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Cap-and-Trade Expenditure Plan Released

September 6, 2017
In July, the Legislature passed and the Governor signed legislation to extend the Cap-and-Trade market mechanism through 2030.
With this step complete, leaders have now begun conversations about how to spend the revenues. Both the Senate and Assembly budget subcommittees held hearings introducing the discussion of how to expect Cap-and-Trade revenues and hear public testimony. The League testified at both hearings to express our priorities for funding.
As with previous expenditure plans, 60 percent of the Cap-and-Trade revenues in the Greenhouse Gas Reduction Fund (GGRF) are continuously appropriated and the remaining 40 percent have been appropriated by the legislature on an annual basis. Cities and other local governments are eligible for a number of GGRF-funded programs.
Continuous Appropriations
Consistent with current law, $900 million of projected GGRF revenue would be continuously appropriated to the following programs:
  • $375 million for high-speed rail;
  • $300 million for the Affordable Housing and Sustainable Communities Program;
  • $150 million for transit and intercity rail capital; and
  • $75 million for transit operations. 
New Proposed Expenditure Plan
Governor Brown released a $1.5 billion expenditure plan last week for the remaining 40 percent of GGRF funds for FY 2017-18. This plan aligns with the new spending priorities set forth in AB 398 (E. Garcia), which extended the Cap-and-Trade system through Dec. 31, 2030 and made other changes. Among other priorities, $350 million would be directed to assist the California Air Resources Board (CARB) and local air districts implement the new air monitoring and quality program established by AB 617 (C. Garcia).
The chart below contains the proposed appropriations for the 40 percent of GGRF funds:
Among these allocations, local governments are expected to be eligible for a number of these programs, including waste diversion and some of the low carbon transportation programs. The Legislature must pass an expenditure plan, which must be signed by the Governor, before funds can be appropriated.

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