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Senate President Pro Tem Steinberg Announces Cap and Trade Proposal

Cities Would Benefit in Multiple Ways

April 14, 2014
Today League Executive Director Chris McKenzie joined Senate President Pro Tem Darrell Steinberg (D-Sacramento) along with other transportation and housing stakeholders at a press conference to announce legislation that would allocate revenues from Cap and Trade auctions to various transportation and housing programs.
 
Following the press event McKenzie expressed how this proposal could address the needs of California cities. “Sen. Steinberg’s proposal could provide critical funding to high priority city projects such as transit, local streets and roads and developing affordable housing in locations close to jobs and shopping that can all contribute to greenhouse gas reduction. When California enacted SB 375 in 2008, it was with the understanding that funding for the program would soon follow. While the recession imposed severe budget constraints on the state, we appreciate the Senator’s efforts now to develop these important funding resources. The League supports this proposal in concept and we look forward to working with the Senator and Legislature as the details of the legislation are developed.”
 
Although the proposal is not yet in print, Sen. Steinberg outlined the bill’s main concepts, which includes the following allocations:
 
After an allocation of $610 million to programs described in the second set of bullets, an estimated $3 to $5 billion would be allocated as follows beginning in FY 2015–16:
  • 40 percent to affordable housing and sustainable communities strategies implementation including transit-oriented development, land use planning, active transportation, high density mixed use development, transportation efficiency and demand management projects;
  • 30 percent to transit construction and operations;
  • 20 percent to High Speed Rail; and
  • 10 percent to state highway and road rehabilitation and complete streets. This may include traffic management, repair, deferred maintenance, bikeways, and retrofits of roads and highways.
$610 million would be allocated annually to the following programs:
  • $200 million to natural resources programs including water efficiency infrastructure projects, forestry and landscape issues, wetland development, waste diversion and recycling, energy efficiency, clean vehicles, and “black carbon” reduction;
  • $200 million to Electric Vehicle Deployment Programs;
  • $200 million to a climate dividend for fuel consumers; and
  • $10 million to a Green Bank program to assist the financing of clean energy and other environmentally sustainable projects.
Funding would be subject to a competitive ranking process within individual funding categories to ensure maximum reduction of greenhouse gas emissions. The proposal unveiled today would also meet all existing constitutional and statutory requirements for use and allocation of Cap and Trade funds, including SB 535 (deLeon, 2011) that requires 25 percent of all Cap and Trade funds be spent to the benefit of disadvantaged communities and SB 1018 (Budget Committee, 2012) that requires careful documentation and justification of expenditures of funds to protect against lawsuits. 
 
The details of the proposal will be finalized in the next two months leading up to adoption of the FY 2014–15 budget. The League will remain involved in the development of the legislation and will provide additional details as they become available. 
 
Cap and Trade Background
 
California’s Cap and Trade program is a key element of California’s greenhouse gas reduction program under AB 32. The program works by establishing a hard cap on about 85 percent of the total statewide greenhouse gas emissions. This includes industries like mining, oil production and energy production, manufacturing plants, transportation fuels and others. The California Air Resources Board  issues emission “allowances” equal to the total amount of allowable emissions over a given compliance period. Entities that are regulated under the program are able to “trade” or buy and sell a portion of these allowances. Each allowance is equal to one ton of greenhouse gases.  As the overall cap declines, fewer allowances will be available.
 


 
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