(1)Existing law requires a registration fee to be paid to the Department of Motor Vehicles for the registration of each vehicle or trailer coach of a type subject to registration under the Vehicle Code, except those vehicles that are expressly exempted from the payment of registration fees. Existing law, until January 1, 2024, increases vehicle registration fees by $3 and requires revenues from those fees to be used, upon appropriation by the Legislature, for programs to reduce air pollution from motor vehicles.

This bill would impose an additional annual $4 charge on each motor vehicle registered in the state except those vehicles that are expressly exempted from the payment of registration fees, thereby imposing a tax. The bill would require the department to collect the charge and deposit revenues from the charge in the Air Quality Improvement Fee Fund, which the bill would create. The bill would continuously appropriate the revenues in the fund to the department for distribution upon request to air pollution control districts and air quality management districts based upon the amount of the charges collected from motor vehicles registered within each air district, thereby creating an appropriation. The bill would require these revenues to be used for the reduction of air pollution from motor vehicles and for related planning, monitoring, enforcement, and technical studies, as specified, or for the attainment or maintenance of state or federal ambient air quality standards or the reduction of toxic air contaminant emissions from motor vehicles. The bill would also authorize the department to withhold up to 1% of the annual revenues collected from the charge to cover its administrative costs. costs, and the bill would authorize an air district to use not more than 6.25% of the revenues distributed to the air district for its administrative costs. The bill would require the charge to be increased annually based on the California Consumer Price Index, as specified.

(2)Existing law authorizes an air pollution control or air quality management district, except the Sacramento district, to levy a surcharge of up to $6 on the registration fees for motor vehicles registered in the air district, as specified by the governing body of the air district. Existing law requires the Department of Motor Vehicles to collect that surcharge if requested by an air district, and requires the department, after deducting its administrative costs, to distribute the revenues to the air districts. Existing law, until January 1, 2034, authorizes a $2 increment of that surcharge to be used for the reduction of air pollution from motor vehicles and for related planning, monitoring, enforcement, and technical studies, as specified, or for the attainment or maintenance of state or federal ambient air quality standards or the reduction of toxic air contaminant emissions from motor vehicles.

This bill would authorize that increment to be used for both of those purposes indefinitely.

(3)This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of ²/₃ of the membership of each house of the Legislature.

(2)Existing law authorizes an air pollution control or air quality management district, except the Sacramento district, to levy a surcharge of up to $6 on the registration fees for motor vehicles registered in the air district, as specified by the governing body of the air district. Existing law requires the Department of Motor Vehicles to collect that surcharge if requested by an air district, and requires the department, after deducting its administrative costs, to distribute the revenues to the air districts. Existing law, until January 1, 2034, raises the limit on the amount of that surcharge from $4 to $6 and requires that $2 of the surcharge be used to implement the Carl Moyer Memorial Air Quality Standards Attainment Program, among other programs. authorizes a $2 increment of that surcharge to be used for the reduction of air pollution from motor vehicles and for related planning, monitoring, enforcement, and technical studies, as specified, or for the attainment or maintenance of state or federal ambient air quality standards or the reduction of toxic air contaminant emissions from motor vehicles.

This bill would make a nonsubstantive change to the provision that authorizes the increase in the fee until January 1, 2034. authorize that increment to be used for both of those purposes indefinitely.

Existing law authorizes an air pollution control or air quality management district, except the Sacramento district, to levy a surcharge on the registration fees for motor vehicles registered in the air district, as specified by the governing body of the air district. Existing law requires the Department of Motor Vehicles to collect that surcharge if requested by an air district, and requires the department, after deducting its administrative costs, to distribute the revenues to the air districts. Existing law, until January 1, 2034, raises the limit on the amount of that surcharge from $4 to $6 and requires that $2 of the surcharge be used to implement the Carl Moyer Memorial Air Quality Standards Attainment Program, among other programs.

This bill would make a nonsubstantive change to the provision that authorizes the increase in the fee until January 1, 2034.

Date of Hearing: May 10, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1609

Author:(Garcia) – As Amended Ver:April 17, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill imposes an additional annual $4 charge on motor vehicles to provide funding for air quality management districts (air districts) to address air pollution.

Specifically, this bill, among other things:

1. Imposes, beginning January 1, 2024, a new annual air quality improvement fee of $4 on each motor vehicle registered in the state, except those vehicles exempted from the payment of registration fees, and increases the fee annually based on the California Consumer Price Index.
2. Authorizes the Department of Motor Vehicles (DMV) to collect the fee at the same time and in the same manner as it collects the general registration fee and withhold up to 1% of the annual revenues to cover its administrative costs.
3. Requires DMV to deposit revenues into a newly created Air Quality Improvement Fee Fund (Fund) in the State Treasury and continuously appropriates moneys in the fund to DMV.
4. Requires DMV to distribute revenues to air districts based upon the amount of fees collected from motor vehicles registered within each district.
5. Requires South Coast Air Quality Management District (SCAQMD) and Bay Area Air Quality Management District (BAAQMD) to allocate the revenues distributed to each respective air district in a manner consistent with current law.
6. Requires revenues from the fee to be used to reduce or mitigate air pollution from motor vehicles and for related planning, monitoring, enforcement, and technical studies necessary for the implementation of the California Clean Air Act of 1988, or for the attainment or maintenance of state or federal ambient air quality standards or the reduction or mitigation of toxic air contaminant emissions from motor vehicles.
7. Extends an air district’s authority, except for the Sacramento Air Quality Management District (SacAQMD), to use revenues from the existing increased vehicle registration fee for the attainment or maintenance of state or federal ambient air quality standards or the reduction of toxic air contaminant emissions from motor vehicles.

FISCAL EFFECT:

1) Ongoing annual revenues of up to approximately $140 million from the additional annual $4 surcharge on registered motor vehicles (Air Quality Improvement Fee Fund), which after DMV withholds up to 1% of revenues for its administrative costs, would be distributed to air districts. There were approximately 35 million fee-paid vehicles registered in the state as of January 1, 2023.

2) Costs of an unknown but significant amount, in the millions of dollars, for DMV to implement this bill (Motor Vehicle Account). DMV notes this bill would require programming modifications to its core legacy systems to enable the department to collect new fees as part of the annual registration renewal for specified vehicles. DMV notes it is currently undertaking an enterprise modernization project that is anticipated to last through fiscal year 2025-26. If DMV is required to implement this bill by January 1, 2024, outside of this project, the department would be required to build a temporary IT solution outside of its core legacy systems, which will be costly and require the department to acquire new technology and services. Additionally, DMV provides customers with their annual renewal notice 75 days in advance. Any changes for vehicles with registrations expiring January 2024 would need to be completed by September 2023, which is infeasible.

This bill authorizes DMV to withhold up to 1% of the annual revenues collected pursuant to this bill to cover its administrative costs relating to the collection of the new fee and distribution of revenues from that fee. However, because DMV will be required to build a temporary IT solution before it begins collecting the new fee, the department will need to rely on existing resources for upfront costs and seek reimbursement once the fees go into effect. In addition, DMV’s costs will likely exceed 1% of annual revenues collected pursuant to this bill.

COMMENTS:

1) Purpose. According to the author: “We must continue to invest in the reduction of air pollution throughout the state. This bill will allow us to continue funding programs that are essential to air pollution reduction.”

2) Background. California's 35 local air districts are responsible for regional air quality planning, monitoring, and stationary source and facility permitting. The districts administer air quality improvement grant programs and are the Air Resources Board’s (ARB) primary partners in efforts to ensure that Californians breathe clean air. Each air district has unique geographic characteristics, pollution sources, and governing boards that dictate their authorities and priorities.

Existing law authorizes air districts to levy a surcharge on vehicle registrations, which is collected by DMV at the time of registration. DMV distributes the revenues to those districts requesting the imposition of the surcharge, as specified, after deducting its administrative costs related to collection. Existing law increases the amount of the surcharge from $4 to $6 and requires that $2 be used by air districts to implement the Carl Moyer Air Quality Standards Attainment Program – which is administered by ARB in partnership with the air districts to fund projects that reduce emissions from heavy-duty on-road and off-road equipment – and other specified purposes.

This bill requires, as opposed to authorizes, a new $4 fee, adjusted annually for inflation, which air districts would be able to use to improve air quality. SCAQMD contends the current $4 fee has not increased in over 30 years and that additional funding is essential, especially in the South Coast region where approximately 17 million Californians are breathing some of the dirtiest air in the nation. The types of projects funded by air districts with these funds include transportation demand management, traffic management, particulate matter reduction strategies, alternative fuels and electric vehicles, public transportation, bicycles, vehicle emissions abatement, commuter benefits, and enhanced mobile source inspection. This bill would result in a total air district fee of up to $10 on each motor vehicle registered in the state, if the air districts opt to exercise their existing fee authority, which the vast majority do. In addition, the San Joaquin Valley Air Pollution Control District has the authority to levy an additional $30 surcharge on vehicle registrations until January 1, 2034, to fund emission reduction and air quality improvement projects.

SCAQMD further states:

CARB has taken action to eliminate tailpipe emissions, including adopting the Innovative Clean Transit regulations in December 2018 and the Advanced Clean Cars II regulations in August 2022. CARB is also continuing to develop the Advanced Clean Fleets rule, among others. These regulations will substantially reduce mobile source pollution across the state. However, they will also significantly increase costs for local jurisdictions. Funding from this bill will provide desperately needed financial assistance to local jurisdictions to meet new state requirements and goals.

There are many sources of funding for programs and projects intended to improve the state’s air quality. These include federal incentives, revenues from the state’s cap-and-trade program, funding from other vehicle registration and related fees, such as smog abatement, and significant recent support from the state’s General Fund. Additionally, as noted under “related legislation,” the Legislature is considering two proposals and an administration trailer bill to reauthorize vehicle registration and other fees to continue funding vehicle, vehicle infrastructure, and air quality programs. The Legislature will need to consider this bill within the broader context of all of the funding available for air quality improvement activities, the overall financial burden placed on vehicle owners, and the other proposals moving through the legislative process.

In addition, it is difficult to assess from a statewide perspective what types of projects air districts have funded using the existing surcharges and what the outcomes have been. In part, this is because air districts have different reporting requirements. BAAQMD, SCAQMD, and SacAQMD have some of the most stringent reporting requirements for the use of their district fees. However, many of the other 32 air districts do not have reporting requirements specified in statute, and state oversight is limited.

3) Related Legislation. AB 241 (Reyes) and SB 84 (Gonzalez) reauthorize various vehicle-related fees that fund the Air Quality Improvement Program (AQIP), the Clean Transportation Program (CTP), and the Enhanced Fleet Modernization Program (EFMP) and makes changes to CTP and AQIP. AB 241 is currently pending in this committee, and SB 84 is currently pending in the Senate Appropriations Committee.

4) Prior Legislation. AB 2836 (E. Garcia), Chapter 355, Statutes of 2022, reauthorized fees that fund the Carl Moyer Program until January 1, 2034.

Analysis Prepared by: Nikita Koraddi / APPR. / (916) 319-2081

Date of Hearing: April 24, 2023

ASSEMBLY COMMITTEE ON TRANSPORTATION

Laura Friedman, Chair

ABPCA Bill Id:AB 1609 (

Author:Garcia) – As Amended Ver:April 17, 2023

SUBJECT: Air pollution: motor vehicle registration: pollution reduction

SUMMARY: Imposes an additional annual $4 charge on motor vehicles to provide funding for Air Quality Management Districts (districts) to reduce or mitigate air pollution from motor vehicles, for the attainment of air quality standards, or for the reduction or mitigation of toxic air contaminant emissions from motor vehicles. Specifically, this bill:

1. Imposes a new annual air quality improvement fee of $4 on each motor vehicle registered in the state beginning January 1, 2024, and increases the fee annually based on the California Consumer Price Index.
2. Authorizes the Department of Motor Vehicles (DMV) to collect the air quality improvement fee at the same time and in the same manner as it collects the general registration fee, and withhold up to 1% of the annual revenues to cover its administrative costs relating to the collection of the fee.
3. Authorizes air districts to use not more than 6.25% of the revenues distributed to the air district for its administrative costs.
4. Creates the Air Quality Improvement Fee Fund in the State Treasury, requires DMV to deposit the revenues collected into the Air Quality Improvement Fee Fund, and continuously appropriates moneys in the fund to DMV.
5. Requires DMV to distribute revenues to districts based upon the amount of fees collected from motor vehicles registered within each district.
6. Requires the South Coast Air Quality Management District (SCAQMD) to allocate the revenues distributed to it consistent with Health and Safety Code (HSC) 44243 and 44244.
7. Requires the Bay Area Air Quality Management District (BAAQMD) to allocate the revenues distributed to it consistent with HSC 44241.
8. Requires revenues from the air quality improvement fee to be used to reduce or mitigate air pollution from motor vehicles and for related planning, monitoring, enforcement, and technical studies necessary for the implementation of the California Clean Air Act of 1988, or for the attainment or maintenance of state or federal ambient air quality standards or the reduction or mitigation of toxic air contaminant emissions from motor vehicles.
9. Extends an air district’s authority, except for the Sacramento Air Quality Management District (SacAQMD), to use revenues from the existing increased vehicle registration fee for implementation of the California Clean Air Act and for the attainment or maintenance of state or federal ambient air quality standards or the reduction of toxic air contaminant emissions from motor vehicles indefinitely.

EXISTING LAW:

1. Finds and declares that local and regional authorities have the primary responsibility for control of air pollution from all sources, other than emissions from motor vehicles. (HSC 40000)
2. Requires air pollution control districts or air quality management districts to adopt and enforce rules and regulations to achieve and maintain the state and federal ambient air quality standards in all areas affected by emission sources under their jurisdiction, and to enforce all applicable provisions of state and federal law. (HSC 40001)
3. Generally prohibits a person from driving a motor vehicle unless it is registered and the appropriate fees have been paid. (Vehicle Code (VEH) 4000)

District fees to implement the Clean Air Act

1. Authorizes an air district, except SacAQMD, to levy a fee of up to $2 on motor vehicles registered within the district, only if the district board adopts a resolution providing for both the fee and a corresponding program for the reduction of air pollution from motor vehicles pursuant to, and for related planning, monitoring, enforcement, and technical studies necessary for the implementation of, the California Clean Air Act of 1988 or for the attainment or maintenance of state or federal ambient air quality standards or the reduction of toxic air contaminant emissions from motor vehicles. (HSC 44223)
2. Authorizes an air district, except SacAQMD, to increase the $2 fee, up to $6 until January 1, 2034 and up to $4 after January 1, 2034 and indefinitely, if both of the following conditions are met:
   1. Before January 1, 2034:
3. A resolution providing for both the fee increase and an expenditure plan for the increased fees for the reduction of air pollution from motor vehicles, and for related planning monitoring, enforcement, and technical studies necessary for the implementation of the California Clean Air Act or for the attainment or maintenance of state or federal ambient air quality standards or the reduction of toxic air contaminant emissions from motor vehicles, is adopted by the governing board of the district; and,
4. In districts with nonelected officials, the resolution is adopted and approved by both a majority of the governing board and a majority of the board members who are elected officials.
   1. After January 1, 2034:
      1. A resolution providing for both the fee increase and an expenditure plan for the increased fees for the reduction of air pollution from motor vehicles, and for related planning, monitoring enforcement, and technical studies necessary for the implementation of the California Clean Air Act; and,
      2. In districts with nonelected officials, the resolution is adopted and approved by both a majority of the governing board and a majority of the board members who are elected officials. (HSC 44225)
5. Requires DMV, after deducting its administrative costs, to distribute the revenues (proportionally based on vehicle registrations) to the air districts, and requires the air districts to use the revenues from the first $4 of each fee imposed to reduce air pollution from motor vehicles and to carry out related planning, monitoring, enforcement, and technical studies necessary for implementation of the California Clean Air Act. (HSC 44229)
6. Requires districts to use the next $2 of each fee to implement programs that the district determines remediate air pollution harms created by motor vehicles on which the surcharge is imposed, including the Carl Moyer Memorial Air Quality Standards Attainment Program, among other programs. The $2 fee sunsets January 1, 2034. (HSC 44229)

Bay Area specific statutes

1. Requires the Bay Area Air Quality Management District to allocate subvened district fees to implement the following mobile source and transportation control projects and programs that are included in adopted plans:
2. The implementation of ridesharing programs;
3. The purchase or lease of clean fuel buses for school districts and transit operators;
4. The provision of local feeder bus or shuttle service to rail and ferry stations and to airports;
5. Implementation and maintenance of local arterial traffic management, including, but not limited to, signal timing, transit signal preemption, bus stop relocation and “smart streets”;
6. Implementation of rail-bus integration and regional transit information systems;
7. Implementation of demonstration projects in telecommuting and in congestion pricing of highways bridges, and public transit;
8. Implementation of vehicle-based projects to reduce mobile source emissions, including, but not limited to, engine repowers, engine retrofits, fleet modernization, alternative fuels, and advanced technology demonstrations;
9. Implementation of a smoking vehicles program;
10. Implementation of an automobile buy-back scrappage program operated by a governmental agency;
11. Implementation of bicycle facility improvement projects that are included in an adopted countywide bicycle plan or congestion management program; and,
12. The design and construction by local public agencies of physical improvements that support projects that achieve motor vehicle emission reductions, as identified in an approved area-specific plan, redevelopment plan, general plan, or other similar plan. (HSC 44241 (b))
13. Requires any county or entity within the bay district that receives funds to at least once a year hold one or more public meetings to adopt criteria for expenditure of the funds if the criteria have been changed from the previous year. (HSC 44241 (f))
14. Requires the bay district board, and any county or entity within the district that receives funds, to hold an annual public hearing or meeting to review the expenditure of revenues. (HSC 44241.5 and 44241 (f))

South Coast specific statutes

1. Requires fees subvened to SCAQMD to be expended for programs, and grants to fund projects, to reduce air pollution from motor vehicles. (HSC 44243)
2. Authorizes SCAQMD to impose a fee of $1 and requires that fee be paid to DMV, upon renewal of registration of any motor vehicle registered in the district, except those expressly exempt. Requires the SCAQMD district board to approve the imposition of the fees through the adoption of a resolution by both a majority of the district board and a majority of the district board who are elected officials. (VEH 9250.11)

SacAQMD specific statutes

1. Authorizes the Sacramento district board to adopt a surcharge (up to $6 until January 1, 2034, and up to $4 after) on the motor vehicle registration fees applicable to all motor vehicles registered in those counties within the Sacramento district whose boards of supervisors have adopted a resolution approving the surcharge. (HSC 41081)
2. Requires the surcharge to be collected by DMV and, after deducting the department’s administrative costs, requires the remaining funds to be transferred to the Sacramento district.
3. Requires, before the adoption of any surcharge pursuant to this subdivision, the district board to make a finding that any funds allocated to the district as a result of the adoption of a county transportation sales and use tax are insufficient to carry out the purposes of this chapter.
4. Requires the first $4 of each surcharge to be used to implement reductions in emissions from vehicular sources, including, but not limited to, a clean fuels program and motor vehicle use reduction measures.
5. Requires the next $2 of each surcharge (in place until January 1, 2034) to be used to implement programs that achieve emission reductions from vehicular sources and off-road engines, such as Carl Moyer Memorial Air Quality Standards Attainment Program, among other programs.
6. Requires DMV, if requested by SacAQMD, to impose and collect a surcharge on the registration fees for every motor vehicle registered in that district, not to exceed $6 prior to January 1, 2034 and $4 starting January 1, 2034. (VEH 9250.2)

FISCAL EFFECT: Unknown

COMMENTS: California's 35 local Air Districts are responsible for regional air quality planning, monitoring, and stationary source and facility permitting. The districts administer air quality improvement grant programs and are the California Air Resources Board’s (CARB) primary partners in efforts to ensure that Californians breathe clean air. Each air district has unique geographic characteristics, pollution sources, and governing boards that dictate their focus in activities.

Generally, statute authorizes the imposition of a $4 per vehicle charge paid to the DMV, as part of vehicle registration, to fund the implementation of programs designed to reduce air pollution from motor vehicles and to implement the California Clean Air Act of 1988. The DMV distributes these revenues to the air districts. This fee is not adjusted for inflation and remains at $4 today.

The SacAQMD program was the first surcharge to be established (Chapter 1541, Statutes of 1988). SacAQMD is authorized to receive the revenues from DMV’s collection of these charges on each motor vehicle registered within the air district. State law specifies these fees be used to implement strategies to reduce emissions from vehicular sources, including but not limited to a clean fuels program and measures to reduce motor vehicle use.

Later legislation authorized other districts to use revenue from the same fees and specified similar uses for the funds (AB 2766 (Sher), Chapter 1705, Statutes of 1990 and AB 434 (Sher), Chapter 807, Statutes of 1991). AB 2766 authorized other districts (except Bay Area) to assess motor vehicle registration fees to reduce motor vehicle emissions and implement the California Clean Air Act. One year later, AB 434 established a program specific to the Bay Area.

Existing law defines more specific parameters for certain air districts and the use of motor vehicle registration funds. For example, AB 2766 requires DMV to subvene the revenue from these fees to SCAQMD as follows:

1. 40% to the Local Government Subvention Fund Program to implement projects that reduce emissions from mobile sources.
2. 30% to the SCAQMD Program Fund for agency planning, monitoring, research and other activities that reduce mobile source emissions.
3. 30% to the Discretionary Fund Program which awards money to project proponents that also reduce motor vehicle emissions.

As another example, BAAQMD administers the Transportation Fund for Clean Air (TFCA) program, allocating 60% of TFCA funds to the Bay Region, and 40% back to the counties in which the fees were collected.

This bill creates a new $4 fee, adjusted annually for inflation, which air districts would be able to use for implementation of the Clean Air Act, or for the attainment or maintenance of state or federal ambient air quality standards, or the reduction or mitigation of toxic air contaminant emissions from motor vehicles. Currently air districts can only use the existing $4 fee for implementation of the Clean Air Act.

Additionally, this bill extends air districts’ authority, except SacAQMD, to use the revenues from the existing $4 vehicle fee for attainment or maintenance of state or federal ambient air quality standards or the reduction or mitigation of toxic air contaminant emissions from motor vehicles. This bill would result in a total air district fee of $8 on each motor vehicle registered in the state, if the air districts opt to exercise their existing fee authority.

The types of projects funded by air districts with these funds include transportation demand management, traffic management, particulate matter reduction strategies, alternative fuels and electric vehicles, public transportation, bicycles, vehicle emissions abatement, commuter benefits, and enhanced mobile source inspection.

According to the author, “We must continue to invest in the reduction of air pollution throughout the state. This bill will allow us to continue funding programs that are essential to air pollution reduction.”

In support, SCAQMD writes, “This bill would supplement an existing $4 fee which funds the AB 2766 Subvention Fund Program which was created to reduce air pollution from motor vehicles and protect public health. That fee has not been increased in over thirty years and consequently has been severely devalued by inflation over time. Additional funding is essential, especially in the South Coast region where approximately 17 million Californians are breathing some of the most unhealthful air in the nation, and the region is home to nearly 67% of the state’s disadvantaged communities.

CARB has taken action to eliminate tailpipe emissions, including adopting the Innovative Clean Transit regulations in December 2018 and the Advanced Clean Cars II regulations in August 2022. CARB is also continuing to develop the Advanced Clean Fleets rule, among others. These regulations will substantially reduce mobile source pollution across the state. However, they will also significantly increase costs for local jurisdictions. Funding from this bill will provide desperately needed financial assistance to local jurisdictions to meet new state requirements and goals. This funding will also be important to facilitate air districts’ efforts to meet and maintain state and federal air quality requirements and protect public health.”

In opposition, the California Taxpayers Association writes, “(1) The Proposed Tax Is Unconstitutional. The structure of the proposed tax in [this bill] is unconstitutional because the Legislature is prohibited from imposing taxes for local purposes. According to Section 24 of Article XIII of the California Constitution: “(a) The Legislature may not impose taxes for local purposes but may authorize local governments to impose them.” This bill imposes a tax for the purpose of supporting local air pollution districts, which places it in violation of the California Constitution. (2) California Motorists Are Overtaxed. California motorists already are overburdened with vehicle fees and taxes. They pay the highest state-level sales tax rate in the country when they buy a car, and the highest gas tax in the nation at the pump – increased annually with rising inflation -- and soon may face even higher costs with several proposals to increase annual taxes and fees pending in the Legislature. These taxes and fees directly affect Californians struggling with inflationary pressure and increase the cost of doing business, especially for companies with vehicle fleets. The Legislature should seek to alleviate the tax burden for motorists rather than adding costs.”

Committee comments: This bill would provide additional funding to the state’s 35 air districts and allow for the new revenues, as well as the funding from the existing $4 vehicle charge to be used for attainment or maintenance of state or federal ambient air quality standards or the reduction or mitigation of toxic air contaminant emissions from motor vehicles. (This bill unintentionally excludes SacAQMD from the extension of the authorization of the broader use of these funds and SacAQMD has indicated it wants amendments to be included in those provisions.)

The state currently has many sources of funding being directed toward programs and projects intended to improve the state’s air quality. These include Greenhouse Gas Reduction funds from the state’s Cap and Trade program as well as funding from other vehicle registration related fees. Also, AB 241 (Reyes) and SB 84 (Gonzalez) of this session reauthorize vehicle registration and other fees that would provide funding for the state to continue the implementation of three vehicle, vehicle infrastructure, and air quality programs.

Because many activities are being funded at the federal, state, and local level to improve air quality it is unclear to what extent additional funding is needed for these activities. The Legislature should consider this bill within the broader context of all of the funding available for air quality improvement activities and assess if providing additional funding is the highest priority. For example, funding generated by this bill could be used by air districts to fund the replacement of polluting vehicles. However, funding sources for these types of projects exist at the state and federal level and some may prefer the funds to be used for other activities such as traffic management, public transportation, and bicycle projects, rather than paying for public entities to meet regulatory compliance. The Legislature should consider whether expanding the use of these funds will result in project selection and outcomes consistent with its highest priorities.

It is also important to recognize that the fee increase this bill proposes puts an additional financial burden on owners of vehicles, since the fee is imposed as part of the annual vehicle registration fee vehicle owners pay to the DMV.

In addition, it is difficult to assess from a statewide perspective what types of projects air districts have funded and what the outcomes have been. In part, this is because air districts have different reporting requirements —BAAQMD, SCAQMD, and SacAQMD, have some of the most stringent reporting requirements for the use of their district fees. However, many of the other 32 air districts do not have reporting requirements specified in statute. The Legislature may wish to consider if additional reporting requirements should be added, and if they could be made more consistent to improve the Legislature’s ability to provide oversight of the air districts’ use of these fees.

Finally, the vehicle registration fees proposed to be reauthorized under AB 241 (Reyes) and SB 84 (Gonzalez) have a 10-year sunset. If the Legislature agrees on the need for these fees, it should consider imposing a 10-year sunset on the fees proposed by this bill to allow for program evaluation and determination of demand in the future, among other things.

Related and previous legislation: AB 241 (Reyes) and SB 84 (Gonzalez) of this session reauthorize fees that fund the Air Quality Improvement Program (AQIP), the Clean Transportation Program (CTP), and the Enhanced Fleet Modernization Program (EFMP) and makes changes to CTP and AQIP. AB 241 is currently in the Assembly Natural Resources Committee. SB 84 is currently in the Senate Environmental Quality Committee.

AB 2836 (E. Garcia), Chapter 355, Statutes of 2022 reauthorizes fees that fund the Carl Moyer Air Quality Standards Attainment Program until January 1, 2034.

SB 491 (Committee on Transportation), Chapter 451, Statutes of 2015 requires entities receiving vehicle registration fee surcharge revenue within BAAQMD to, at least once a year, hold one or more public meetings to adopt criteria for expenditure of funds, if the criteria have been modified from the previous year, and one or more public meetings to review those expenditures.

AB 923 (Firebaugh), Chapter 707, Statutes of 2004 added an additional $2 surcharge, for a 10 year period, to provide a source of funding for expansion of the Carl Moyer Memorial Air Quality Standards Attainment Program and to incentivize early introduction of clean air technology such as cleaner diesel engines; a Lower-Emission School Bus Program; and accelerated vehicle repair and retirement programs.

AB 434 (Sher), Chapter 807, Statutes of 1991 grants to BAAQMD the authority to collect a surcharge on vehicle registration fees similar to the authority already granted to other air pollution control districts.

AB 2766 (Sher), Chapter 1075, Statutes of 1990 authorizes specified air quality management districts to levy a fee of up to $2 on motor vehicles registered in the state and authorizes a district to increase the fee up to $4 to be used solely to reduce air pollution from motor vehicles and for related planning, monitoring, enforcement, and technical studies necessary for the implementation of the California Clean Air Act of 1988.

Chapter 1541, Statutes of 1988 requires, no later than January 1, 1990, the Sacramento district to adopt an air quality improvement strategy to reduce public exposure to air pollution and toxic air contaminants and to achieve and maintain state and federal ambient air quality standards by the earliest practicable date.

REGISTERED SUPPORT / OPPOSITION:

Support

Bay Area Air Quality Management District

California Air Pollution Control Officers Association

Environmental Health Coalition

San Diego County Air Pollution Control District

South Coast Air Quality Management District

Opposition

California Taxpayers Association

Analysis Prepared by: Christine Casey / TRANS. / (916) 319-2093