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Senate Releases Cap-and-Trade Spending Plan

August 18, 2016
The Senate on Aug. 17 released a comprehensive $1.2 billion Cap-and-Trade expenditure plan to fund programs and projects that reduce greenhouse gas emissions. It focuses largely on disadvantaged communities as determined by the California Communities Environmental Health Screening Tool (CalEnviroScreen).
 
“We have the opportunity to follow through on the promise of cap and trade, which is to use polluters’ dollars to clean up the air we breathe,” said California Senate President pro Tempore Kevin de León (D-Los Angeles). “Working families in our most economically disadvantaged and polluted areas deserve to benefit from investments now so they have access to the cleanest technologies and the tools to make their communities more livable.”
 
The Senate’s plan is the first proposal to emerge since negotiations fell apart earlier this year between the Senate, Assembly and Gov. Jerry Brown.
 
Assembly Speaker Anthony Rendon (D-Paramount) responded to the Senate’s proposal stating: “As we continue our deliberations on the most responsible and effective way to allocate Cap-and-Trade funds, the Assembly will consider items that the Senate has indicated they would like to see included in the negotiations, as well as any parameters the Governor suggests.”
 
The Governor proposed a $3.1 billion Cap-and-Trade expenditure plan as part of the FY 2016-17 state budget. This included the balance of unallocated auction proceeds from FY 2015-16 and the projected auction proceeds for FY 2016-17. The Assembly and the Senate rejected the Governor’s Cap-and-Trade expenditure plan and passed the state budget without allocating auction proceeds.
 
The Senate’s expenditure plan allocates the 40 percent of Cap-and-Trade auction proceeds that are discretionary and must be appropriated by the Legislature. In contrast, the other 60 percent is continually appropriated and is already earmarked for the high-speed rail project, transit and intercity rail programs, and affordable housing and sustainable communities.
 
Although the Senate has released an expenditure plan, uncertainty remains regarding the future of the Cap-and-Trade program and the possibility that existing law does not allow the program to continue beyond 2020.
 
An association of business groups has challenged the legality of the Cap-and-Trade program in court, arguing that the program functions as a tax, and not a fee. The Legislature passed the law as a fee on a majority vote. All new taxes require a two-thirds vote of the Legislature. The state appeals court is set to rule on the case sometime this summer or early fall.
 
In the meantime, some legislators are supporting the approval of SB 32 (Pavley), a bill that would essentially extend the Cap-and-Trade program by giving the California Air Resources Board clear authority to limit statewide greenhouse gas emissions equivalent to 40 percent below 1990 levels by 2030. SB 32 stalled last year in the Assembly over the objections of a number of moderate democrats.
 
It is unclear if SB 32 or the Senate’s Cap-and-Trade expenditure plan will garner enough support to pass before the Legislature adjourns on Aug. 31. League staff will continue to engage legislative leadership on this important issue.
 
Details on the Senate’s proposal are included below.
 
Low Carbon Transportation
  • $400 million for low-carbon and low-polluting transportation programs; and
  • $100 million on strategic transit investments that improve traffic flow. 
Environmental Justice and Urban Pollution
  • $175 million for a new transformative communities program to convert highly-polluted and high-carbon communities into clean and sustainable communities;
  • $100 million for energy efficiency upgrades and weatherization for low-income families; and
  • $100 million for urban greening projects. 
Key Priorities for Climate Leadership
  • The Senate Cap-and-Trade expenditure plan allocates funds to key priorities for members in the Assembly and Senate, as well as the Governor;
  • AB 1550 (Gomez) Requires that 25 percent of Greenhouse Gas Reduction Fund (GGRF) funds be awarded to projects located in disproportionately impacted communities and 25 percent to projects that benefit low-income communities;
  • AB 2293 (C. García) Establishes a technical assistance program for small businesses and nonprofits;
  • AB 2722 (Burke) Appropriates GGRF funds to the Strategic Growth Council to create the Transformative Climate Communities Program, and specifies that the program fund grants for "transformative climate community plans" in disadvantaged communities;
  • SB 20 (Pavley) Establishes low carbon fuel council to streamline deployment of GGRF funds for low polluting transportation;
  • SB 1350 (Wolk) Establishes Healthy Soils low carbon agriculture program funded with GGRF funds;
  • SB 1383 (Lara)  Establishes new targets to reduce short lived climate pollution such as methane, black carbon, and refrigerants that, while lower in volume, have much great climate warming impacts; and
  • SB 1425 (Pavley) Allocates funds for water and energy efficiency.


 
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