Assembly Subcommittee Approves Budget Bill Language on AB 32

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On May 23, the Assembly Subcommittee No. 3 on Resources and Transportation approved Trailer Bill Language dealing with state budget recommendations regarding AB 32 auction funds.

The approved recommendations include:

1. Create a Greenhouse Gas Reduction Fund
2. Make sure revenue expenditures meet AB 32 and Sinclair fee nexus (Sinclair nexus means the distribution of any funds must be consistent with the court decision regarding the structure of regulatory fees)
3. Require the administration to submit a statute for fund expenditure by January 10, 2013 (in the absence of legislative direction)
4. Require payment over $25,000 to Western Climate Initiative (WC), WCI, Inc. or subcontractors to go through Joint Legislative Budget Committee no later than 30-days pre-expenditure
5. Prohibit WCI, Inc. board involvement without approval of California State Senate
6. Prohibit Linkage until November 30, 2013, unless approved by the state legislature in future statute
7. Additional reporting requirements related to fund expenditures
8. Direct CARB and the California Public Utilities Commission to rebate cap-and-trade revenues collected by the utilities to be refunded to ratepayers upon delivery of credits to the utilities

In addition, the subcommittee approved changes to the code that would allow the Director of Finance to allocate up to $500M derived from allowance sales to the Greenhouse Gas Reduction Fund. In addition, this Control Section language specifically states that "no funds shall be used for the purposes of the development of a High-Speed Rail System for two years."

Nearly identical trailer bill language was approved by the Senate Subcommittee No. 2 on Resources, Environmental Protection, Energy and Transportation on the previous day. The only difference is the Senate wants a "climate dividend" rebate paid to utility ratepayers from the sale of the utility allowances whereas the Assembly wants the utility cap-and-trade revenues to go toward clean energy projects.

The approval of these recommendations by both houses’ budget subcommittees sets the stage for the budget discussions on AB 32 funds over the next few weeks.

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