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Legislature Moves to Allocate Cap-and-Trade Funds in Budget Bill

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August 29, 2016

In a flurry of legislative scrambling, lawmakers proposed a plan for spending cap-and-trade auction proceeds just two weeks before the end of the session. AB 1613, authored by the Assembly Budget Committee, would allocate $1.2 billion of unspent Greenhouse Gas Reduction Fund (GGRF) money, including the $500 million allocated to CARB for low-carbon transportation programs in the 2016–17 budget bill.

AB 1613 allocates $150 million for investments in heavy-duty vehicles and off-road equipment, and assures the $23 million in incentives for new low-NOx trucks and buses included in CARB’s plan for the 2016–17 Low Carbon Transportation and Fuels (LCTF) program, which the GGRF funds.

“Last year, the Legislature approved just a fraction of the Greenhouse Gas Reduction Fund spending plan that CARB sent over to them. And when that funding fell through, incentive programs heavy-duty trucks were the first to be cut,” said Coalition President Thomas Lawson. “Another year without incentive funding would severely compromise the state’s goals for reducing pollution from heavy-duty vehicles.”

If Gov. Jerry Brown and the Legislature again fail to reach a deal on spending cap-and-trade revenues, the allocations in this year’s budget will remain unspent.

The Coalition has sent a letter to Assembly Speaker Anthony Rendon voicing support for AB 1613 and encouraging the Assembly to make low-carbon transportation spending—especially incentives for low-NOx heavy-duty trucks—a priority. The letter argues that LCTF projects are the most cost-effective way to both help California reach its ambitious greenhouse gas emission reduction goals and make headway on environmental justice issues.

AB 1613 focuses on projects that would reduce pollution in some of the hardest-hit areas of California and benefit low-income families. The plan would spend $100 million on public transit, $150 million on a clean vehicle trade-in program for low-income people, and $100 million on rebates for buying clean vehicles. It also includes $175 million for projects to improve disadvantaged communities.

AB 1613 spends the discretionary portion of the GGRF—40 percent of the program—that is subject to appropriation by the Legislature. The remaining 60 percent of cap-and-trade revenues are automatically allocated for other purposes. This bill is linked to companion legislation, AB 1629, that will contain policy details on how to spend the GGRF funds in AB 1613. Those details are not yet available.

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