Legislative Hearing on Cap & Trade Auction Revenues
The Assembly Budget Subcommittee #3 on Resources & Transportation
convened on February 29 to hear from the Legislative Analyst’s
Office, the Department of Finance, the California Air Resources
Board, and the Public Utilities Commission on issues related to
the pending Cap & Trade auction and expenditure of anticipated
revenues. The background
materials identify a number of issues for the
Legislature to consider in the coming months including setting
the parameters for spending Cap & Trade revenues, such as funding
activities and programs that meet the Sinclair nexus test, and
outlining a process for developing an expenditure plan for those
revenues, which the LAO points out, likely requires a better
understanding of how much Cap & Trade will generate in the
upcoming fiscal year.
Governor Brown, in his January Budget Proposal for FY 2012-13,
provides for $1 billion in budgetary authority to spend Cap &
Trade revenues. However, there are differences in opinion between
the Administration and LAO on exactly how much Cap & Trade will
generate (a range between $650 million and $3 billion). Also, the
Governor’s Budget does not include a detailed expenditure plan.
Brown argues that a plan should come only after the first GHG
emissions allowances auction in August 2012 so that DOF has a
better idea of revenues available. However, the Governor has
indicated that High Speed Rail is an appropriate use of the
funds, as well as backfilling the General Fund for current GHG
emission reduction expenditures.
Aside from the Governor’s plan, Speaker John Perez has also
introduced legislation, AB
1532, which is anticipated to become a vehicle for specific
parameters the Legislature will set related to the kinds of
activities and programs can be funded with Cap & Trade
revenues.
Because over 40 percent of the GHG emissions in California come
from the transportation sector, many stakeholders are interested
in this revenue stream as a potential funding source to meet SB
375 goals. Many stakeholders are voicing suggestions for
expenditure of these funds, but resolution is not likely for
months to come. CSAC staff remains actively engaged on this issue
and will report back as new information becomes available.
