1532 (Pérez, Chapter 807, Statutes of 2012) required the
Department of Finance (DOF), in consultation with ARB and any
other relevant state agency, to develop a three-year
investment plan for AB 32 cap-and-trade auction proceeds. The
first investment plan was submitted to the Legislature in May
2013.
The plan identified: 1) sustainable communities and clean
transportation; 2) energy efficiency and clean energy; and 3)
natural resources and waste diversion as the three broad
categories that provide the best opportunities to achieve the
goals of AB 32.
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The second Investment Plan was released in January 2016, and
proposes diverse strategies under the same three major
investment categories. The plan also identifies gaps in the
current investment portfolio and suggests approaches that
would help address these gaps.
3)Cap-and-trade auction revenue. To date, cap-and-trade auction
revenues have generated over $4 billion. However, the most
recent auction, held last month, generated just over $10
million, much less than expected. The previous auction
(February, 2016) generated over $500 million.
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
appropriated 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.
The Governor proposed spending over $3 billion for a variety
of programs and projects in the transportation, energy,
natural resources, and waste diversion sectors in the 2016-17
budget, however, the Legislature did not act upon these items.
According to the Assembly Budget Committee, due to
lower-than-expected auction revenues, decisions on
cap-and-trade funding were deferred until after June 15, 2016.
This extra time should allow for more analysis of the revenue
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available for appropriation in the budget year.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081