The Association has been actively engaged in the development of the Cap and Trade program. This includes our initial efforts as part of the Transportation Coalition for Livable Communities, the development of the “Steinberg Plan,” and the eventual enactment of the FY 2014-15 Budget Act. Throughout the program’s development, the Association has remained committed to the principal that transit investments, combined with smart land-use decisions, significantly reduce GHG emissions. Emissions from the transportation sector are responsible for almost 40 percent of the state’s overall GHG emissions. Reducing the number of vehicle miles traveled is critical to decreasing the amount of GHG emissions stemming from transportation.
Where we begin
The California Transit Association participates in a coalition of transportation and local government stakeholders advocating for the allocation of a significant portion of Cap and Trade funds to be earmarked for transportation and transit. Members of the coalition – called the Transportation Coalition for Livable Communities – include the Association, California Alliance for Jobs, Transportation California, League of California Cities, California State Association of Counties, Self-Help Counties Coalition and the California Association of Councils of Government.
In 2013, the Association co-sponsored legislation, as part of the Transportation Coalition for Livable Communities, to set up the allocation processes for state funds dedicated to local, regional and state transit investments to reduce GHG emissions. That bill, AB 574 (Lowenthal), was held in the Assembly Appropriations Committee, as the Governor ultimately called for a loan of Cap and Trade funds to the General Fund for 2013-14 in the amount of $500 million.
In early 2014, the Association’s Executive Committee adopted a set of overarching advocacy principles relative to the allocation of state Cap and Trade funds to transit and sustainable communities. The Association sought to obtain the long-term dedication of no less than one-third of all Cap and Trade revenues to three core transit programs:
- The sustainable communities implementation program proposed by the Transportation Coalition for Livable Communities;
- A dedicated rail connectivity, integration and capital improvement program;
- Establishment of a dedicated, predictable source of funding for transit operations and/or capital improvements developed through the framework of the State Transit Assistance (STA) program.
The Executive Committee’s action provided the direction the Association needed as it worked through the FY 2014-15 budget process, which is the first year in which the Governor proposed to spend Cap and Trade revenues.
Governor Brown sets the stage
As part of his annual January budget proposal, Governor Brown laid out his vision for expending Cap and Trade funding in FY 2014-15. The Governor proposed a robust new, multi-faceted expenditure plan to be spent in three program areas, the most substantial of which was clean transportation and transit which would have received $600 million in one-time funding for implementing regional Sustainable Community Strategies ($100 million), low-carbon transportation ($200 million), and rail modernization ($300 million). The latter would have provided $250 million to begin construction of high-speed rail and an $50 million for the rail projects through a competitive grant program for existing rail operators for capital improvements to integrate rail systems, including those located in disadvantaged communities, and provide connectivity to the high-speed rail system.
Senator Steinberg makes waves
In May 2014, then President Pro Tem Darrell Steinberg released a Cap and Trade expenditure plan which would dedicate 100 percent of Cap and Trade funding to various programs on an on-going basis. Part and parcel to his plan was a continuous appropriation of 25 percent to transit agencies through the State Transit Assistance formula. As negotiations between the Pro Tem, the Assembly Speaker, and the Governor moved forward, the percentage of funding dedicated to transit via the STA was significantly reduced. This was in large-part due to the Legislature’s desire to spread the funding around to several different programs. By the time the budget was enacted, the transit formula program, now called the Low-Carbon Transit Operations Program (LCTOP), had been reduced to 5 percent of all Cap and Trade funds continuously appropriated.
The Budget Act lays the foundation
The FY 2014-15 Budget Act contains two key elements related to Cap and Trade: a one-time budget year appropriation of $872 million in Cap and Trade revenues and a long-term funding plan dedicating 60 percent of future revenues to specific transportation-related programs. For a detailed description of the transit-related programs, please see the Association’s Overview of 2014 Cap and Trade Legislation and Opportunities for Public Transit.
In 2014-15, $630 million is appropriated for transportation-related programs, including:
- $25 million for low-carbon transit operations
- $25 million for transit and intercity rail capital projects
- $130 million for affordable housing and sustainable communities projects
- $200 million for low-carbon transportation
- $250 million for high-speed rail
In 2014, the Legislature passed SB 862 (Committee on Budget), a budget trailer bill, which established a long-term funding plan for Cap and Trade revenues.
Beginning in 2015-16, 60 percent of Cap and Trade revenues are dedicated as follows:
- 5 percent for the Low Carbon Transit Operations Program (LCTOP)
- 10 percent for the Transit and Intercity Rail Capital Program (TIRCP)
- 20 percent for the Affordable Housing and Sustainable Communities Program (AHSCP)
- 25 percent for high-speed rail
The remaining 40 percent is available for appropriation by the Legislature and the Administration in each fiscal year. Transit agencies routinely receive additional funding through this process, usually for deployment of zero-emission buses and the buildout of supporting infrastructure. See the Association’s Zero-Emission Bus Regulation page for more information about this funding.
As part of the long-term expenditure plan, state law tasks several state agencies – the Strategic Growth Council (SGC), the California State Transportation Agency (CalSTA), the California Department of Transportation (Caltrans), CARB, and the California Environmental Protection Agency – with developing guidelines for each of the aforementioned programs, as well as specific elements governing all programs, such as defining disadvantaged communities and methods for measuring GHG reductions.
For detailed program information, see "Cap and Trade Program Information."