BILL ANALYSIS �
SB 862
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( Without Reference to File )
SENATE THIRD READING
SB 862 (Budget and Fiscal Review Committee)
As Amended June 13, 2014
Majority vote. Budget Bill Appropriation Takes Effect
Immediately
SENATE VOTE :Vote not relevant
SUMMARY : Implements, as part of the 2014-15 budget, the Cap and
Trade expenditure plan for expenditure of Greenhouse Gas
Reduction Funds and creates specific state programs for that
purpose. Specifically, this bill :
1)Articulates legislative intent that the Cap and Trade
investment fund in the following investment areas:
a) Transit, Affordable Housing, and Sustainable
Communities;
b) High Speed Rail;
c) Low Carbon Transportation;
d) Energy Efficiency and Renewable Energy;
e) Natural Resources and Waste Diversion.
2)Creates a Cap and Trade programs to allow for expenditures:
a) Transit, Affordable Housing, and Sustainable
Communities;
b) Transit and Intercity Rail Program;
c) Low Carbon Transit Operations Program;
d) High Speed Rail Program;
e) Clean Vehicle Rebate Project;
f) Energy Efficiency State Property Revolving Fund;
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g) Program Timberland Environmental Impact Report for
Carbon Sequestration and Fuel Reduction Program;
h) Waste Diversion and Greenhouse Gas Reduction Financial
Assistance Program.
3)Establishes accountability and reporting provisions for Cap
and Trade investment.
a) Requires each state agency to demonstrate to the
California Air Resources Board how expenditures reduce
greenhouse gas emissions;
b) Requires the California Air Resources Board to develop
guidelines for this purpose;
c) Articulates that Cap and Trade expenditures must have a
clear nexus to the greenhouse gas reduction goals;
d) Stipulates that overall Cap and Trade expenditures must
comply with existing statutory requirements that at least
25% of the funds are spent at on disadvantaged communities.
4)Creates the Transit, Affordable Housing and Sustainable
Communities Program which contains several distinct
programmatic funding areas:
a) Affordable Housing and Sustainable Communities program,
a competitive grant program administered by the Strategic
Growth Council.
i) States the goals of the Affordable Housing and
Sustainable Communities program are:
(1) Reducing air pollution;
(2) Improving conditions in disadvantaged
communities;
(3) Supporting public health;
(4) Improving connectivity and accessibility;
(5) Increase mobility to implement of Active
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Transportation Program;
(6) Increase transit ridership;
(7) Preserving and developing affordable housing,
as defined Health and Safety Code Section 50079.5;
(8) Protecting agriculture lands to support infill
development.
ii) Requires all program funding demonstrate reduction
in greenhouse gases emissions, support implementation of
a sustainable communities strategy, and demonstrate
consistency with state planning priorities.
iii) Articulates projects that may be eligible for
funding, the list includes, but is not limited to:
(1) Intermodal affordable housing projects;
(2) Transit capital projects that support transit
ridership;
(3) Active transportation programs, such as
bicycle and pedestrian programs;
(4) Non-infrastructure related active
transportation programs;
(5) Transit-oriented development projects;
(6) Complete streets capital projects;
(7) Acquisition or other approaches to protect
agricultural lands that are under pressure of being
converted to non-agriculture uses;
(8) Planning and support of sustainable
communities' strategies.
iv) Requires the Strategic Growth Council to develop
guidelines, in consultation with the California Air
Resources Board, to implement this program. The
guidelines must be developed in a public process and with
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the coordination of metropolitan planning organizations.
v) Sets a programmatic goal that 50% of all Affordable
Housing and Sustainable Communities funding benefit
disadvantaged communities.
b) Transit and Intercity Rail Capital Program, a grant
program for transport and rail related capital projects
that is administered by the State Transportation Agency and
awarded by the California Transportation Commission.
i) Articulates projects that may be eligible for
funding:
(1) Rail capital projects including rail cars and
improving connectivity to existing and future rail
systems;
(2) Intercity, commuter, and urban rail projects
that increase service levels, improve reliability, and
decreases travel time;
(3) Rail and transit integration, including
integrated ticketing and scheduling;
(4) Bus Rapid Transit and other bus transit
investments.
ii) Requires that the all expenditures demonstrate a
reduction in greenhouse gas emissions as a condition for
funding.
iii) Sets a programmatic goal that 25% of Transit and
Intercity Rail benefit disadvantaged communities.
iv) Requires the California Transportation Commission to
consider co-benefits in awarding funding.
v) Requires the Transportation Agency to develop
guidelines through a public process.
c) Low Carbon Transit Operations Program, which provides
funding through the existing State Transit Assistance
program to reduce greenhouse gas emissions by supporting
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new or expanded bus or rail services or expanded intermodal
transit facilities.
i) These funds will be distributed by the State
Controller to local agencies through the existing
statutory funding formula;
ii) Requires Caltrans, in coordination with the
California Air Resources Board, to develop guidelines for
the use of these funds, each transit agency must have a
plan approved by Caltrans prior to expenditure of funds;
iii) Requires 50% of funding spent on programs benefit
disadvantaged communities, this provision only applies to
local agencies that have identified disadvantaged
communities in their service area.
5)Creates the Energy Efficiency and Renewable Energy program for
the use of Cap and Trade funds for weatherization activities
in low income communities. Requires the Department of
Community Services and Development to develop guidelines for
the program.
6)Amends the Energy Efficiency State Property Revolving Fund to
allow for the use of Cap and Trade funds for a revolving loan
fund to finance energy efficiency activities in State
owned-buildings.
7)Creates the Program Timberland Environmental Impact Report for
Carbon Sequestration and Fuel Reduction Program, administered
by the Department of Forestry and Fire Protection, which
allows the use of Cap and Trade funds for carbon sequestration
and to resist wildfires through agreements with landowners.
8)Creates the Waste Diversion and Greenhouse Gas Reduction
Financial Assistance program, a revolving loan program
administered by CalRecycle to fund organic composting,
anaerobic digestion and recycling.
9)Allows renewable energy projects at the California Department
of Corrections and Rehabilitation to be included in net energy
metering as an eligible customer-generator.
10)Continuously appropriates, beginning in 2015-16, 60% of
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annual Cap and Trade revenues for the following purposes:
a) Thirty-five percent of the total Cap and Trade Revenues
are appropriated to the Transit, Affordable Housing and
Sustainable Communities program. These funds are allocated
within this program as follows:
i) Twenty percent of total Cap and Trade revenues are
appropriated for the Affordable Housing and Community
Services program. Half of these funds, 10% of the total
Cap and Trade Revenue, must be used for affordable
housing;
ii) Ten percent of total Cap and Trade revenues are
appropriated for the Transit and Intercity Rail Capital
Program;
iii) Five percent of total Cap and Trade revenues are
appropriated to the Low Carbon Transit Operations
program.
b) Twenty-five percent of total Cap and Trade Revenues are
appropriated to the High Speed Rail Authority for costs
associated with constructing the High Speed Rail system and
the repayment of loans made to fund the project.
11)Dedicates the $400 million owed to the Greenhouse Gas
Reduction fund from the General Fund to the High Speed Rail
when the loan is repaid.
12)Appropriates $20 million in Greenhouse Gas Reduction revenue
for the Clean Vehicle Rebate project to replace existing
Vehicle Inspection and Repair Account and Air Quality
Improvement Fund revenues currently dedicated for that
purpose.
13)Expands the membership of the Strategic Growth Council to
include two public members, one appointed by the Assembly and
one appointed by the Senate.
14)Contains a severability clause.
FISCAL EFFECT : The 2014-15 budget includes $832 million of Cap
and Trade funding for programmatic purposed outlined in this
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bill. In addition, 60% of all future Cap and Trade fee revenue
are appropriated by this bill.
COMMENTS : This budget implementation bill creates the
programmatic structure for the expenditure of Cap and Trade
funds. For the 2014-15 budget year, it provides the necessary
programmatic framework to allow for funds appropriated in the
budget to be expended in a manner consistent with existing state
policies.
In specific, this bill creates structures to allow Cap and Trade
funds to flow to investment areas identified by the State
Investment Plan, as created by AB 1532 (John A. P�rez) Chapter
807, Statutes of 2012. This plan was created to implement the
intent of AB 32 (N��ez), Chapter 488, Statutes of 2006, which
established the Cap and Trade mechanism to reduce the emission
of greenhouse gases that contribute to climate change. In
addition, this bill insures the goal of SB 535 (De Le�n),
Chapter 830, Statutes of 2012, that 25% of all Cap and Trade
funds benefit disadvantaged communities is met through the
expenditure of these funds. This bill also insures the local
planning efforts required by SB 375 (Steinberg), Chapter 728,
Statutes of 2008, are reflected in the investment of funds for
sustainable community efforts. Finally, this bill has
accountability mechanism to insure that state investments
demonstrate and verify reductions of greenhouse gas emissions,
to insure a tight fee nexus required by the California
Constitution Article XIII.
For 2015-16 and beyond, this bill appropriates 60% of the Cap
and Trade funds. Of this amount, 25% of all Cap and Trade funds
are continuously appropriated for High Speed Rail construction
related activities. Additionally, 35% is for the Transit,
Affordable Housing and Sustainable Communities program. This
program has three major components which are distinct and have
their own dedicated appropriation articulated by this bill:
1)Twenty percent of all ongoing Cap and Trade funds are
continuously appropriated for the Affordable Housing and
Sustainable Communities program, a grant program administered
by the Strategic Growth Council. Of this amount, half of the
funds must be used for affordable housing.
2)Ten percent of all ongoing Cap and Trade funds are
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continuously appropriated for the Transit and Intercity Rail
Capital Program, a grant program for transport and rail
related capital projects that is administered by the State
Transportation Agency and awarded by the California
Transportation Commission.
3)Five percent all ongoing Cap and Trade funds are continuously
appropriated for the Low Carbon Transit Operations Program,
which provides funding through the existing State Transit
Assistance program to reduce greenhouse gas emissions by
supporting new or expanded bus or rail services or expanded
intermodal transit facilities.
Analysis prepared by : Christian Griffith / BUDGET / (916)
319-2099
FN: 0003980