Assembly Budget Subcommittee No. 3 on Climate Crisis, Resources, Energy, and Transportation

All right? Good morning. Welcome to Assembly Budget Sub three. This will be our first voting meeting. There are 27 items on the vote only calendar which were heard last week. Today we'll hear from the Air Resources Board, the Department of Food and Agriculture, and the Energy Commission, but only on zero emissions vehicle items for the Energy Commission.

This will include an informational overview of the Greenhouse Gas Reduction Fund and spending plan, an implementation update on the $10 billion zero emissions vehicle package, and the proposed cuts and sustainable agriculture package, as well as new proposals from the departments. This includes 20 proposals on the non-presentation calendar and six presentation items. For each presentation item, I'll ask each of the witnesses in the agenda to introduce themselves before they begin their testimony. At the end of the presentation items.

Members of this Subcommitee may ask questions or make comments on any of the non presentation items. After all the items are heard, we will take public comment in regards to the departments before us today, first in the room, followed by phone testimony. Each Member of the public will have 1 minute to speak. The phone number is on the Committee website and should also be on the screen if you're watching over the Internet.

That number is 877-692-8957 the access code is 131-5447 if you encounter any problems, please contact the Assembly Budget Committee at 916-319-2099 and a staff member will assist you. Let's take roll, please.

[Roll Call]

We do have a quorum. We'll take three motions for the vote only calendar. The first vote is to approve as budgeted vote only items issues 1, 3, 4, 6, 7, 9 through 15, 17, 18, 20 through 22, 24, 25, and 27. Can I get a motion on those items? Good. Moved by Assembly Member Connolly and executed by Assembly Member Rivas. All right, roll call, please.

[Roll Call]

Thank you. The second vote is to approve as budgeted vote only. Issues 2, 5, 8, 23 and 26. Can I get a motion for that, please? 19 is not listed. 2, 5, 8, 23 and 26.

We'll do a third motion for 16.

Yeah. Okay, 16 and 19 of them be another. Moved by Assembly Member Rivas and seconded by Assemblymember Connolly.

[Roll Call]

And the last vote is to approve his budgeted vote. Only issues 16 and 19.

Chair, could we separate those two, because I think we may have different votes?

Only 16. All right. Can I have a motion, please, for 16?

Can I make a motion with a comment?

Okay, Mr. Chair, I'll move to approve 16, but my expectation is that the Department will expedite sequel reviews, so I move to approve that.

Sure.

All right, great. We have a motion by Mr. Essayli and seconded by Assemblymember Rivas and vote. And there we go. Welcome, Mr. Assembly Member Fong. We're ready for vote on item 16.

[Roll Call]

We have item 19 in front of us now. We need a motion. We need a motion for item 19. All right, Assembly Member Rivas, second by Assembly Member Connolly. Thank you.

[Roll Call]

All right, we'll leave the roll open for the absent Members, and we are now ready to move to discussion. Item 10, emission vehicle package implementation update and General Fund solutions. So if the Administration witnesses will all welcome to the Committee hearing and whichever Members of the Administration want to start off.

Thank you, Mr. Chair and Members Christian Beltran with the Department of Finance. So the Administration has worked with the Legislature to make historic investments in the expansion and rollout of zero emission vehicles over the last couple of years. The Administration remains committed to protecting these historic investments as much as possible for the state to continue to make major strides in reducing the amount of greenhouse gases emitted from the state's transportation sector.

As such, the Administration has taken a methodical and balanced approach in how we are protecting these investments while also solving for lower projected General Fund revenues. Overall, the Administration is proposing to maintain about almost 90% of the original investments. But before I jump into how the Administration approached the General Fund reductions, I'd first like to provide a high level summary of where the Air Resources Board and the Energy Commission are at in implementing some of the 21 and 22 appropriations.

First, in looking at fiscal year 21-22 CARB has encumbered over 90% of the $1.7 billion included in the ZEV package and has spent almost a quarter of those funds through the end of last year through investments in programs like the Clean Vehicle Rebate project, clean cars for all, and the hybrid and zero emission truck and bus voucher incentive project. CEC has encumbered approximately 90% as well of the 785,000,000 in 21-22 funding and about 117,000,000 of the 2223 funding from the 21 ZEB package.

This includes adding funding to block grants to accelerate ZEB infrastructure deployment for passenger vehicles trucks and buses, and targeted investments where the private market may not otherwise act, including rural communities and apartments. For fiscal year 22-23. The final budget Bill was signed into law in September of 2022, and CARB's board approved its funding plan for the ZEV package investments in November of 2022, dedicating the full 2.4 billion to projects, and CARB will begin encumbering those funds this quarter.

For the 2022 ZEV package for CEC, a total of 874,000,000 was appropriated to the Department or, excuse me, the Commission ZEV vehicle infrastructure, medium heavy duty and offroad ZEV infrastructure, and emerging opportunities will all get support for electric and hydrogen fuel cell vehicles, and CUC also intends to encumber those funds this quarter. Now I'd like to pivot to how the Administration approached the General Fund reductions and Fund ships.

The budget maintains $8.9 billion of the 10 billion, which is approximately around 90% included in the multiyear spending plan for zero emission vehicles that was originally agreed upon with the Legislature the last couple of years. The overall General Fund reduction for ZEV is approximately $2.5 billion across multiple years beginning in 23-24 through 25-26. However, the Administration is proposing to shift $1.4 billion of the 2.5 billion reduction to be funded by the greenhouse gas reduction Fund, resulting in a net reduction of $1.1 billion.

The administration's methodology for the zero Emission Vehicle Fund shifts and reductions included a prioritization of critical programs, focus on equity, and a consideration of where federal funds are available as a result of the Infrastructure Investment and Jobs act, or IIJA, as well as the Inflation Reductions act, the Ira.

The budget also includes a control section that provides a mechanism to allocate any additional discretionary cap and trade auction proceeds towards the zero emission vehicle programs that receive General Fund reductions and have not otherwise already been fully offset by GGRF.

Specifically, the control section authorizes the Department of Finance after the fourth cap and trade auction in the 23-24 fiscal year if the annual GGRF revenues are greater than projected in the 23 budget to allocate the remaining funds to programs which include fueling infrastructure grants, transit buses and infrastructure, school buses and infrastructure, ports, community based plans, projects and support, and sustainable community strategies, emerging opportunities, and charter boats compliance one important note is that there is significant new federal funding that the Administration believes would help offset these reductions stemming from the Infrastructure Investment and Jobs act and the Inflation Reduction act.

Many of the same stakeholders that would benefit from the state programs would theoretically be able to also apply to some of the federal programs. In total, through the IIJA and IRA, the Biden Harris Administration has made available nationally approximately $27.8 billion for direct ZEV related programs. The administration's General strategy on federal zero emission funding is to leverage formula funding wherever possible, directly apply or support partners applying for competitive funds create opportunities to use smart finance to stretch public dollars as far as possible.

We note that there has been a tremendous amount of interest in the competitive solicitations and there is no assurance that California will get those funds. But that being said, California is a leader in the zero emission vehicle space, and the Administration believes that the state will be very competitive for these funds.

Given that the most federal programs benefits related to zero emission vehicles come in the form of non refundable tax credits, the Administration maintained all funding related to equity programs, such as clean cars for all and equitable at home charging via a Fund shift to cap and trade, or GGRF. Additionally, given the role of drayage trucks and their impacts on low income communities around ports and major rail corridors, the Administration has maintained a large majority of investments made in drag trucks and infrastructure.

To conclude, I would like to highlight that despite these reductions, carbon CEC anticipate deploying a significant number of zero emission vehicles and refueling stations. This includes over 10,000 vehicles, 20,000 level two chargers for multidwelling units, as well as refueling capacities to support over 1300 medium and heavy duty trucks and buses, as well as 15,000 light duty fuel cell electric vehicles.

This concludes my presentation, and I'm joined today by Dr. Verges from the Air Resources Board and Director Rasoul to help answer any questions the Committee may have. Thank you.

Anybody else from the Administration? All right, LAO.

Thank you. Sarah Cornette with the Legislative Analyst Office. We find that the governor's proposals in the ZEV package are generally reasonable. The reductions are targeting newer programs and where there is potential for federal funds, such as funding zero emission activities at ports, we also find merit in maintaining funding for programs that are designed to reduce emission and air pollution in low income and disadvantaged communities, such as the drayage truck programs.

We recommend that the Legislature begin with the governor's solutions, but consider additional or alternative solutions across ZEV programs. Based on its goals and highest priorities, the Legislature may want to consider narrowing the scope of certain programs as it looks to make funding reductions. For example, this could include narrowing the scope of the clean cars for all program to focus benefits to those consumers whose incomes are too low to access federal tax incentives to purchase a ZEV.

Another option could be further targeting charging funds to support chargers that have received less private investment. So this could include chargers in apartment buildings, in low income communities, and chargers for heavy duty and hydrogen vehicles. We also recommend rejecting the governor's GGRF trigger proposal to automatically allocate additional GGRF revenues that come in higher than expectations to ZEV programs. We believe this would limit legislative flexibility and authority over these mid year GGRF revenues.

And as we'll talk more about in an upcoming item, we also recommend considering whether ZEV programs represent the highest priority for GGRF funds, as the governor's proposal would use the majority of discretionary GGRF funds to backfill reductions in ZEV programs and also commit out year GGRF revenues, which is unusual and would limit the availability of these funds in the future.

And we also recommend considering these proposals in light of other investments in zero emission vehicle programs, such as AB eight fee revenues, and also a proposal from the Department of General Services Fund zero emission vehicle charging at state owned and leased facilities. This isn't being considered in this Subcommitee, but we think it could make sense to Fund it through the ZEV package given that it's related to similar activities. Thank you.

Thank you very much. As we did at the first Committee hearing that we had, we would appreciate it if just consistently the Administration will list the actual cuts that they're making. So could the Administration please list the net reductions per program and how that compares to what was adopted in the previous budget, please?

Yeah, absolutely. So Christian Beltran with the Department of Finance, again, happy to do that for you, Mr. Chair. So in the 23-24 year, specifically, the Air Resources Board clean cars for all program would have $125,000,000 reduction for the California Energy Commission for its equitable at home charging, it would have $160,000,000 reduction for the Drayage trucks and infrastructure program with the Air Resources Board. That would have an $80 million reduction for the California Energy Commission for the drayage Trucks and Infrastructure.

That would have an $85 million reduction, for the Air Resources Board transit buses and infrastructure, that would have $38 million. For the Energy Commission for transit buses and infrastructure as well, that would have a $25 million reduction. For the Energy Commission's clean trucks, buses, and off-road equipment, that would have $98 million reduction, and I believe that covers all of the reductions. Mr. Chair.

Thank you very much. We're going to now open this up for Member questions and comments. Do we have any questions? Assembly Member Rivas and welcome. Assembly Member Rivas.

Thank you Mr. Chair. I have a question about the proposed advanced clean fleets rule. I signed on to a letter, updated February 13, with a group of Members urging CARB to ensure that the rule does not impact utility, reliability, and emergency response. We haven't received a response yet, and so I wanted to know what you're doing to address concerns that we articulated in that letter and when we will receive a response.

Thank you so much. I'm familiar with the letter you're talking about. My name is Sydney Burgess. I'm a Division Chief at the California Air Resources Board. I oversee both incentives and many of our regulations, so happy to speak to advanced clean fleets. So just for a little bit of background for folks who are unfamiliar with the history on this, in 2021, the board adopted what we call our advanced clean truck regulation, which required manufacturers to bring zero emission trucks to our market.

Our board recognized that even with that regulation, that 12 million Californians would still be breathing unhealthy air and that heavy duty trucks would still be contributing a disproportionate impact to transportation emissions, having a real impact on communities who live next to truck corridors.

So they asked us to follow up with the advanced Clean Fleets Regulation, which you're referring to, which is a requirement to accelerate the zero emission truck market by requiring fleets to purchase these vehicles, including utilities, private and public sector. With respect to emergency response. Definitely share your concerns, and emergency vehicles are actually exempted out of the regulation.

Will we receive a response in writing?

I'll certainly bring this back to our Legislative office. Thank you so much. You're formally entered into our official docket. I don't know if that brings you any comfort but.

Well, we'll follow up. I'll have my office follow up, too.

Thank you.

I want to support the strongest rule possible and this budget request, but I want to make sure that these issues are addressed. So thank you.

Thanks for your interest.

Members with questions.

Thank you chair, and appreciate the testimony. I want to delve deeper into the proposed cuts on the zero mission vehicle program. Of course, we're all supportive of the state's ambitious goals to achieve 100% ZEV, but we find ourselves now evaluating proposals to cut significantly funds to that program. So just a few questions to get into more of the details on that.

Beginning with in light of these cuts, how many rebates, zero emission vehicles, chargers and the like will not be subsidized or purchased because of these cuts.

Yeah, thank you, Assembly Member Connolly. So I believe on page 26 of the agenda there is a table there that highlights and identifies the specific amount of vehicles that would potentially not be deployed as a result of some of these cuts. That's specifically for the Air Resources Board component of it. I believe the CEC is also in the process of identifying what will not be funded as a result of the cuts as well. But I do also want to just highlight a couple of things.

First and foremost, as highlighted in my first kind of opening comments, we are protecting approximately 90% of the overall package. So when looking at the grand scheme of the General Fund condition, this is something that we as the Administration believe that this is kind of critical in terms of the amount of funds that we are protecting and how we are prioritizing the zero emission vehicle space.

But I would also like to point out that in terms of the specific kind of rollout, in terms of what is included in the funding, the CEC has identified that for this budget year we will indeed roll out 20,000 level two chargers for multi dwelling units. Approximately 740 dredge trucks will be supported, 500 transit buses will be supported and 15,000 light duty fuel cell electric vehicles will also be supported.

And Air Resources Board is projecting that 8500 vehicle deployments will be supported, 910 dredge trucks, 370 transit buses and 900 vehicles for the community based plan. So I think it's important to identify some of the positives that are still there, understanding that in the out years, at the very least there will be a little bit of impacts. But again, that's out years. And there is that GGRF trigger that we are also proposing that would help kind of backfill those specific cuts.

Yeah, I also wanted to specifically flag the issues of schools and their transition to cleaner bus technologies. And again, looking at page 26, just to be perfectly clear, there will be significant cuts in the number of school buses that would be funded as well.

So I would just identify that I believe last year we had some Proposition 98 General Fund Dollars that was included that is not being touched as part of these General Fund solutions. So this in particular is focused on non-Prop 98 dollars. So we are still maintaining that previous funding from last year.

Great. You talked a little bit about federal funding and some opportunities we have to backfill with that. Of course, we know that that funding is very competitive and that includes around ZEVs and ZEV infrastructure. It certainly is not guaranteed. How confident are you we will be able to compete effectively for those funds and ultimately get them?

I'll kind of make a brief comment, but then I'll turn it over to the Air Resources Board to maybe just talk a little bit about how they're helping, in particular some of those local school districts. So I would say that, as mentioned in the comments that I said during my opening statement, that California is really competitive in terms of obtaining a lot of those general school bus funds.

And so a lot of the federal funding that is being identified in the IIJA and IRA, we have a track record of obtaining a lot of those funds in our local school districts, obtaining those funds. But to give more detail about how the state is also helping our partners obtain those funds, I'll turn it over to the Air Resources Board.

Sure. Happy to speak to that. So, Sydney Burgess again, California Air Resources Board. So with respect to the school bus. Yes, thank you. With respect to school bus money, we have a pretty deep relationship with US EPA.

And you can broaden it beyond school buses, but touch on that specifically, but then more broadly, on the issue.

Yeah, definitely. So between California and the Federal Government, these are two of the biggest school bus incentive programs that exist. So as my colleague at DOF mentioned, we have about $1.1 billion to spend over the next several years to help incentivize school buses, which we're looking to actively leverage with the $5 billion coming from the Federal Government right now, there is a lot of, I think, questions with respect to how those funds for school buses will be rolled out federally.

But one of the ongoing conversations that we're having with us, EPA, is how best do we move the market towards zero emission in a way that schools that serve school districts and can leverage both these pots of funding? To your broader question, the benefits that come to California will be in direct proportion to how many electric vehicles generally are sold in California.

And one of the great things about the Legislature's continued support for many of California's incentive programs is the ability to stack those with federal incentives, which necessarily means that more federal benefits will be flowing to California. So right now, in California, we offer purchase rebates on the light duty side, we offer increased rebates if you're willing to scrap a vehicle, but those can be combined with the federal tax credits that we all know are coming.

Great. And then final question for now. In what ways are we prioritizing helping lower income Californians, in other words, achieving more equity in the results? We want to transition from older polluting vehicles to zero emission vehicles, which, as we know, are still relatively expensive in the market.

Thank you so much for that question. Many of our programs over time have, in fact, transitioned from being very much focused on how do we get the zero emission vehicle market started to now, how do we ensure that communities are not being left behind in this electrification transformation? So, following the guidance of the Legislature, one of the activities that we at CARB embarked on was to produce a SB 350 report which looked at Low income barriers to accessing zero emission vehicles and zero emission transportation generally.

So what you see in our portfolio is really an attempt to meet consumers where they are. So if you're a low income consumer living in a disadvantaged community and you're willing to scrap a vehicle, we will provide you a purchase, rebate or transit cards or other mobility options if you're living in a community where you don't necessarily want or can have the overhead of a personal vehicle.

We have programs like our Clean Mobility Options program, which are really meant to be community based solutions like zero emission car share projects.

And Assembly Member, Hannon Rasool, California Energy Commission I'll just add on the infrastructure piece a bit, too. This is exceedingly important to us. We've committed at least 50% of our funding to be deployed in disadvantaged communities and low income communities. We actually started an effort late last year and will hold a second workshop, likely in March, and may slip into April to define benefits even beyond locationally based.

So we want to see, can we go a layer deeper on that as well, because we know the location alone isn't always a factor of who benefits from it. So that's an effort we're taking in earnest as well. In addition to setting that 50% floor of making investments on a location basis, we also design solicitations focused on specific segments. So a little over a year ago, we had a solicitation focused solely on multi unit dwellings, apartments, and condos.

We also had one solely focused on rural communities and also one solely focused on high mileage vehicles. We're going to relaunch the apartment and condo one again hope to release that late March could slide into April but that's something we want to do on an annual basis. The General Fund money we have received helps us do that. And then I know it's a later item, but also extension of AB 8 funding would help us do that for a longer period of time, too.

Great. Thank you, Mr. Connolly. Before I turn it over to Assembly Member Fong, first I want to welcome you to the hearing. I know Assembly Member Ting is also going to join us. And part of why there's so much interest in this is $10 billion for ZEV infrastructure is a huge commitment on the part of California, and I think there's going to be a lot of interest in it.

I think that to the extent that we can have as much information as possible and recognize that this is going to constantly be evolving and adjusting as technology changes, as we find out about federal funding coming in, this won't be the last time we'll talk about ZEV infrastructure in this budget. And as we go forward in California, it's just going to be a huge question for us.

And I want to get on the radar screen, sort of a general overall thought that I have in preparation for this conversation. And that's the issue of trying to keep up with technology advances while a government entity is trying to play this unique role. When the market gets mature, then changes can easily be handled by the market.

But when you're in this chicken and egg situation of nobody wants to buy the vehicles until the charging station is there, nobody wants to build the charging stations until there's the demand because people have the vehicles, the government has a very interesting and challenging role because you're trying to sort of like anticipate where things are going.

And so I've said this to many people before and certainly have said it to CEC and car representatives, but I want to get this said at the committee hearing so that it's out there. And that is, I think, back to the early 1950s, and I was alive then and very few people around, but the internal combustion car companies purchased up all the electric battery cars and the patents for those electric battery cars and killed that industry in the crib.

And nobody on the government side stood up to that and said, hey, we really should have both of these technologies competing with each other early in the adoption of vehicles and how much better off we would have been if we would have at least kept that alive long enough to see whether it was commercially viable. But today we'd have a very different air quality equation and potentially a greenhouse gas equation if we had done that.

So while we're in this next phase of trying to go from a carbon economy to a carbonless economy, I want you to know from my perspective, I think it's important. I'm not trying to pick winners. I'm trying to keep as many options open as possible. And that's part of why I want to make sure we are making the appropriate hydrogen infrastructure investments and still maintain as much flexibility as possible so we can shift as the technology shifts.

So with that, that's just an overview that I think will influence some of the conversations and certainly the questions that I have. And Assembly Member Fong, welcome.

Thank you, Mr. Chair. I wanted to step back a little bit and ask about just where we are right now and what the goals are moving forward. So I've read the CEC report and let me know if this has changed from when it came out. But how many charging stations are necessary moving forward that we need to get to?

Yeah, our projections are we need 1.2 million chargers by 2030. And that's for the light duty passenger side. Approximately 157,000 chargers for medium duty heavy duty to support 180,000 vehicles, also 2030. I'll note that we are drafting our second AB 2127 report now, so some of those numbers may be updated with new data.

And so where are we currently? How many charging stations are currently set up across the state? I know there was a lot of attention on some that were not functioning. So do you have a current account of how many zev charging stations are currently set up across the state that are functioning?

Yeah, we're estimating 80,000 chargers today. And with the funding we received from the General Fund and current AB 8 funding, we think we'll get to about 260,000 shortly after 2025. Our goal was 250,000. By 2025, we may be slightly behind that. So we're projecting a gap of 900,000 chargers.

Do you have yearly or monthly goals or how do you measure, how often do you measure where we are going?

Yeah. And one thing we actually intend to do, because we heard this from some stakeholders, is on the next AB 2127 report, to have that granular data on a year by year basis and see how we're tracking against that, because often it's not linear. Right. As the vehicles ramp the economy, the scale.

Yeah, the scale.

Exactly right.

If I could ask, what is your next two or three year goals?

Yeah, so I think a couple of things. We need to deploy the funding we have received from the General Fund and hope to continue to receive and hit that 250,000 charger goal. Ideally, we can accelerate a few things and hit that by the end of 2025, looking more like 2026, mostly due to permitting and utility interconnection. There's also been some supply chain issues as well that we're dealing with that have slowed down some of the progress. But near term, we're very committed to hitting that goal.

Both the 250,000 chargers. Yeah, please.

Sorry. In three years, you want an additional 260,000. That's correct, yeah.

So the delta between 250 and 90? Yeah.

And that's on top of the 80 that currently exists.

So. No. So our goal is to get to 250. So if we're at 80, it'd be the difference.

Okay, so your goal is to put 170,000 more charging stations in the next three years.

Exactly. Right? Yes.

Okay. And what is the per unit cost per charging station? I mean, I know it depends on where you are, the location. I represent the Central Valley, so certainly the connection will be a little bit more challenging.

Yeah, that's a fantastic question. And you're right, it does vary quite a bit. So we base our incentive levels around what it takes to move the market in a certain direction. So, illustrative purposes, we believe it may cost about $2,000 for a level two in a single family home, maybe $7000 for that same level two at a multi unit dwelling apartment or condo. If you're trying to tackle equity like Low income, disadvantaged communities, it may cost you more.

So for level two, we're estimating about $7,000 in CEC investment and approximately $70,000 for 50 kW fast chargers. But again, as the market demands higher power fast chargers, that does cost more money. Trying to tackle more difficult segments does.

Cost more money, I guess. What would be the average cost of a fast charging station?

It would be tough to put that down in just a one average.

Do you have a range?

We can provide one. We can provide one. I wouldn't want to just shoot from the hip on that.

Okay. I would really like that information. As the chair said, the amount of resources that is being requested, in terms of your count, when a single family home or condo or apartment complex, when they put in a charging equipment, you're not counting that as charging stations.

So we're not counting single family homes. We do count what we call shared private, and that would be multi unit dwellings, workplaces. And the way we define shared private is it is in an area that is not accessible by the general public, but it is shared amongst several people, either the tenants or the workers.

So those are counted in the 80,000 estimate.

That's correct.

That you have. Okay. Out of the 80,000 currently, what portion of it is state subsidized, and how much of those are privately funded?

It varies quite a bit. I think, on the DC fast charger side, we know that a good chunk of those are privately funded, but a lot of that is Tesla. Right. So that's a different network than is generally open. We're glad that Tesla is starting to open up some of those chargers, but there is that universe of privately funded chargers, and then there's a portion that, going forward, we hope will be federally funded. We definitely want to bring that money to California.

Historically, not a lot of federal funding on state infrastructure for chargers. And then the balance is either state funded or utility rate pair funds.

So then, just to take another layer off the onion. So, out of the 80,000, are you counting the Tesla, and are you counting all of those in that count?

We are. A large vehicle population today is Tesla. So we count those chargers as well to support those vehicles. Okay.

I will say that that's a pretty large delta to get from 80,000 to 1.2 million. Are your estimates reasonable?

We think so. We think so. We are seeing much more action in this space, federally, state, local, and private. We do not pretend that this is going to happen overnight or that it's easy. It will take continued funding, it will take continued effort, and it's important. This is 50% of the greenhouse gases in our state come from transportation. So they are ambitious goals, but we're aiming for them. Those are our targets.

I guess the conversation we just had was specifically on the car side, and you did mention that the report indicated 150,000 medium, or chargers for the medium sized fleets.

Yes, that's correct. 157,000.

And how many of those currently exist?

We're actually starting to collect that data. As you can imagine, for some of the infrastructure that is behind the fence on site, it's a little bit more difficult to get that data. We're going to see what more we can do to collect that information.

So do you have an estimate of how many there are now?

Let me check with our staff, and we can get back to you. We have a publicly facing dashboard because we want to be as transparent as we can. And we just added a tab for medium duty, heavy duty. And I'm not recalling if there's a tab for the vehicles and the infrastructure or just one, but we can get back to you on that.

Well, I'll just echo what the chair just said, which is you're asking for a lot of money, and we need to know where we are to get to where we need to be. And I think it's a pretty basic question to ask. How much is a charging station cost? I think it's pretty basic to ask how many charging stations we have and where they are. So I just want to kind of channel my comments with the chair that I think we need more information.

And I think the fact that we're having this hearing and we can't get those basic facts is very frustrating. In terms of the grid, because you mentioned utility connections, everything else. Are there any resources that are going into actually, like, the grid infrastructure? Cal Matters did a piece. The headline was, can California's power grid handle a 15 fold increase in electric cars? And they outlined kind of some significant obstacles there. Does any of the investment go into actually, like, the actual electricity grid?

Yeah. So those investments are made by utilities. But I think there's something important we should articulate here is that even in 2030, we expect EVs to be less than 5% of the peak load and less than 10% of the energy demand. And we are planning to meet that need.

So we have analysis and report we're doing through our energy assessment division that looks at a 10 year forecast for this information and contemplates not just where we are today, but where we need to get with the CARB regulations taken into place. So we are planning for that transition both from a modeling and analysis side and also a data side. And I'll also note that we are making those investments in the grid through other things. Outside of the fuels and transportation division.

Everyone's got different data points. And so while you say that it's only 1-5%, I think your own report indicates that's a 42% increase in electricity production that's necessary to even meet that goal. Right?

I'm not familiar with how much, but if you have a report for us to point to, I'd be happy to look at it.

Well, it's in the Cal Matters piece that says, of course I'm happy to share it with you, but the amount of electricity production that's necessary to support a 15 fold increase in electric vehicles on the grid is pretty substantial.

Yeah. And we'd be happy to collaborate with your office and understand where that number came from, because our analysis shows that it would be 10% added electricity in 2030 from EV load and only 5% at the peak.

Okay. I'm happy to have that conversation with you. I just want to jump real quickly to the freight corridor infrastructure and the ports. In terms of funding, how much funding is now remaining for the freight corridor?

Yes, Assembly Member Fong, I think I can address that question for you. Just give me one moment while I turn to that. Okay. So for drayage trucks and freight corridors, we have, the California Air Resources Board would receive for all the multi year funding, $445 million, which is actually the full amount that we originally appropriated for the Energy Commission. They would receive $500 million, which is again 100% of what was originally agreed upon last year in the zero emission vehicle packages.

And then for the drainage trucks and infrastructure pilot projects, we would have $40 million, as well as $25 million for both the Energy Commission and the Air Resources Board. And that was all funded last year, two years ago in the 2021-2022 packages.

Okay. With the funding cuts to the ports, how much resources do you anticipate going to the ports with all these federally competitive funds? Are you seeking to offset them completely?

We definitely know that there is quite a bit of federal funding for the ports in that package, and we do anticipate that, I would say somewhat match what was included in the reductions. We have about 250 million plus the 150 million for CEC. So roughly around 400 million total was part of the reductions. And out of the 27.8 billion that's available in federal funding, I think it's reasonable to expect somewhere along the lines of 400 million going to ports.

Okay. And then lastly, I think in the analysis, it indicated that in terms of the trigger reductions, restorations, whatever language you like to use, it provides the Administration with the authority to shift those funds around. Is that correct?

Yes. So the logic there is we simply tried to backfill some of the reductions that were previously agreed upon across all the different programs that did not receive the GGRF backfill in the current plan from Governor's Budget.

I guess the one question to the LAO is, do you have a perspective on whether that's a reasonable authority to give them, or should we as a Legislature maintain that authority?

So we recommend rejecting this GGRF trigger proposal. Typically, when GGRF revenues come in higher than the Administration estimates, there's a mid year process to determine what those funds will be used for. And this budget section control language would kind of give away too much legislative authority in our view.

I appreciate that. Thank you very much. Appreciate it.

Thank you, Mr. Fong. Assembly Member Friedman.

Thank you, Mr. Chair. I do have a question, and this may not be the right panel for this question. So if you don't feel that you're the right ones to answer it, that's fine. I have a question about the funding proposal for the sustainable community plans and strategies section falling from 200 million to 80 and then to 59. My question is, what kind of metrics do we use to evaluate the effectiveness of the funding for these programs?

In other words, there's been reports and analysis that have showed that a lot of the state's planning organizations are not actually meeting the goals under the old SB 375 sustainable community strategies legislation, that their planning is not necessarily reducing VMT or prioritizing transportation projects that would lead to a reduction in VMT. So I'm wondering, we are funding a lot of these plans, and how do we ensure that the plans that are being produced with this money actually meets those climate goals?

Sure. Sydney Virgis with California Air Resources Board. Happy to take a stab at this, but if it's not what you're asking, please stop me. So, in terms of the metrics for our programs, including but not limited to many of our equity and mobility programs, we look at a wide array of metrics as laid out for all California climate investment programs. And that includes metrics like cost effectiveness, greenhouse gas emission reductions, air quality, workforce development.

There's a number of metrics that we as a state look at every year and put out in an annual report from DOF. In terms of reducing VMT, I would say by and large, at least from the car perspective, many of our programs actively work to reduce combustion VMT, which is a little bit different than what you're asking. But what we're trying to do is really meet consumers and communities where they are.

So if they're willing to get rid of a personal vehicle, we want to help them get into a cleaner vehicle.

But that's not the goal of the sustainable communities strategies. So I'm asking specifically about that because that is actually not trying to do that. It's not saying we want you to plan for people switching over from IC engines to EVs. What it's saying is we want you to plan for communities that are more walkable, bikeable, and that use more public transportation. That's what this $200 million, $80 million, $59 million is. It's not about getting people into ZEVs.

So how do you ensure that those plans that are produced using this money actually is serious about doing community planning and land use planning and funding transportation projects that actually reduce VMT?

Got you.

We're funding it. So what are the metrics that ensure that?

Sure. So the dollars that would go to the community based programs are more like the ones that where we go into communities and say, hey, if you don't have access to transit, how do we get you into a zero emission form of mobility so you can get to where you need to go?

Okay, I'm sorry, that's not what this money is for. I'm asking about this particular budget item, which is about sustainable communities plans and strategies, not about other ways of getting people into EVs. So maybe that's. I mean, maybe if you look at the page, it's the top of page 25, it's the line item, sustainable communities plans and strategies. Unless I'm misunderstanding what that budget item is for.

Assembly Member Freeman Christian Beltran with the Department of Finance, I'm happy to actually go back and take a look at the different metrics that we have to focus on those dollars specifically. I believe my understanding of that funding was more focused on to what Dr. Burgess had mentioned, how to allow folks the different options. What do I mean, different options? It's different options to have a net zero emission impact in communities.

So I think the Administration and the Air Resources Board have kind of taken a broad view of what that funding can be used for and how it's used, but I'm happy to take it back.

So I'm not talking about all the funding going into getting to electrifying our fleet. Sustainable community strategies is a very specific goal and a very specific term of art. So maybe I'm misunderstanding what this is. So maybe I'm getting thrown by what you're calling it. Because when I hear sustainable communities, I think about SB 375 and helping communities plan through Reap 2.0, the money that we had allocated towards planning for transportation projects that reduce VMT and that make for sustainable communities.

Because increasing ZEV vehicles is not a sustainable strategy for reaching zero emissions. It's part of a strategy. But the strategy is also supposed to be using land so that you create options for people to walk and bike and also so that we can get people into public transportation. That's what a sustainable community is. So I'll dig deeper into this. I think maybe either I'm not understanding the way the term is being used here, or there's a disconnect. But I appreciate the answer.

And really the question is that we have asked, through legislation that's now 14 years old for communities as they do their planning, to try to focus on projects that reduce VMT and to focus on public transportation, not focus on, let's just get everyone an electric vehicle and continue getting everybody more cars. It's that we actually want people to drive less, too. That's part of our strategy that's written CARBS and your VMT reduction is in there.

So the only way you can have that 25% VMT reduction that's in your scoping plan is to get people out of cars. You have a VMT reduction, not a switch to electric vehicle strategy. So in order to do that, our communities have to plan for ways of doing that through public transportation, through walking and biking more.

So if we're giving them money to do that, which we are in this budget, how do we make sure that their plans are actually doing that and that they're actually prioritizing projects that do that as opposed to highway widenings and other types of capacity projects? That's what my question is. What are the metrics around that?

So maybe you can, if you can't answer it now, get back to me with how we are ensuring that we are meeting those goals and how we get to that 25% VMT reduction that's in CARB scoping plan. Thank you.

Thank you, Assembly Member Ting.

Thank you, Mr. Chair. Just quick question for CARB. I've been a huge fan of the clean vehicle rebate program, but given the success that we've had last year, as we all know, the Tesla Model 3, the Tesla Model Y, were the two top selling cars in the entire state. Not in that category, but across the board, beating out the Corolla, beating out the Rav4.

So at what point, and again, I don't know when this point is, but at what point would we want to start thinking about shifting some of the CVRP money into the clean cars or some of the other equity programs that are more focused on used vehicles. Part of the challenge with incentivizing used vehicles was their lack of inventory.

Now that we're going to have more and more inventory coming out that's going to be used at some point, I think it would make sense to start shifting our focus into used vehicles.

Definitely. And have always appreciated your leadership on the CVRP program. Glad we're also thinking about the used market. There are a number of programs in place, as you mentioned, that do focus on used vehicles like our financing assistance program and clean cars for all program, which has been legislatively supported in the past, and definitely appreciate that leadership in terms of transitioning the funds. Happy to defer to my DOF colleagues on that, but we too are very excited about the used vehicle market.

And I think as we see regulations like advanced clean cars too. Coming online, we're going to see more and more news EVs in the market, which also means more used EVs.

Well, before we hear from DOF, because I know what answer he's going to give, have you been doing studies, I guess, regarding the inflection points that make sense for used vehicles? I'm going to piggyback off my Vice Chair's comments at some point. But just like we're seeing things grow logarithmically, we're going to probably see the same with used cars.

But what can we do to sort of boost that, especially in many of the communities that as we know, certain income levels don't buy new cars, they buy used cars. So I'm just curious if you've done any research or what kind of research, what your research is starting to see.

Sure. One of kind of the hallmark pieces of work on this was actually legislatively directed. It's our SB 350 report, and it required us to go out into low income communities and really look at what are the barriers to accessing all forms of zero emission transportation, whether it be new used transit. And so what you really see from the incentive programs that we're running is a focus on both the new and used market.

Right now, only about 3.6% of vehicles on the road are currently ZEV, but we know that number is going to grow over time. So we want to make sure that we're able to meet consumers where they are and provide both options.

What were the barriers that you discovered?

Well, I would say that they were numerous, but I think you hit on one of the biggest ones, actually, which is the barrier to the overhead of having a personal vehicle. So that came in multiple forms, both the upfront purchase price, because we all know that having a zero emission vehicle in the long run is actually more cost effective for the consumer. But it was that upfront purchase price we were really trying to get at. And other barriers also included things like having access to financing.

And so we provide a financing assistance program that allows folks to get not only dollars on the hood, but access to financing where maybe they wouldn't have been able to otherwise.

And then what about charging?

Our incentive programs currently...

Oh no, did you see charging as a barrier?

Absolutely. And I think one of the issues that we're trying to get at, too, is recognizing that not everyone lives in the same kind of home. Right? Some people live in apartments, some people rent, some people own their own homes. And so what we've done is within our programs, is packaged up an option for either the state will help you install a level two charger, or we'll help you get access to a charge card that will allow you to charge out using the broader network.

Great. I assume finance will just reiterate what the proposal is from the Governor. Is there anything else you want to add?

No, thank you. Assembly Member Ting, you read my mind.

Just going to CEC first. Thanks for doing the study. It's great to actually have analysis, understand sort of what our goals, where we need to go. Just kind of piggybacking off the Vice Chair's comments. Do you have a sense of with the incentive program, are we using that money to do subsidies, or is that money really going to building charging stations? I guess. And if it's incentives, where is that going? Is it going to utilities? Is it going to independent companies?

Yeah. Thank you. Hannon Rasool, California Energy Commission. If I understood your question correctly, it's the latter. So the way we do it is we use a portfolio approach. We use block grants, which sent an incentive or rebate level at a certain amount for level two and DCFC. That does vary with the power of the DCFC. We're seeing the market wanting higher power, faster charging. So for our next block grant we're launching. We're setting 150 kW floor for that charging.

We also use targeted investments and we run those more directly in house. Those are much more targeted. And across the board, we're focused on equity, but these even more so at harder to reach segments. So last little bit over a year ago, we did one solely focused on multi unit dwellings, one solely focused on rural communities, one solely focused on high mileage vehicles. And the incentive amount that it takes to tip that for different segments does vary quite a bit.

But roughly what are your grant ranges for the targeted?

Yeah. So we would have to come back to you with a number on that, because it does vary quite a bit. Some of the proposals we got, I'll give you the MUD one, for example. Sorry, the multi unit dwelling one, we allowed for onsite level one. We applied for onsite level two and we allowed for close proximity, high power chargers. So within half a mile of the domicile they want to support. Some of the proposals were just level one, some were level one and level two.

So there's a blend. We can certainly disaggregate that for you and bring that information back.

Just out of curiosity, why would you do level one?

It's interesting, we heard from some stakeholders that level one was the cheapest option to provide access, especially for older buildings that have lower capacity in the panel. And so I think there is a healthy debate on should everything be level two networked or above. There are some stakeholders, especially some equity stakeholders, who felt like we should do level one. For now, I will say we're going to launch a second multi unit dwelling, focused solicitation in the next month or so.

For that one, we're not allowing DCFC. We're saying we're going to use other strategies to do fast chargers. We will still allow level one for that, but I could see refining that program over time as well, to not allow level one, if that's the best interest of the state and legislative guidance and all that.

Well, I think level one does work, depending on how much you drive. For someone like me, level one is very hard because of my mileage, but I know I tend to be on the higher end of mileage users. So I think if I was doing my commute before I took this job, a level one probably would have been totally fine. So I could understand the argument with block grants. Who are the block grants going to? Are they going to a jurisdiction? They're going by region? Are they going by type?

Yeah, it's a range. So we're launching two block grants now for the light duty side, and we have one for the medium duty, heavy duty side. On the light duty side, we're going to have one focused on high power, fast chargers. To really get infrastructure out there, we're going to tier those, tier one, tier two, and tier three, and try to get that funding out quickly. As far as the recipient goes, it can be quite a few different folks. We've had EVFPs do be the applicant.

We've had site hosts do it. We've had public entities do it as well. We want to continue to target that funding for the one that we just opened up. It's going to be open for about a month. We're requiring 100% of those to be in low income and disadvantaged communities. And so we might see a different mix of applicants for that one.

And then are you targeting proximity to freeways, highways, or how do you figure out where you want the charging stations to be placed?

Yeah, right now, we're showing from the AB 2127 report that we have gaps, really, throughout the state. And so the strategy we have is block grants should be rapidly deploying this infrastructure to create access for everyone and then targeting our in house solicitations to specific areas. We can continue to refine block grants and target those in a certain way. One thing I want to do from the AB 2127 report. We're working on the second iteration now is we have a lot of this data.

Right. But it's pretty opaque. It's in a 200 page document. We actually want to create a heat map or some kind of GIS tool to show where those gaps are. And as we continue to reduce the gaps in certain areas, we can continue to refine and focus our investments where the largest gaps exist.

Can you give us, is there a way that you can produce a list? We understand who the grants are going to?

Absolutely.

And what's being subsidized?

Absolutely.

And then in terms of this year and then next year, how many charging stations do we think are coming online this fiscal year and next fiscal year?

Yeah, we think we're going to accelerate quite a bit. Supply chain issues have been a concern for some applicants.

Do you have a number?

We don't. We can try to pull that together. For the next 2127 report, we are going to show each year where we need to get and then juxtapose that with where we are. Right.

But you've given out block grants last year, right?

Yes.

I assume because you mentioned we want these built sooner. I would hope that some of the money last year is coming online this year. The charges are coming online this year.

Yes. There certainly should be some that will come on later this year. I think one thing we learned from our old block grant is it was first come, first serve. And so we had some projects that came in and got stuck in the queue because they just weren't ready to build. And it's difficult because we want to provide support for equity communities who might not be as ready to build today. But we also don't want to slow down the progress we need to make.

What we're doing for the next round of block grants is dividing it into three tiers. If you have applied for a permit and applied to the utility, you're tier one if you've done, or you're tier two if you've done neither, you're tier three. And we want to Fund the tier one projects first and get those built as soon as we can.

What about interconnection? I mean, we heard a lot about interconnection toward the end of last year and the challenges around interconnection, especially if you're in communities that are already underserved. How's the interconnection going? And are there things that we need to do legislatively to make it easier to get these charging stations up and going?

Yeah, I mean, I would have to defer to our colleagues at the Public Utility Commission on the interconnection piece, overall, I will say they recently passed either a decision or a resolution trying to set a benchmark for how quickly these need to be installed. I think they said 125 days for the interconnection process, but I'd have to confirm that. But that is an issue that interconnection and energization still is an issue, as well as permitting to get these things built as quickly as we need to.

Yeah. My thought is I think it makes sense to definitely set aside resources, make sure we are investing in communities that will have a longer lead time. But given the demand for the infrastructure, I think it is really important to show results in the fact that I don't think we get brownie points for spending money or getting money on the street unless there's a charging station at the end of it. Right.

So I think the fact that you're coming here and you're talking about all the money we're spending, which is nice, but you can't answer any of my questions about how many stations and where they are, that's concerning. Right. I think we should be very laser focused on that end goal.

Yeah. And we can certainly provide that information to you. It is contained in our 2127 report and some of the ZEV dashboards we have. I can't tell you right now exactly where those are located, but we have that information and we can certainly share that with you. Yeah.

But it's something that you should hopefully be able to go through in your sleep, in my opinion. Because what's the point of putting the money on the street if we don't have charging stations 2, 3, 4 years or never, right. So it's not about the money, it's about the stations that we're trying to buy. Thank you.

Say that again. Sure. So we've go 1, 2, 3. All right. And before we go to 1, 2, 3 as I think we can see, there's a significant amount of interest in this issue. I want to alert everybody. I don't think this is going to be the last hearing we're going to have. So, number one, hopefully that'll help everybody realize we don't have to get it all done right now. But I do want to alert you that we will be coming back.

Obviously, it's a big budget item and it's also a big item, that policy item that lots of members have lots of interested in stuff. So we will be coming back. And I have some significant questions also as we move forward so we will go to assemblymember Essayli.

Thank you, Mr. Chair. And I'll yield to Mr. Isher.

Okay.

Good morning. We have obviously different viewpoints here, but I think there's one thing that we all agree on and echo is that if we're going to spend a significant amount of our taxpayer resources, we expect clear goals and results and have some outcomes that are delivered to the taxpayer. We don't intend to just keep spending money for goals. But let me just ask a couple of questions. I want to understand.

It's. Mr. Rasool?

Yes.

Okay. Mr. Rasool, our goal is to get to zero emission vehicles by 2035 100%. Is that correct?

That's the goal.

Yes, it is.

Well, I'll defer to CARB on that particular goal if they set those. Okay.

And so to get to 100%, we're at. What percent did you say we're at right now?

3.6% of vehicles on the road are zero emission, and we're at about 19% sales.

Okay. So 3% of the roads are zero emission. So in the next 10 years, we're going to go from 3% to 100%. Do we think that's realistic?

Well, we have a package of regulations that are intended to accelerate getting to that goals. And the incentive packages that you have in front of you certainly help.

Okay. So I'll ask you that. So we're planning to spend $10 billion over the next five years. How many zero emission vehicles will that put in the road at the end of that spending in five years? What is the number?

Happy to provide that to you. Assemblymember Sally. So, Christian Beltran with the Department of Finance. So what we do have in front of us right now is just the 23-24 numbers. So any of the funding that goes into budget year, we have the results for that funding that is currently estimated. But we can definitely work with the Air Resources Board as well as the CEC to see the rollout in terms of what we expect in the next five years.

In terms of the budget year, though appropriations, I'm happy to say that of the $729 million that will be given to CEC, 20,000 level two chargers for multi dwelling units, 740 Drayage Trucks are supported, 500 in transit buses are supported, and there will also be support for 15,000 light duty fuel cell electric vehicles.

For the vehicle specific deployment with the Air Resources Board, we estimate of the 412 million being appropriated to the Department, or, excuse me, to the Air Resources Board, 8,500 vehicles will be deployed as part of the Clean Cars 4 All Program.

Okay, sir, I don't mean to interrupt, but you're talking about thousands or tens of thousands. We have millions of cars on the road.

Absolutely.

Doing a few thousand cars here or there is insignificant. It's not going to get to 100%. So I'm just observing that that goal may not be realistic, and we should be realistic with the voters and the taxpayers. And what is achievable? I believe in zero emission vehicles. I have one, and I would love for everyone to have one, but we have to be realistic with the market factors. Let me ask you, what is the role of hybrids in our future here?

I mean, there's a lot of talk about zero emission vehicles and almost no conversation about hybrids. That's a significant part of the economy, and it takes a lot of carbon emissions off the road. So I'll ask you, Ms. Fergus, what is the role of hybrids?

So, in our incentive programs, we do also promote the use of plug in hybrid electric vehicles and offer incentive amounts for those, too. We recognize that right now a zero emission vehicle might not work for everyone. If you're someone with a longer commute or has a further way to go to travel, a plug in hybrid might be more than appropriate.

But they'll be illegal by 2035, correct?

No, that's just for sale.

Just be illegal to sell it. Okay. And then I want to notice, Mr. Vasil, it'd be illegal to sell it. Yeah. Mr. Vasil, you said that 50% of greenhouse gases come from cars. Is that correct?

Yeah. And I'll defer to CARB. They do this analysis, but approximately 50% of the greenhouse gas emissions from the state come from transportation or upstream fuel production.

Okay. And cars have to be charged with electricity, correct?

Yes.

And what percentage of our electricity comes from non renewable energy?

We are well on our goal to meeting.

That's not my question. What percentage of our energy comes from nonrenewable resources?

I would have to check with my colleagues who assess that within our energy assessment division. But I will note that we do have a state goal that we are moving towards to get to 100%.

You're at 66.4% according to Energy.CA.Gov. Is that your agency? Energy, Department of Energy?

We're the California Energy Commission.

You're the California Energy Commission? Is this not your website?

I'm sorry, could you repeat that? You said Energy.CA.Gov

Yes, that's your website. Okay. So your website has a graph. 66.4% you have is thermal and non renewable energy. So the only reason I bring that up is what is the government's role in this? The market, I think, will take care of cars and supplies. The market will deliver what people want. Teslas are the number one selling car right now, not because the government said so, but because people want it. The market will make cars that are desirable.

What the government, I believe, should focus on is having reliable and cheap energy. That should be your job. How do we make electricity cheap and reliable so that when people buy these cars, they're not going to go bankrupt charging them? Our electricity bills are 83% higher than the US average. 83%. And part of it is this push to get to 100% renewable energy. I understand the goal, but I think we need to be considerate about how quickly we transition and the effect it has on costs.

And this is outside the scope and won't go in detail, but I really think we need to have a serious conversation about nuclear power because in the portfolio that you have, renewables are still about 20% when you look at solar and wind. And if we really want to get to a climate policy where we have zero emissions or zero carbon, we need to look at nuclear. So I'll end there, I think, focused on reliable and affordable energy and let the market do the rest. Thank you, Mr. Chair.

Thank you. We have lots of interest in this topic, and I know Assemblymember Friedman wants to respond, and I'll let her respond. And then I want to make a comment about what I hope the goal is of these Committee hearings all the time. Go ahead, Assemblymember Friedman.

Thank you. I just wanted to add to the discussion and respond to my colleague and I agree that the cost is really important. And we certainly want to make sure that as we transition to clean energy and to cleaner cars, that we do it in a way that is affordable to the public. There's no question about that. And I appreciate the concern.

I do want to say, though, when I went to one of the climate cops and was able to talk to industry, and when I talk to industry here in California, as I often do, having a clear market signal and a clear understanding of what the future of regulations is, a big part of their funding for their own R&D and for their own production.

And when they invest in a transition from a type of engine that they've been making for 50 years to a brand new type of engine, they also want to know that they're going to have a very large place to sell that.

And knowing that California is going to have the regulations in place to say, this is what you're going to be selling here, and everyone will buy it because they don't have another option, is a huge reason why they put the amount of money R&D into that transition. They want the comfort to know that if they're going to put their own capital behind transitioning their whole production line, that they have a customer at the end of the day.

And so what California's done is actually very friendly to industry, which says, you're doing the right thing, you're transitioning, do it a little faster. And we're going to be there to make sure you have customers for these vehicles. So I think it actually is the role of government to ensure that. And that's the single best way that we can bring costs down for consumers, because the reason those vehicles were more expensive a few years ago is because they were making so few of them.

So you lose that economy of scale. But once the assembly lines are cranking out thousands of EVs, we are seeing what already the result of that, which is the prices dropping like rocks and the car companies competing against each other to bring those cars to the market for that very price sensitive customer. So Tesla's had the market because they're aspirational and wealthy people buy them. But now we're seeing cars like the Bolt, Bolt, Bolt, Bolt.

I still drive a 15 year old Prius, so I don't know what's actually always of the name of the cars, but they're out there now and people who are medium and lower income are able to buy them along with the used vehicles. And that's because of Governor Newsom's very ambitious and aspirational goals that's actually resulting in bringing the price down for people, not raising the price.

Thank you very much, Assemblymember. So I want to say this just about our process, and that is, I think it's very appropriate at these Committee hearings to have healthy philosophical points of view expressed. And we just had that here on both sides. And I think it's very healthy for us to be able to ask questions and sometimes difficult questions of the Administration and point out things that we are concerned with.

But what I want to emphasize is that we can do that in a way that does not have anybody feel like it is a personal either interruption or attack. And so I'm going to ask all of us on this Committee, when the Administration is answering a question, that we let them complete their answer and not interrupt or talk over them.

And we try to keep this so it is at as professional of a level as possible because we actually are all trying to do the same thing. We're trying to do good government. We have different views about what is good government, but everybody intends to do that. But we'll be able to do that much better if we keep it very professional. And I'm going to insist on that. And I just wanted to get that said here early.

That being said, I'm going to get to my questions if I can. And one, I just want to clarify one of your answers. You talked about 1.2 million charging stations need to be out there. That's total charging stations, private, subsidized, everything else. We're trying to get to the 1.2 million, right?

Yes, that includes everything except for those in single family homes.

Okay. And then what percentage of the 1.2 do you anticipate we will have to incentivize to get to 1.2? Because some of these are being built, obviously without incentives.

Yeah, that's a great question. And it's something we do put a lot of thought into. The way we're thinking about this currently is that, and we're calling out our little theory of change is that the annual sales are great, but really what's on the ground today on the road that is using those chargers. So we have enough utilization to make those profitable for the private market. Right now we're seeing about 50% of what's being deployed is from private investment.

Again, a large portion of that is Tesla. So that could be a little bit misleading. Federal government has not put a bunch of money into it yet. They're starting to. A lot of the early infrastructure has been from utility ratepayers and from public investment, if you exclude the Tesla piece. But when we look at the theory of change and we're developing to put numbers behind this, is you have to look at how many vehicles are on the road and using those chargers.

But more importantly, of the percentages on the road, how many of those don't have access to single family home charging? I live in a condo. I have a Bolt. I primarily charge at home. I am not the utilization those chargers need out in the field. So we're building that theory and structure out to better understand that question, and we'll start putting numbers behind it. But I don't have an answer for you today on when we can stop funding it.

Good. Thank you. My guess is we'll always not have all of the answers because this is such a flexible situation that we have and it's constantly evolving. My second question, I know that the Energy Commission in particular is concerned about creating stranded assets and so trying to fund things that aren't going to be used. And at the same time, the things that I expressed earlier in this Committee Hearing about trying to keep various options open as the technology is still evolving and we're at this early stage.

So it's not 100% clear to me. Is the Energy Commission committed to a hydrogen heavy and medium duty quarters connecting the ports to the freeways, as well as a battery charging quarter? In other words, will we have a hydrogen highway freight quarter and port connection system and an electricity one so that we have both of those technologies? And before I take your answer, I'll preface this by saying it. I think it's very clear that on the light duty side, battery technology is leading the way.

We probably should still have some hydrogen just for the competitive purposes of that. But on the heavy duty side, it's not clear for sure where this is going. Tesla is now testing their heavy duty semi, and we've heard about that, but it takes 2 hours for that truck to charge and 2 hours. How do you build truck stops that you could have trucks that take 2 hours to charge rather than 10 or 15 minutes to fill up?

Battery technology is having challenges in cold climates, and we certainly have to get over the Sierra Nevadas and all of that. I'm not certain hydrogen, what the issues are with hydrogen. So trying to. In the heavy duty side, I think the jury is still out in terms of where we're going to go.

And so I would hope that the CDC would be open to try to that philosophy even more so in the heavy duty side than the light duty side, where I've seen that being the case. But could you answer the question about is the CEC committed to this freight quarter and port connection being both battery and hydrogen connected?

Yes, we definitely are. We're actually looking at the result of Senate Bill 671 and the California Transportation Commission. We want to release a solicitation that'll be open to both electric and hydrogen and target those five corridors first. Because we agree with you, I think we need to invest in both those now, see where the market takes hold, and then maybe we take a certain direction over time. But we need to be investing in both electric and hydrogen for Heavy Duty Goods Movement.

What are you hearing from the ports in terms of their interest on hydrogen versus battery? Fuel cell versus battery is probably a better way for me to say it.

Yeah, it's a mixed bag. It's a mixed bag. There are some that feel like hydrogen is definitely the right path for them. There's others who feel like electric is the right path. I think ultimately, because there is so much equipment and transportation that comes in and out and on ports, it could very likely be a mix. Actually, I'm not sure that one may win.

Right. Yeah. I could see the dredge trucks that are doing short and steady, and they're going to be parked that night, always in the same spot. Could be a different kind of technology, and they don't have as much of a weight, and the long distance haulers are going to need a different kind of technology and different access to fueling stations, et cetera. You were asked a question about how much money for ports. I heard your answer, but I want to try to just clarify.

You talked about $400 million being cut with the cuts to ports, but you thought that with the federal funding out there that you'd be able to replace that. Am I correct there? And that's more Department of Finance, I believe. Right. In terms of that.

I'm sorry, Assembly Member, you caught me with that. Would you mind just repeating that?

With the cuts to the ports, how much do you anticipate going to the ports from the competitive funds? And in your answer also, your answer dealt with, there are federal funds out there also, and I'm not sure whether it was, which of you two, whether it was CEC or yourself that answered that question, but do we anticipate the port funding with the cuts will be replaced with the competitive grants and federal funding?

I would say that it's the administration's perspective that we're definitely going to see a lot of federal funds come in from the IIJ and IRA. We are very competitive in that space. Whether it's the 100% backfill from Federal Government, I'm not sure. We could say 100% will be backfilled by federal funds, but we certainly can assume that of the 27.8 billion, 400 million is a reasonable level of funding we could see come through the Federal Government.

Thank you very much. And then I just want to comment. LAO's presentation, following the historical approach that we've had of trying to Reserve as much flexibility as possible, is certainly, I think, one that makes sense. I would like to get a bit of a response.

The talk about does that cause for CEC's planning and for carbs planning, does that cause a problem holding on to flexibility. You know? We talk about adopting language, the additional GGRF fundings, which programs, et cetera, does it cause a problem for you guys in terms of your planning, if we hold that flexibility open for the Legislature?

Well, I believe that the GGRF spending is again separated by the continuous appropriation side. So that is continuing to show the commitment and plan in terms of the different investments that we have for high speed rail, LCTOP, TRCP. So those commitments will continue in terms of the discretionary amount of funds. That's a continuous discussion that we have with the Legislature usually every year.

So in terms of planning, I think it actually helps the Administration plan as to where we are going to be receiving funding for the very important zero emission vehicle space by putting those dollars aside for that purpose.

Great, Thank you. I think that'll be an ongoing conversation as we constantly have this tension about trying to hold on to legislative flexibility for the future funding, et cetera. Right. Yeah, go ahead.

Mr. Chair, I hope you don't mind. You caught me a midthought earlier, and I just wanted to clarify about reading off the reductions. I believe I may have read the incorrect amounts, but can I go back on the record and correct those values for you? Okay. Yes. So of the reductions in total, the Air Resources Board for the Clean Cars 4 All would have about zero, in terms of reductions. For the Energy Commission, they would have roughly about 210 million in 23-24.

For the ZEB Fueling Infrastructure Grants. For the, let's see, air resources for transit buses and infrastructure, it'd be roughly around, in 23-24 around 140-130 million for transit buses and infrastructure. For the California Energy Commission, it would be around 40 million. For the school buses and infrastructure, it would be for Air Resources Board, 135 million. For the California Energy Commission, it would be 15 million 23-24. For the clean trucks and buses and off road equipment, for California Energy Commission, that is all backfilled by GGRFs.

No cuts there. And then for there Air Resources Board for Ports and Energy Commission for Ports, it would be $100 million total there. And then for the community based plans, it would be $140 million in 23-24. For Air Resources Board Emerging Opportunities, it would be $35 million in the budget year. And for Energy Commission for emerging opportunities, it would be $35 million there. And then for the Air Resources Board, for the charter boats and compliance, it would be 40 million in budget year.

But we replace that 40 million in the out years with $20 million of backfill from GGRF.

And if it's helpful for the Department of Finance to go back and let everybody know that we will at these Committee Hearings ask for that listening each time. So you can be prepared for that. Any other questions by Committee Members? Right, go ahead.

I was going to wait to the next panel, but I think the panel is the same. So let me just quickly go to real quick. On the prepaid cards, how much is being proposed to give to ZEB drivers to charge their cars? And in terms of the prepaid cards and the contract, who is the contract with? And does the contract specify an amount that is allowed for fraud?

Thank you so much for the question. So I can get at most of that, but we'll need to circle back with you on some of it. So I would say for the prepaid cards, how much you get is kind of depending on how much you can or are eligible to stack.

So your lower bound is 2000, your upper bound is 4000, $4,000 in terms of the charge card represents about two years of charging, which stands in stark contrast to how much one would spend on gasoline in that period, which is about $10,000. So in terms of your contracting question, I'm happy to circle back on that. But as you know, CARB does not stand for fraud as the agency that oversaw VW. If you know a fraud, let us know, because we will follow up.

I'm not saying that learning from the Middle Class Tax Refund Program, there were credit cards stolen and it was fraud. And so who is the contract with to deliver the prepaid cards for the assistance you're providing here?

Right. I can follow up with you on that. I'm sure it's a subcontractor to a subcontractor. So let me follow up on that information. And I will circle back.

So you don't know who delivers your cards?

Not in this moment, but my team does.

Is the contract signed?

Yes

It's a contract signed. Who with who?

I don't personally know that. I don't have it in front of me right now. But I'm happy to circle back with you on that.

That's a very disappointing answer. Thank you.

We're going to open the roll back up here, and then Assemblymember Friedman has a question, and then we'll go to the presentations on issue two. Would you open the roll, please?

[Roll Call]

Thank you very much. And to help Assembly Member Friedman, and with her schedule, we're going to let her ask her question on issue two and then we'll have the presentation.

Thank you. I appreciate that. I'm assuming it's the same panel, same people. Okay. So I am apologizing. I'm going to skip to the next topic because I do have to go to other meetings. So I do want to circle back. First of all, I would love maybe some information. I was asking about the program, the sustainable communities plans and strategies program at the top of 25.

And my transportation staff, who's a lot more in the weeds on this than me, is also confused because we think that might be a different program that has the same exact name as a similar program. So I wanted to just see if they really are two separate programs that Fund two separate things or not. So that would be good to have that follow up.

But I wanted to jump ahead to the CARB scoping plan that's anticipating or basing some of its emissions reductions on a 25% VMT reduction. And first, let me say that I think that that's a very important goal, and I see that as a goal and aspirational and a target. But just because it's a goal doesn't mean that we don't have to take very real steps in trying to achieve it. Certainly we understand that we can't get to that just through electrification.

It's going to take a while. It's not sustainable for other reasons and that we have to do better with mobility, for equity reasons, for public health reasons, for better land use reasons, for creating housing reasons, lots of reasons. So my question is, how do you anticipate meeting that goal?

And this may require, I understand, some follow up, but do you have a specific roadmap as to how we meet that goal and does it include what projects we Fund in the transportation space and also how we use land? And if so, how does CARB interact with the entities that Fund transportation projects and that do land planning to make sure that that goal is realized and done consistently throughout the state? That's my first question.

Great. Thank you. And happy to have a follow up, of course. So we see our roadmap really as the state's scoping plan, which CARB contributes to, but it includes, I think, those kind of roadmap milestones that you're looking for and includes different policies like encouraging infill development, encouraging active transportation that kind of thing. So we really, as a state and as all the agencies working for the state, look to that roadmap to help guide us.

But I think you're hitting on something really important, which is that the scoping plan itself and those VMT goals are really, as you said, aspirational. But I think recognizes that all of us have a role to play in reducing VMT and that it's not necessarily the responsibility for creating the built environment that we live in currently and the transportation patterns we all engage in currently.

There were a number of factors that led us to this point, and there's going to be a number of agencies, both state and local, contributing to these VMT solutions.

Thank you and I've been trying to have a very serious discussion, not just through discussions and hearings, but also through legislation, to make sure that the projects that we Fund in the transportation space align with these goals. And it's not been a particularly successful conversation to this point.

So I think we have a lot of work to do, and I hope that we can work on that so that we make these goals real and that we look at all of our policies and make sure that this is where they lead and that we can't allow us to fall into the trap of saying, well, these are our goals, but we're going to do them in the future at some point, that we're going to continue to allow projects that are in the planning stages or even and sometimes further along that we know are counted to these goals that actually will increase VMT to move forward?

That we've got to find a way of trying to funnel the interest and the prioritization towards things that really reduce VMT? We also need to make sure that those projects really do result in that. If it's an active transportation project, for instance, how do we know that it's really in the right place and done in the way that's really going to encourage people to use it? And we need to have some metrics behind that.

Are we, for instance, allowing agencies to paint sharrows in streets when we don't really know if that actually makes people feel safe enough to encourage an increase in cycling? That's one example I would give. And if so, where are our policies to actually direct money towards the projects that pay the biggest dividends? Are we prioritizing the bicycle infrastructure that actually connects the things that we need to connect, or are they bike pass in a park?

So we need to make sure that our policies really help you achieve those goals. And I think I'd like to see a lot more of a conversation about that. And I'm going to ask the next two questions, just even though they're separate questions, I'm just going to get them out there. The first one is how do we achieve this reduction without having a serious conversation about pricing?

And when do we have that conversation to know that we can still pay for our infrastructure, pay for the repair of our existing roads and our infrastructure if we're reducing VMT? When does pricing come into this and what's the timetable? And how does CARB get us there? And then lastly, what are the hurdles right now in achieving these goals as far as you see them? Where are they not being met? Is it at the MPO level? Is it at the state level?

Are there barriers out there? And I'll just give you an example. I was just at Calcog last weekend and there's a lot of agencies in the state and a lot of cities in the state that are really trying to do the right thing. They've got the projects on the books. They're trying to move them forward and they'll say it's going to cost us $50 million to do sequel planning for a bike path in our community. It's just too expensive or whatever the barrier is.

They have their barriers. And are you sitting down with them to see what they are, to see if they make sense? Does that make sense? And are there ways of streamlining these better projects that we know are more environmental, that meet our goals so that we remove the barriers for agencies that are really trying to get us there? So those are my two last questions.

Well, I'll just say, really appreciate your interest in leadership on this topic. We're always looking for ways to make all of our programs better. So welcome the conversation. I'll just touch on a few of the themes you hit on. You had asked about pricing. I'll defer to our ledge office on that, but I believe that to do something like road pricing, that might require some activity on the legislative side, that's certainly not my area of expertise.

But that's what I picked up in the ether at least. The hurdles as I see them, I'll just say, as I alluded to before in our scoping plan, I think it's really recognizing that the solutions to VMT really need to be multifaceted. And a lot of the solutions that you were pointing to had shared responsibility at both the state and local level, which is challenging, right? Because it's not just one agency that can help solve the problem.

Thank you.

All right. Thank you very much. We will now go to issue number two, and whichever Administration witness would like to go first.

Good morning, Mr. Chair. And Members David Evans with the Department of Finance. I will present on the reauthorization of the Clean Transportation program, the Air Quality Improvement program, and the Enhanced Fleet modernization program. Collectively, these programs, they support the state's greenhouse gas reduction goals. They provide grants for zero emission vehicles fueling infrastructure. They provide low interest financing so truck owners can obtain cleaner vehicles, and they also help low income earners who have higher polluting older vehicles, and it helps them switch towards cleaner transportation.

The revenue collected from these programs, which equates to approximately about $173,000,000 annually. They support low income and disadvantaged communities that are experiencing disproportionate levels of air quality pollution. The proposal is to request an extension of the vehicle registration and the smog abatement fees which support these programs. They're currently anticipated to expire on January 1, 2024. The request is to extend these fees until June 30 or July 1 of 2035 and to make minor updates to the clean transportation program.

With that, I would like to pass it to Director Rosool at the Energy Commission to explicate a little bit more on these programs.

Good morning. My name is Hannon Rasool, Director of California Energy Commission's Fuels and Transportation division. I will be presenting the opening statement on behalf of the Energy Commission and the Air Resources Board. Both agencies are here to answer questions. Transportation does account for 50% of the greenhouse gas emissions in the state. It also is a significant cause of local air pollution in our communities and negatively impacts public health. We must continue to address transportation emissions, especially because they do disproportionately impact low income and minority communities.

California State agencies are committed to supporting the adoption of zero emission vehicles in an equitable manner that creates access for all Californians. The transition is occurring, and we need to ensure that it works for everyone and we do not leave anyone behind. We have made significant progress. The ING Commission and CARB have made meaningful investments with the funds that have been entrusted to us, with almost 19% of new sales in 2022 being zero emission vehicles. But there is still work to be done.

As you heard, only about 3.7% of the vehicles on the road today are zero emission vehicles today. I will give an overview of our request to seek reauthorization and funding for these three important programs. The Clean Transportation program administered by the Energy Commission, the Air Quality Improvement program administered by the Air Resources Board, and the Enhanced Fleet Modernization program, or EFMP, administered by CARB and the Bureau of Automotive Repair. We are requesting an extension of these programs and fees until the summer of 2035.

Let me first talk about the clean transportation program, and I'll go to the other ones as well. The CTP provides about $110,000,000 per year, primarily for zero emission vehicle infrastructure, and this is electric and hydrogen infrastructure for passenger vehicles and medium duty heavy duty trucks and buses. We are seeking minor modifications such as adjusting the language to align more with our zero emission state goals, and the CTP has been instrumental in meeting several state goals.

We have invested approximately half of our funds in Low income and disadvantaged communities. We have made significant investments in electric and hydrogen infrastructure to support light duty vehicles. We have increased our focus on trucks and buses as those markets continue to mature. We have funded over 25 instate manufacturing projects, supported over 20,000 trainees, and we've leveraged significant nonprogram funds towards these goals.

We recognize the Legislature has made significant investments towards ZEBs and ZEV infrastructure, and we're grateful for the recent General Fund investments and we appreciate the federal investments which are occurring as well. To put those in context a little bit, we'll get about $384,000,000 over five years in formula funding for zero emission vehicle infrastructure, and we will compete for the $2.5 billion pot which is going to be competitive throughout the nation. However, the full and equitable transition to ZEVs will still take time and state investments.

We do need stable and ongoing investments to support Low income households and also those smaller independent owner operators of small fleets to provide context. We do have about 80,000 chargers today and we will need 1.2 million by 2030. We anticipate having a gap of about 900,000 based on the current funding we have that we'll need to bridge and also continue to invest in medium duty heavy duties of infrastructure.

And again, the good news here is we are on our way to reaching the 250,000 charger goal slightly after 2025 and the 200 hydrogen station goal as well for light duty vehicles. We're committed to meeting those near term goals and also long term goals through a portfolio approach. We've already talked about that portfolio approach, so I won't belabor it here in the interest of time.

But we do make block grandstand targeted investments as well, and we will continue to make those investments where the private market may not otherwise act. So if this program extended, the CTP will continue to support those infrastructure investments in state manufacturing, workforce development, and also fuel production. We go through a really important public stakeholder process because we do want to be responsive to stakeholders and evolving technology and market conditions. That's informed by a diverse Advisory Committee and disadvantaged communities advisory group.

So next, let me talk about the Air Quality Improvement program, or AQIP, and the Enhanced Fleet modernization program, EFMP. AQIP is administered by CARB. It receives about 30 million a year and supports the deployment of cleaner combustion and zero emission vehicles and equipment. It fills the gaps in CARB's incentive portfolio. For example, the equip funded Truck Loan Assistance program provides financing opportunities for small business truck owners who fall below conventional lending criteria and are unable to qualify for traditional financing.

Since program inception, that program has supported nearly 100,000 cleaner vehicles. Next, the EFMP, or the enhanced fleet modernization program that receives about $33 million a year. It provides incentives to Low income individuals to scrap high polluting vehicles and replace those with cleaner alternatives. Removing these oldest vehicles from the roads is a key part of the state's strategy to reduce smog forming emissions to achieve health based air quality standards. There's two components to that program. One is administered by bar.

It's a scrap only option which offers eligible low income consumers a $1500 incentive and this accounts for about 90% of that funding. To date that is supported about 100,000 vehicles scrapped. CARBs portion of it is the scrap and replace program which provides low income motorists with a retirement incentive and additional compensation towards the purchase of a cleaner hybrid or zero emission vehicle.

This is run through air districts with vouchers valid at about $4,500 towards the purchase of a newer cleaner replacement vehicle or towards transit or other mobility options. CARB coordinates is funding closely with its related clean cars for all funding and to date they've supported about 3700 vehicles retired and replaced. In conclusion, we're very proud of the work that we've collectively done in California with the guidance of the Legislature to advance zero emission vehicle adoption and we strive for equity across the board.

We also want to ensure that California continues to be the leader in jobs of the future. We have about 55 instate ZEV related manufacturers, 70,000 ZEV related jobs, and more than 11,000 ZEV manufacturing jobs in the state. We also leverage significant other funds. So across these programs we have leveraged significant non program investments. For every $1 we invest, we leverage over $1 in non program funding and transitioning California's vehicle fleet away from fossil fuels is a long process and it will take time.

So this is why we're asking for stable, consistent and predictable public funding to support and extend these programs for a bit longer, and I truly believe that we are at an inflection point and we really need to make these investments now. Thank you.

Anything else from the Administration? LAO.

Thank you. Sarah Cornet with the Legislative Analyst Office. So I'll refer to the fees that Fund these programs as AB eight fees, which is how they're often referred to, referencing the Bill that reauthorized them in 2013. The sunset date on the fees that Fund these programs is offering a good opportunity for the Legislature to consider what programs are being funded with them and if the Legislature wants to consider using the revenues for other purposes.

So, though these are relatively modest, these fees do represent a tax and are constitutionally considered a tax and a direct cost to households. Vehicle fees have also increased significantly over the past decade, so it's worth considering whether their cost merits the benefits, and these fees were last reauthorized in 2013.

Since then, the state has adopted new, ambitious greenhouse gas reduction goals and has also committed significant funding to support zero emission vehicle activities through the recent zero emission vehicle package investments and also through the Greenhouse Gas Reduction Fund, which is historically funded programs that support zero emission vehicles as well. So extending AB eight fees could provide a reliable source of funding and help to potentially offset potential budget reductions.

But the reauthorization does offer an opportunity to consider the highest priority for the funds should the Legislature reauthorize the fees. The funding could support a different mix of clean vehicle programs, other climate activities, or a different set of efforts entirely. The Legislature could also consider restructuring the fees to try to reduce some of the burden they place on low income households. So this could include potentially using a more progressive structure that bases the fee on the value of the vehicle.

The fees could also be extended to medium and heavy duty vehicle owners, as this category of vehicles currently receives about half the benefits from the fee revenue, while the fees themselves are paid by passenger vehicles. And overall, we think the Legislature should consider whether these fees are still necessary in the context of other funding and regulations.

And should it choose to reauthorize the fees, consider its highest priorities for the use of the funds, which may include a different mix of programs than the ones currently being funded. Thank you.

Thank you for the testimony. Before I open up to Member questions, I do want to say that I appreciate the administration's interest in sort of a clean reauthorization of this and so that you have the steadiness of planning. At the same time, I would be remiss if I didn't point out that there's significant Assembly Member and Assembly sort of interest in taking a look at this.

Certainly this is an issue that has quite a bit of conversation going on with Assembly Members, so we'll get that out there. Do we have any questions or comments, Mr. Assembly Member Essayli.

Thank you, Mr. Chair, and good morning again. So we have a representative from the Legislative Analyst Office. Thank you for being here. I read your report and I was a little surprised that AB eight was passed as a fee and not a tax. Is that my understanding?

So AB eight is often referred to as fees. However, they are a tax and constitutionally are considered a tax. I think it's more of like a colloquial decision to often refer to them as fees, but they are a tax.

Was it approved by two thirds of the Legislature?

The last reauthorization was approved by two thirds of the Legislature in 2013.

Okay. And is it your position if we were to extend these fees, they would require another two thirds vote of the Legislature?

That's our understanding, yes.

Okay. And does the Administration agree with that assessment?

David Evans from the Department of Finance, yes.

You agree it's a tax?

No, I agree that it is a fee. It is classified as a fee, and it is a fee that is moderate. The total amount that is collected is about, at most $18.50.

With all due respect, I don't think there's a moderate exception to the constitutional requirement for taxes. So can you articulate to me why the Administration views this as a fee and not a tax?

I can ge back with your office on that.

I'd appreciate that.

Assembly Member Rachel Ehlers with the LAO. Maybe just a clarification. I think that part of the terminology issue is that the first time that the fees were authorized was before the ballot Proposition that drew a tighter description around what is a fee and what is a tax. So I think that's why they were originally in statute referred to as a fee.

And then forgive me for not remembering the number of the Proposition that made that kind of more firm distinction, that the revenues had to be used explicitly to enforce the regulation if it were to be considered a fee. So I think that's kind of where it became a tax, if you will. And so I think now because of the way the revenues are used, it is kind of thought of as a tax and would require two thirds vote.

I appreciate that clarification. I think it's important that we have clear terminology and understanding of exactly what we're dealing with. I mean, taxes and fees. It's an important distinction. It's a higher threshold to get through the Legislature, and I think we have to be transparent with our constituents on what we're doing in the Legislature. So I appreciate that. And I look forward to the administration's explanation of why they disagree with the LAO, which I find their report and analysis to be quite sound.

So I appreciate that. Thank you, Mr. Director. I apologize. Rasool, you mentioned again that 50% of greenhouse gases come from cars, and that's where a lot of your focus has been. Does that account for. Well, let me ask you this. Are all carbon emissions equal in your viewpoint and what goes in the atmosphere? Do you distinguish among carbon emission?

I would have to defer to CARB on the carbon piece, but I will just reiterate that these emissions from transportation are a significant cause of cancer, public health issues. So it is something that we are committed as state agencies to address.

No, I understand that. I guess my question is, is all carbon emissions equal, or do you differentiate? My point is, are you considering wildfire emissions in that percentage? Because, do you know wildfires emit a lot of carbon?

I'll defer to CARB on how they calculate that.

We have recently begun incorporating wildfire emissions into our scoping plan and the 50% number, it's of greenhouse gas emissions. So I think maybe what you're getting at is the difference between carbon dioxide and methane, and that's all kind of rolled up into this 50% number.

Is your position that wildfire emissions are not greenhouse gases?

No. In fact, wildfire emissions are baked into the scoping plan, which looks at the carbon emissions and greenhouse gas emissions from the state as a whole.

So when you consider the carbon emissions from wildfires in the last 10 years, is your position still that 50% of greenhouse gases come from cars, or do you now revise that number?

I think there's a few ways you can slice and dice this if you choose to do so. But again, I think the important factor here is that transportation emissions are a significant cause of the climate crisis and public health. So I think you can certainly slice it in different manners if you choose to do so. But this is still an area that we are committed to solving.

No, I appreciate that, but my question isn't one of opinion. It's a fact. I mean, if you look at the carbon emission from wildfires, it's massive and it's wiped away about over 10 years of the efforts we've done to lower our carbon emissions. So I just don't think it's accurate to keep saying that 50% of the emissions are attributed to cars when we know wildfires have contributed far more than that.

It's important that we're honest in these conversations because if we're serious about dealing with climate and carbon emissions, we have to be honest and transparent and science based. Right. I mean, that's important. I'm so happy you said that CARB is beginning to incorporate wildfire emissions. Will the Administration take a look at AB 397 and provide a position that is my Bill, to require wildfire emissions to be included in the scoping plan? You've indicated that that's the direction CARB is going.

So I really appreciate if you take a look at that and provide your position, would you do that for me?

I would be happy to take a look at your Bill.

Thank you. Appreciate it. I don't have any more questions Mr. Chair.

Thank you very much. If there are no other questions or comments, we'll move on to issue three.

Mr. Chair. Mr. Chair, if we could come back, please. Jeff Bell with Department of Finance. I just would like to address the earlier question that we have at the Legislative Analyst Office, in our office on whether we disagreed or not on that last topic that you had brought up, sir.

On the taxes?

On the taxes, yes. I just wanted to be clear that it wasn't whether we disagreed with them or not. It was whether we would indeed take a look at that issue or not. We will come back to that issue and somebody from our staff will get with your staff and get back on that topic with you.

Okay.

And I wanted to be clear on that and make sure that you didn't have it appear that we had a disagreement with the legislative analysis officer, that it was an unclear statement.

I appreciate it. It wasn't a trick question. I just want to understand if the Administration agrees with the analysis and the viewpoint of the LAO. And I appreciate that commitment.

I just wanted to make sure that was cleared for the record.

Thank you very much. We're now on to issue three and we have a new panel coming up.

All right.

All right. So, administration representatives, if you'll be sure to identify yourself at the beginning of your comments, and we'll let the Administration decide who's going to go first.

Good morning chair and members Brandon Merritt with the Department of Finance. The administration proposes trail bill language that modifies statutory requirements to align CARB's EVSC standard with recently published federal EVSC standards by the Joint Office of Energy and Transportation. This modification will provide consistent requirements that electric vehicle service providers and EVSC manufacturers must meet, as well as ensure consistent consumer experience nationwide.

Making this change as soon as possible will give EVSPs and EVSC manufacturers more time to prepare to take advantage of the federal funding and therefore supports California's deployment of federal dollars to realize the environmental and economic benefits of investment as early as possible. Quickly implementing funds provides greater assurance that the rapidly growing market for ZEVs will be supported by both state and federal investments and infrastructure and advances the state's greenhouse gas reduction goals. And with that, I'll turn it over to my colleague.

Anybody else from the administration? Go ahead.

I just wanted a, Christian Beltran with the Department of Finance. Just want to say we also have staff here, Jennifer Gress from the Air Resources Board, to answer any questions that the committee has.

LAO's office.

We do not have comments or concerns about this proposal. Thank you.

Great. We have committee members with any questions?

I have two very quick questions. What percentage of major credit cards and debit cards in circulation in California right now are tap enabled?

Good morning, Mr. Chair and members. Nice to see you. Jennifer Gress with the California Air Resources Board. The most recent data that we have available is about two years old and is currently reflected in the agenda. But to reiterate, in the fourth quarter of 21, Visa reported about 15% of transactions were through tap cards, and MasterCard reported that within 24 months of their report in 2021, they anticipated about 25% of transactions. We currently have a contract in place to update those numbers.

We anticipate that report sometime early this summer. We do know that the deployment of tap technologies is expanding rapidly.

15% and 25%. What is their projection in terms of when they anticipate essentially all cards being tap enabled?

We were not able to get that information from Visa and MasterCard at the time that we were asking those questions. What we understand from that know full deployment of new car technologies can take anywhere from three to seven years. But as I mentioned, we do have a contract in place to update our numbers. So we have the most current numbers possible.

And are all new cards tap enabled, or are they still issuing cards that are not tap enabled.

Our understanding is that for credit cards, the major issuers are rolling out tap for all new cards. That may not be true, though, for debit cards and issuers who may be kind of less major.

So the only thing I want to opine is that the issue of moving to tap only cards, the question is who's left behind and will it be the most disadvantaged or the people that are going to have the greatest challenges? Maybe because they don't update their cards very often, or because with debit cards they're uncomfortable with the tap enabled side of it, et cetera. That's the one comfort level I have.

At the same time, overall, we should be able to get there, and I think the Europeans are further along than us in terms of going this direction, so we should be able to get there. And the question just is in the transition side of this. Any other questions? All right, we want to thank you very much for this and we will move on to issue four. Carbon Greenhouse Gas Reduction Fund spending plan and a general overview on this one. We do have a few questions on.

I'm sure good morning chair and members. Brandon Merritt again with the Department of Finance. The administration proposes a $2.8 billion cap and trade spending plan in 202324 which you can find on page 46 of your agenda. This spending plan is based on the estimated Greenhouse Gas Reduction Fund, or GGRF, as is known, revenues that are a result of auction proceeds from four quarterly auctions per fiscal year and assumes all current and advanced allowances sell at the floor price.

Similar to historical practices, this methodology is used by the administration because the administration is sensitive to not creating speculation on upcoming changes related to the floor price to not send any form of market signal and help maintain the integrity of the auction process. However, we do update our revenue estimates to reflect actuals after auctions occur. The administration will be evaluating cap and trade revenues for the May revision and reflect any updates at that point.

It's important to note that there are statutory obligations calculated as immediate off the top deductions, in particular the state responsibility area fee backfill, the manufacturing tax credit, and the healthy and resilient forests. Next is the mandatory 65% deduction for continuous appropriations to the following programs, high speed rail, affordable housing and sustainable communities transit and intercity rail capital program, low carbon transit operations program and the safe and affordable drinking water program. What remains is 35% of revenues, which is considered discretionary for the 202324 Governor's Budget.

The administration exclusively proposes this discretionary pot to backfill General Fund solutions, specifically 250,000,000 towards AB 617 programs and 611,000,000 towards ZEV General Fund solutions, which are split between CARB and CEC. Lastly, as mentioned during the discussion for issue one of this hearing, control Section 15.14 contains language specifying that any additional discretionary GDRF revenues in the 202324 fiscal year shall be used as additional backfill for ZEV programs impacted by General Fund reductions.

That concludes my presentation, and I, along with my CARB colleagues as needed, am happy to address any questions you may have.

Thank you. We find that the governor's estimates of GGRF revenues are conservative, so the administration assumes allowances for the cap and trade auction will sell at their price floor, which is not a typical scenario as allowances have sold above the price floor in recent years. Under our revenue scenario of stable allowance prices, we estimate that the state will have a total of about 800 million of additional dollars available in discretionary GGRF revenues from the current year and budget year, compared to the administration's estimates.

This includes about 280,000,000 for the current year from the recent February auction and the upcoming may auction, and roughly 520,000,000 in the 2023-24 fiscal year. Based on our higher estimates, we have five recommendations for you regarding GGRF. First, we recommend the legislature consider whether the continuous appropriations continue to reflect legislative priorities, as many of these were decided on in the 2014-2015 Budget act, and priorities may have changed since then.

Second, while the governor prioritizes zero emission vehicle programs, the legislature may prefer a different allocation of discretionary funds, and we recommend the legislature allocate these revenues based on its highest priorities. And third, as I noted in the earlier agenda item, we recommend that the legislature reject the governor's GGRF trigger proposal, as this would significantly limit legislative authority over midyear GGRF revenue. And this is especially important because it is likely that GGRF revenues will come in higher than the administration's expectations.

Fourth, the administration has not yet provided an updated fund balance for GGRF, meaning how much it estimates would remain in reserve under its scenario. Because this information could help the legislature better understand the GGRF picture, we recommend that the legislature request this information from the administration before the May revision.

And finally, we recommend the legislature consider whether it is comfortable committing out your GGRF revenues now as the administration's proposal commits about 400 million next year and another 400 million in the following year, or whether it would prefer to wait and make decisions about future year priorities as part of the budget negotiations for that year. Thank you.

Thank you very much. Do we have any questions? A couple of quick questions. Can you provide the list of the General Fund cuts to carve that are on page 47? Could you read those into the record? Pleased.

I'm sorry, could you repeat the question? I couldn't quite hear you.

The list of the General Fund cuts to CARB that are on page 47.

Right. And what was the question?

Could you read those into the, into the record?

AB 617 implementation, $250 million fund shift from General Fund to GGRF. AB 617 implementation, $50 million reduction and equitable building decarbonization. That's a $20 million General Fund reduction out of $40 million total.

Okay, great. Can you answer why no cuts into the discretionary GGRF Fund.

In comparison to the 2022 cap and trade program, those discretionary programs were considered one time and they were indeed impacted when you looked at the proposal for 2023-24. So it's not quite accurate to say that there were no discretionary General GDF funded programs impacted in comparison to 2022.

Christian Beltran with the Department of Finance. I think that the administration approached the current year appropriations from the Greenhouse Gas Reduction Fund as critical investments to continue keeping retained in this year's budget. And so therefore, we didn't necessarily approach those discretionary GGRF appropriations that are one time in nature usually negotiated with the legislature as an appropriate funding source to take back.

Given that a lot of those dollars are already being encumbered by the Air Resources Board and a slew of different other departments as well, I do want to mention that the statutory required clean climate initiative report that is due from the administration in March will be coming out shortly, and we'll explain a little bit about where all the departments are in terms of implementation of those dollars.

Okay. There's a lot of interest in the farmer small off road vehicle program. Can you give us just an update in terms of where we are with that status report?

Yeah, we do have representatives here. We'll do a quick switch to make sure we get the question answered for you.

Hi, Sydney Vergis from California Resources Board. So the question I heard was about the status of the farmer program and the small off road engine program.

So in terms of the farmer program, all of those dollars have been fully encumbered to the local air quality districts, and dollars are rolling out now, in terms of the small offroad engine program per SB 170, we have developed that incentive program that's intended to help incentivize small business and sole proprietors who are professional landscapers get access to zero emission equipment. Those dollars are rolling out now. In fiscal year 21-22 we received $30 million.

The program opened in November, $8 million has moved out the door, which represents almost 18,000 pieces of equipment.

Great. Thank you very much. Any other questions?

I'll be very quick. Certainly looking at the chart on issue four, the one item that certainly stands out is the $526 million going to the California high speed rail project. With the recent business plan that came out, identifying some fundamental structural challenges and flaws, out of control costs, time delays, lower ridership projections, is the administration willing to reconsider the continuous appropriations for a project that isn't sustainable?

Christian Beltran with the Department of Finance again, we're always happy to engage with the legislature on discussions in terms of where these funds are generally going towards. I would mention that that does require a statutory change, but I'm afraid I can't commit to anything in particular right now at this time. Assembly Member, but thank you for the question.

Does the administration acknowledge the business plan and what was outlined in it and the concerns that are in it?

Again, we do acknowledge that that report is public and that there are challenges identified in that report.

If you could kind of shed some light, what is the total amount of GGRF funding that has gone to this project so far?

Assembly Member, we do have that information, but I'd have to get back to you on the specific dollar amount that has been appropriate to that project since the beginning of the cap and trade funding program.

Do you have a rough amount?

Not with me on hand, no.

Is there someone with you that can get it to me right now?

Yes, we do.

We need more chairs up here. Cumulative to date, GGRF, about $4.3 billion in GGRF funds have gone to high speed rail.

So 4.3 billion has been of GGRF has been.

Excuse me, 1.3 billion.

1.3 billion.

1.3 billion in 2022. 4.3, cumulatively, since the beginning of GGRF.

So 4.3 billion has been spent at a GGRF for this project since its inception. And the governor's proposal is to spend another 526,000,000.

Again, I clarify, Assembly Member Fong, that these are statutory required appropriations to the high speed rail.

Sure, I'll stipulate that. But of course, we're having this conversation of maybe we should change it. I'm asking, is the Administration willing to entertain the idea of maybe changing the continuing appropriation and not providing that funding and maybe investing in other things that are higher priorities for the Administration and for the Legislature?

Again, always happy to engage with the Legislature on those conversations.

Thank you.

Thank you. Assembly Member Garcia.

Can we spend some time talking a little bit about the proposed changes to the AB 6117 program? We've seen kind of a shift in and.

I'm sorry, Mr. Garcia, I didn't hear your question.

The focus would be the AB 6117 proposed changes. My question is this is a program that has seen an increase in community designations. The Fund from its inception has been somewhat funded at the same level. Last year we were able to get an increase now proposed for a reduction. And so just wondering what the justification for that is, given what we've heard from communities, CARB air districts, and pending communities that await.

An AB 617 designation program is focused around emission reduction measures with community input. One of, one of a kind program in the country that I would imagine we'd want to highlight, Fund adequately to be able to meet those objectives. And so just. Can we kind of talk a little bit about the reasoning behind some of the reduction that's being proposed?

I would just note one thing that. We do maintain the majority of the. Funding for that program as part, $250,000,000 is shifted over to GDRF from the. General Fund solutions that were proposed.

So the majority of funding is one thing, but it's not the equal to or increase that we've been asking for for several years, recognizing the budgetary constraints that we have. But this is a program that, again, has doubled in its size and the funding has remained relatively the same. So we made one step forward last year and almost feels like we're making two steps back. So I think there has to be a stronger justification.

Are we going to reduce the amount of communities, which I don't think is going to be the case. Clearly, the air districts need this support in order for these efforts to work. So maybe another shot at the question, is there a more substantial reason for the reduction?

Christian Beltran with the Department of Finance. And I would just add that it is a difficult year in terms of the overall General Fund picture. And I think that the Administration totally acknowledges the effectiveness of the AB 617 programs and the communities that rely on those programs. And so I would just say that given the broader picture of the General Fund condition, we had to make the really tough decision to modestly reduce the $300 million to around 250.

And just for context as well, we did Fund about 270,000,000 to AB 617 programs in the previous year through GGRF. So we're trying to keep in line with generally where average we've funded the program previously under. Totally acknowledging, though, that 300 is definitely more than the 250,000,000.

So the AB 617 communities that have been identified are some of the communities with the highest level of air quality pollution, with the highest level of respiratory disease, public health impacts to people in California. And most likely, if we did a kind of overlay of maps, it's where most poor people of color live and where they're economically disadvantaged, high access or rates of having access to health care services. And the list is long to be added to.

And it's just not I think, a good strategy, policy and approach to be impacting those communities by reducing the budget on something of this significant importance. So I just wanted to state that for the record, and I know that I am not alone when it comes to this particular program. I think my sentiments reflect the sentiments of many Members of the work that we do in this area. So thank you.

Thank you very much. And this is certainly the appropriate place to raise that issue. Assembly Member Garcia. So thank you. Any other questions or comments on this?

Mr. Chair, again, Rachel Ehlers from the LAO, just to highlight your question, we think it's a really important one in that the Administration does not propose any reductions to current year GGRF spending. But in our review, there are some programs where the funds have not been expended yet.

So we really think that is, as you're looking across all of your budget and all of your programs, not just to look at the General Fund, but also to look at GGRF and think about your highest priorities, because to the degree you make reductions there and free up GGRF, you can use it for whatever your other higher priorities are. In some ways, General Fund and GGRF can be interchangeable for some of these programs.

So we think looking back at the current year, expenditures is also an important activity as part of that exercise.

Great. Thank you. And thanks for pointing that out. Before we move on to issue five, we just want to go back to issue three very quickly. And I'm interested in moving the responsibility to the California Energy Commission because they deal with electric vehicle charging. And so that's a conversation we would like to engage the Administration with. Thank you very much. And so we're now on to issue five. We want to welcome Secretary Ross for being patient and being here all this time.

Very informative, and I apologize. I'm going to be standing between you and lunch, but hopefully I can make you hungry to have some good, healthy, nutritious California grown.

You have the solution too, right? The food for us.

We work at it every day.

So thank you very much for being here. We always appreciate hearing from the department.

Thanks.

In this situation. So, secretary, thank you.

And so we'll turn it over to you to kick us off.

Thank you.

I think finance was going to introduce the solutions, and then I'll have plenty to say afterwards. Thank you.

Thank you, Mr. Chair, members of the committee, this is J.T. Creedon from the Department of Finance. Together, the administration and the legislature made historic investments of $1.1 billion, as you know, into sustainable agriculture, food resiliency, and drought programs benefiting our agricultural communities. The Governor's Budget maintains $1 billion, over $1 billion of these historic investments. I want to lay out just part of the framework that we approached when we looked at identifying General Fund solutions across our climate and natural resources investments.

One of the priorities was protecting a majority of the funding for most programs, and we also wanted to have it equitably distributed across the climate solutions. In the sustainable agriculture package, we were able to preserve 89% of the funding, which is consistent with the ratio broadly across all of the climate packages. We also wanted to prioritize investments in priority populations, which face disproportionate harm from pollution and climate crisis, and also funding for the most immediate climate risks, such as water and wildfire.

And we wanted to minimize disruptions for programs already underway, including considerations as to the status of previously appropriated programs and the availability of program funding by fiscal year, as well as identify other solutions, federal funds and shifts to other funds all of the funding in the sustainable agriculture package is all part of the General Fund triggers, which would come back on in a more positive fiscal outlook that demonstrates the administration's continued commitment to these programs.

Mr. Chair, since I already know you're going to ask, I'll just go ahead and go through these line by line. So each of these are under the General Fund solutions. The Farm to Community Food Hubs Program of 14.8 million reduction. Urban agriculture reduction of 5.8 million. 8.5 million for sustainable California grown cannabis. 40 million for the Sweet Program State Water Efficiency Enhancement Program. 8.9 million for the Healthy Refrigeration Grant Program, 15 million for healthy soils.

14.5 million for the Pollinator Nader Habitat Program, 21.5 million for technical assistance for conservation management plans, 4.7 million for the research into greenhouse gas reductions, 5 million for invasive species council, 4.7 million for New and Beginning Farmer Training Program and 25 million for the Climate Catalyst Fund. That is not obviously under the CDFA. So that is not included in the total. 128.4 million in the sustainable ag, another 40 million for sweep. And for just those that apply to CDFA, we remove the climate catalyst Fund.

It's 143 million impact and I'll defer to the secretary.

All right, thank you. So I'd like to give you an update on our process of implementation to make sure that you're aware of how much has been committed and what our plans are to have our funds fully committed by the end of this calendar year. But first, I do want to say that this investment in healthy, nutritious food that's sustainably grown has really been transformational. To really make these kinds of investments as we transition to carbon neutrality, and it's something that's very, very rewarding.

What we've done, particularly with our Climate Smart Ag programs, is really think about how do we provide incentive grants to our growers for them to be able to try this, take some of the risk out of a new practice and have the confidence to grow these practices beyond what we're funding during a grant period. And I think that's really what's showing, is there's a business case if we can do this right. And we have a number of testimonials.

One of them is from Amy with Meridian Farms, who talked about getting a small, like less than $60,000 healthy soils grant. And with that money they invested in compost applications and hedgerow plantings. These, as healthy soils programs are going to draw down carbon, hold it into our soils improve the productivity of those soils, the water holding capacity of those soils. And just after one year, they started expanding to other acres on their farm. Beyond the lifetime of that grant.

That's what we're trying to do here, is use these programs to make an investment that will have long term impact. The other element of what we've really focused on is every one of our grant programs provides technical assistance. This is our commitment to equity. We want to make sure of what language you speak, where you're farming, what practices or crops you have, that you are able to know about these programs and have technical assistance to support this.

So that's been really another important aspect that I think will also speak to the longevity of the practices, going far beyond the incentive grant programs. So I wanted to start with, we have received a total at the Department of Food and Agriculture for our specific Climate Smart Ag programs. $742 million in 21-22 and 22-23. And of that, $288,000,000 has been committed. And $143 million as you heard, as part of the General Fund solution. This leaves $311 million that's uncommitted.

But as I walk through these programs, you'll see that we will have these funds out the door this summer and before the end of the calendar year. Of the $128 million for our healthy, resilient, and equitable food systems, which really deals with reducing food insecurity, providing healthy, nutritious farm to school programs, healthy refrigeration programs, and really engaging our communities in what it is to have healthy, nutritious eating as a way of avoiding chronic diseases and an improved quality of life.

We have $45 million remaining to be committed. This is primarily in our farm to school program. We've already put out $30 million this year, and the remaining $30 million will be out by the end of the calendar year. That's serving an additional 1.5 million school students having access to these programs. And the program is very, very successful. It's oversubscribed by 56%.

We're seeing that the concurrent investment at the Department of Education for that school infrastructure, kitchens, workforce development, to cook nutritious food and make it something that children will want to eat, has been an important complementary program to this. We also had the California Nutrition incentive program. We actually used a total of last year and this year's commitment of state funds and leveraged that for $12.8 million in federal funds through USDA.

I want to make sure that you're aware that both of these programs have a really robust evaluation process that is being done by a third party. Part of that is required by federal grants. But it's also something we want to do since these are new programs to the State of California to prove the value that it's more than the dollars that are spent. These are lives that are being changed and being changed from the youngest age as possible.

The nutrition incentive program is one I'm especially fond of because this helps our low income recipients of programs at the Department of Social Services and the SNAP program be able to redeem coupons and get double the purchasing power of those coupons at a farmer's market or a small local business. Really trying to keep in mind how do we keep those dollars circulating in the local economy.

And I think over time that will prove that it has really changed people's eating patterns to more fresh fruits and vegetables and tree nuts. Our Climate Smart Ag programs have been really well received and all of them have been oversubscribed. We have $348 million for our climate smart programs that are housed at the Department of Food and Agriculture. There are other programs at CARB and at CEC that are available for ag.

These include our Healthy Soils program, our methane reduction program for the livestock sector, our pollinator habitat program and this modest research program for greenhouse gas reductions. And we're spending a lot of time on the methane reduction in particular with those funds. To date we have $152 million that are uncommitted. But we have the plans in place and have already started some of the application processes for those funds to be fully committed by the end of the calendar year.

I want to give a couple of examples of the results we're already seeing with these programs. In our healthy Soils program, which has been oversubscribed by 144%, we have funded 1500 grants. That equates to 1.1 million metric tons of CO2 carbon emissions that have been reduced by the agricultural sector. That's not counting what we're putting into the soil as we think about the solution to carbon is us being able to hold it in our soils. The program received $160 million between 21-22 and 22-23.

$15 million has been identified as one of the solutions. That gives us over $70 million to put out into grants this year. And we are on track to make sure that that's fully committed by the end of the year. That's one of my favorite programs to talk about because of the multi benefits. For our economic recovery and high road job growth program, we received $57 million for economic recovery.

One of the most important programs that we've done with this funding is technical assistance for small and historically underserved populations of farmers. We also have a regulatory, alignment and reporting project that we're doing in conjunction with the State Water Resources Control Board. It included $30 million that went to the Fresno Merced Future of Food Innovation initiative. That $30 million was leveraged to bring home $68 million in federal funds from the Economic Development Administration. And this is where our beginning and new farmer program is housed.

So we have, of this program, we have only $7 million left to be committed. And that will be out the door by the end of this summer, I hope. No, it will be. I promise it will be. And then we have our drought relief program. This is the program that now houses the on Farm water Use efficiency program that is our oldest climate smart agricultural program.

It was established in 2014 in the last drought that I survived, and I hope to live through this one as well. It is oversubscribed, and one of the questions I frequently get is that you've had this program in place for a while. When does it end? The technology is not ending. That is the exciting thing about agriculture and innovation. Science and technology continues to give us tools to improve our water use efficiency, to reduce our energy use, and to improve our nitrogen fertilizer efficiency.

So when you get a triple win like that, we hope to see that program continue to be funded. It was appropriated $207 million. This has right now $106 million left to be committed. The Sweep program, as you heard, has a proposed reduction of $40 million, but we will still have $70 million to put out in grants for the rest of this calendar year. We're on track to commit those dollars and we know from the success of the program it will continue to be oversubscribed.

But I do want to note that the Federal Government at the USDA has an additional $20 billion nationwide for our conservation programs. And because of the investment we've made in technical assistance, we'll be able to help gear our farmers who might apply for our programs. And we're out of funding to be able to seek some federal funds. So we look forward to doing that. I do want to note, since the inception of this program, we have over 1,100 grants that have been given.

It has reduced our greenhouse gas emissions by 900,000 metric tons, and it equates to 1.4 million acre feet of water over the lifetime of these projects in improved water use efficiency and conservation. In closing, I want to say that we're committed. We do a constant feedback loop with listening sessions, engaging with our stakeholders to receive their input. We are constantly refining this program to try to make it as streamlined and easy for farmers to apply for as possible.

But I do want to say our investment in technical assistance has really helped more farmers, regardless of where they're farm, know about these programs and take advantage of these programs. So with that, I'm happy to answer any questions that you might have. I hope you're as excited about my programs as I am.

Great.

We'll hear from the LAO and then we'll open it up to questions.

Good afternoon Mr. Chair and assembly members. I'm Frank Jimenez with the Legislative Analyst Office. Overall, we find the governor's proposals in this space to be quite reasonable. In many cases, the governor's proposed reductions target new or recently established programs. We think it's reasonable for the legislature to consider reducing these programs given that funding has not yet been committed and are relatively new programs with in some cases uncertain benefits. In most cases, the governor proposes to retain some funding for these programs.

This would allow the activities the legislature intended to support to continue, albeit at a smaller scale. Additionally, maintaining some level of funding for these programs would allow the state to gather information on their effectiveness, which could be useful for the legislature in future budgets. In determining whether augmentations are warranted. I will note our office's recent estimates indicate the likelihood of a worsening budget problem. And in the report and as noted in your agenda, we identify alternative solutions that the legislature could consider.

For instance, the legislature could consider reducing funding for the farm to school incubator grant program. The program is relatively new and has a moderate amount of funding that remains uncommitted. The Legislature could reduce funding and allow it to continue on a more scaled down level. The state could then gather information on how effective the program has been in meeting its intended goals before considering additional augmentations. I'm happy to take any questions.

Thank you very much. Do we have any questions? Assemblymember Connolly.

Thanks chair, and thank you to the panel. Just note that, Secretary Ross, I do share your enthusiasm as a new assembly member around sustainable AG and how climate smart policies fit into our overall goals. I've got some questions, but really to frame it, we're hearing some common themes today. One is amounts allocated over the last several years versus dollars that have actually gone out the door of those expenditures that have occurred. What are the metrics?

How are we measuring success toward the intended purposes, particularly around equity objectives and underserved communities. And then finally, in big picture, you've talked in many cases of programs that are admittedly beneficial, popular, and indeed oversubscribed. Yet the proposed budget cuts, those very programs. I want to go through some particular examples of that. But starting with, can you provide an update on the implementation status of the $5 million that was appropriated for grants to farmers who are transitioning their crops.

To organic, to the organic program?

So this would be the organic transition program, right?

That was not a question that I had in my notes. I apologize. That program is in progress through and.

I've written a letter on this particular issue that's in the record. If you don't have that currently.

I do want to respond to it and I want to be very specific. But I do know about the same time a new significant amount of money from USDA came out from transitions and we were trying to leverage, but I don't know the current status. But we will get back to your office on that. I'm committed to that.

Thank you, assembly member. Frank Jimenez with the Legislative Analyst Office. I would note that the program that you're referring to isn't included in the package of proposals that we are discussing. I believe it was a legislative ad through budget negotiations from last year, and I don't have any information on the implementation of that program. But it was a recently enacted program and I'm sure getting still up to date.

Let's continue.

Sorry, I just had it whispered in my ear. We will have the request for proposals out within the next few weeks, though it is on status to be put out for grants yet this year, and I'm hoping that other farmers will look at what the federal program has because it was the hundreds of millions of dollars for transition to organic.

Great. I look forward to following up with you on that. What policies is CDFA adopting to achieve the 20% organic goal by 2045, as articulated in CARB's latest scoping plan? And what percentage of California cultivated land is organic now?

So as of the end of last year, 2022, the most current number for certified organic is 2.1 million acres. That represents about 30 plus percent of certified acreage. California is definitely the largest producer of organic products and so that's what that is. Because the scoping plan for the State of California was adopted late in December.

It is something we spent a lot of time looking at, wanting to be realistic and practical about what has growth been, and also not trying to grow a program so fast that it didn't give farmers the time to make the transition. But more importantly, there was a premium for organic, and if we meter it in over time, it will make it more available and accessible to all producers and to all consumers without crashing the market, because we do a sudden leap in acreage.

And so that's one of the things we're trying to balance and be realistic about it. Because organic agriculture is based on soil health, it's a very natural way to look for continued growth in the market, demand and growth, and equipping growers to have the tools they need to be able to successfully achieve the goal that we have. That's in the scoping plan. The specifics of that will be worked out.

Much more discussion on that. Secretary, as you mentioned, there has been a historic sustainable agriculture funding package over the last couple of cycles. Yet small and socially disadvantaged farmers have often been left out of these programs, as we know, or their proposals, not funding. How has the department considered equity in their various programs and efforts to do outreach and technical assistance on behalf of small farmers and socially disadvantaged farmers, including those with language barriers?

Yes, thank you for that question, because equity is embedded in all of our programs, and we historically have not been in the grants business. So getting grants to be able to disperse has required us to really stand up and think deeply about what we're doing. And it starts with having priority populations, which some of that has been defined for us by the legislature and by our colleagues at the Air Resources Board.

But it also was informed California was the first state to have a farmer equity act. And in fact, our farmer equity advisor, Thea Rittenhouse, is with us. And so her knowledge, as previous, she is a farmer, but she is also a previous technical services provider. So she knows the community very well and has really helped us think about how do we reach the populations that historically don't see government necessarily as her friend or somebody that has services to help them.

And so we immediately started looking at investing in technical assistance.

Traditionally, we use cooperative extension, and one of the first things we did was a contract with University of California cooperative extension to retain what we call climate smart agriculture community educators, making sure that they were multilingual so that they could reach, whether it was the Mong population outside of Fresno or the Korean population outside of Santa Maria, or the very predominant Spanish language population that's in the farming community, just reaching out to them, going where they are, walking through the programs, doing demonstration projects for them to be aware of the programs and providing technical assistance to apply.

It's not only us that are doing that. We also have invested in the California Resource Conservation districts, which have really professionalized their services and reaching all of our populations and other nonprofits. I would also point to a memorandum of understanding that we executed in late October of this year. It is with the Natural Resource Conservation Service.

Our state conservationist, Carlos Juarez, has done an outstanding job of adding tribal liaisons and technical assistance providers on his staff, as well as those that he funds in multiple languages to reach all people. We also have in that memorandum of Understanding, UC cooperative extension and the California Resource Conservation District.

The goal of this is, for the first time, to bring all of our folks together and do training across all of our programs so that we're not getting siloed of only being able to talk to a farmer about my program or this one. And so that's one of the things we're trying to do. So we have an infrastructure to deploy programs far beyond the lifetime of our grant program.

Great, thanks.

And we're meeting our targets of what we set for ourselves on our underserved populations when we do our grants.

Can the department provide information regarding the proportion of grant funding that is awarded to small scale farmers in comparison to large scale agricultural operations?

We can. I don't know that I have specific breakdown here today, but we are able to parse those numbers out and provide that to you.

I would like to see those. Thank you. Has a farm to school program created any new community food hubs, or does it only fund existing food hubs, and if so, where are the new ones located?

So I will have to get you the list of where those grants have gone. But I will say that we have been very creative, based on a lot of interviews, survey work, focus groups, including with students on standing up our farm to school program and on the track that is for the farmers. They can apply to create a food hub. And we've had a number that have done that.

I can't tell you the exact number that have, because for schools, they need to source at a certain volume. And yet we want them to be supporting our small farmers within that local community. So the farmers, after they're in this program or see what the opportunities are, are coming together, or an early innovator in this space has been the one to say, we're going to create a community food hub here so we can do aggregation, have shared chilling facilities, and bring the food to those schools.

So we'll be able to provide that from the first round of funding that we did and give you the list of where they're located. We've had great geographic reach with the farm to school program. So that's been really heartening to see it go into all communities.

Great. I look forward to specific follow up on that. Just a few more quick questions. Healthy soils, beneficial oversubscribe effective program. Can the department provide justification for cutting this popular program? What is the justification.

One of the priorities that we looked at was where funds actually were at the time. We've seen $67 million in the healthy cereals go out from the '21-'22 funds and a significant amount still left outstanding. I can get you the exact number, but there's tens of millions of dollars still left in that program preparing to go out to grants.

But you are proposing a $15 million cut.

That's correct.

What is the justification for that?

Again, we had to make hard decisions to meet the budget shortfall. None of these were easy. And we had to spread them out as much as possible to create the least amount of impact to programs that people rely on. And there was some room to maneuver in that budget and still preserve the grant dollars to be able to provide for a significant number of stakeholders.

So we saw a little bit of room to help us meet our broader goal, to close the shortfall and meet that budget.

Well, you can well imagine with the prior testimony we're going to continue to ask questions about that. Would you say healthy programs like healthy soils and sweep have been effective at achieving their stated goals?

I would say based on the testimonials and the fact that we can quantify greenhouse gas emission reductions, which is one of the drivers for the purpose of the program, they are successful. Obviously, we all are eager to scale them up, but resources and time are the two biggest restraints right now.

Great. And then more broadly, I don't know if anyone else wants to talk to that. But more broadly speaking, and this goes to kind of the metrics piece and I'll wrap up on this, we're really looking for an update on implementation of the sustainable ag package. Have the programs reach their goals and updates on other appropriations from the drought package, GGRF. One time capital investments, really looking for specifics about success in these allocations.

Be happy to work with you on that. Thank you. Appreciate your questions and interest.

Any other questions? If you're on item six, we're going to be that. And just give me one more minute. And we should be there for that. Right. And with regard to item five, as we finish it up, we've had considerable stakeholder interest in the California nutrition incentives program because of the federal match for CalFresh recipients and stuff. So we do have a request for $35 million addition there. And so we'll be considering that and having conversations with the Department about that.

I appreciate all the questions that Assemblymember Connolly asked about equity, and I realized the definition of equity is vague, but I think it is really important to the Legislature that we make sure that these agricultural programs in particular are really helping people that are disadvantaged, people that have language barriers and try to make sure that those people really benefit from these programs. And that group of small farmers out there is an important part of the community that we want to actually make this transition.

And who knows how many entrepreneurials will come out of that, that will then become large scale organic people or their families will, et cetera, as we go forward. So really appreciate your time here. And we have one more item, but we're going to go to item six or issue six. And Assembly Member Essayli was going to ask his question in advance because he needs to. So while we have the same panel here. Go ahead.

I appreciate, thank you. And before I ask my question, I too am excited about the programs you mentioned. I think the emphasis on healthy eating is so important. When I was a kid in school, it was about chocolate milk and an upside down pyramid that makes no sense today. So whatever we can do to encourage healthy eating, I think is so important, especially in the context of health care and the costs.

With health care, I think we need to focus more upfront on diet and exercise and getting that healthy food to low income communities because it's a lot cheaper to get a dollar menu item than to go to the grocery store. So I'm encouraged and I support that. Madam Secretary, my question is about state fairs. As you know, state fairs are important in our communities. Everyone loves going to the state fair.

I go every year, but they also provide emergency services, entertainment, agriculture, education, and serve as a meeting point in many rural areas. I know you're familiar with AB 1499, which was passed and signed by the Governor, recognizing the value of fairs throughout the state, and that revenue is really critical for capital projects and staffing. So my question is about this budget request or proposal to remove the funds from AB 1499 to fund some staffing positions.

The Department currently has 300 vacant positions already that have not been filled. And so my question is, can we hold off on this or defer this until we fill those existing positions? And would you be willing to reconsider this position?

I'm looking forward to having probably a number of discussions about this because theirs are important and they are local and they have lots of interest from lots of different stakeholders. I do want to point out a couple of things, sir. One is this is not taking the money away from 1499 and the fairs. It is about continuing to be able to provide the staff that we have for the oversight that we're required to do as a state. That's ultimately liable for any financial issues or losses.

And so this is about covering our administrative costs, which we've been funding out of reserves. 1499, when it passed a couple of years ago, the first round of funding was done on estimates of what was being generated as far as sales on fairgrounds throughout the year. Not just the fair event, but all the other commercial events that they have.

And we did not get administrative authority to be able to fund the positions that we have that are responsible, whether it's audits, providing support to the fairs, oversight of their spending patterns, making sure they're in compliance with Bagley Clean and all those other types of things. So this is about covering our administrative costs. I think one of the alarms, and we are meeting with affairs not next week, but the week after when I return from an overseas trip.

What we are faced with is that the downturn of not being able to do any fairs at all in year 2020, minimal activity in 2021, and gradually, and people were happy to be back in 2022, is that those revenues went down dramatically. So the allocation that we get, it looks like it's a disproportionate portion of the funding that could be available to go to the fairs.

I also want to point out, in recognition of the extraordinary circumstances those fairgrounds were faced in, and many of them are state owned properties, so we're responsible for those facilities. There was over $40 million that was appropriated because of the layoff process that they had to go through, and an additional $50 million that was provided to cover their operations so they could continue to be in business to do what has become job number one for every fairground.

And that is be prepared and able to respond rapidly for response because of the diversity of disruptions and volatility we've seen in weather and other events, that's job number one for all of us. And that's why the Legislature and the Governor agreed in the last couple of budgets to put that kind of money into those fairs until we can get their commercial activities, including the annual fair, back with the kind of projected revenues that we anticipated for this program, but it might take a couple of years for that to happen.

I appreciate the answer, and I hope we can continue this conversation, but the funds are being diverted from the purpose that 1499 allocated them from, and I want to recognize that, that the request is to use the money differently than how the Legislature and the Governor intended it to be used. And you have 300 unfilled positions, so can we just use that allocated funds to cover this?

Those are positions that most likely are vacant because there is not funding for them and we don't fill positions if we don't have an aligned funding measure for them. We're only talking about the existing staff, not new staff, and programs do not administer themselves. Unfortunately, I wish that they did. We could probably do them faster than the hiring process that we often have to go through.

But this is for making sure we have spent almost all of our reserves and will be out of reserves next year. That F&E Fund that historically was funded by the horse racing handle and other revenue streams is declining rapidly, and so we are in a position where we will not have the staff to fulfill our statutory obligations of oversight and administration.

Thank you. And, yeah, I realize money is limited, and if you want to reallocate high speed rail money to your department, I would welcome that request.

I'll leave that to higher pace.

Yes. Thank you, Mr. Chair, for allowing me to ask that.

You're welcome. And so, secretary, back to you for discussion of. Oh, I'm sorry.

I just wanted to kind of piggyback on some of the comments that were made. Secretary, I know that you care dearly about the fairgrounds. You've been out to many of them up and down St Lunars. We know that there's been a significant investment that's gone out to try to make capital improvements.

If I recall correctly, I may have co-authored the bill with Gray 1499 to really meet its purpose. I'm open to the idea of moving some funds, but I don't know if this is a customary practice or not. Maybe there's a cap because there's a significant concern by statewide stakeholders in the fairground arena that we start with a little bit, and then before you know it, the entire Fund is being used for administrative purposes and not necessarily meeting its intended goal.

So an idea here may be that as we start off, maybe there's a cap in terms of how much money can be used for administrative purposes as it relates to 1499 funds. So just a suggestion that I wanted to put on the table and also just acknowledge your work in this area.

So thank you. Thank you very much.

Thank you very much. So we'll turn it over to you guys for the presentation here on issue six.

On issue six. Oh, I guess I felt like I talked to them. So just to reiterate. Yeah, I can be brief. I just want to reiterate that this is a proposal that will allow us to continue to do our obligation of oversight and fiscal responsibilities, and it is about covering those costs because we do not have the reserves left to get us through the next fiscal year. So that is the point of this and appreciate the dialogue.

And as I said, we are engaging with the stakeholders and have a meeting with a number of the stakeholders the week after next. So hopefully we can come to you with some good solutions.

The proposal did not raise any concerns for us, as Secretary Ross mentioned that these are existing positions when CDFA that have historically been funded from the fair and exposition Fund, the Fund can no longer support these positions. So it's reasonable to support these positions from another source. The Legislature could fund these positions from the General Fund, but it might be difficult given the current budget problem.

Anything else from the Administration? LAO?

It also raises the question of who should be paying for these positions, taxpayers broadly or fairgoers themselves. Rick, thank you very much. Do we have any other questions or comments?

I have nothing on this, but I do want to let people know that issue 19, I would like to make sure that we hear issue 19. So with that, we've commented on issue six. Thank you very much. Really appreciate you being here, secretary.

I hope you get a good lunch today.

All right. Yes, great. Hope we make it there in time. So, CARB, if we could have CARB representatives up, please. So this is low carbon fuel standards for the benefit of the public hearing this and stuff it, and now that we have everybody here, so what's the breakdown of the credits being generated, for example, the percentage of credits that have been generated by the building of the ZEV charging and fueling infrastructure?

I'm trying to get a little bit of a handle on the low carbon fueling standard issue. And my other question is going to deal with the biomethane and the livestock operations of that.

Good morning or good afternoon now. Brandon Merritt with the Department of Finance. I'm going to hand that straight off to my colleague at CARB.

Hi, thanks for having me. My name is Matt Botill. I am a Division Chief at the California Air Resources Board, and I oversee the low carbon fuel standard program.

So we do have a BCP in requesting positions for the Low carbon fuel standard. But I'll get right to your question since I know Secretary Ross said she was holding up for lunch. It looks like it's me, actually. So the low carbon fuel standard sets a declining carbon intensity performance standard on the transportation fuel in California. And in doing so, it creates a private investment signal to deliver low carbon fuels into the transportation fuel market here in the state.

And so over the last few years, it has been very successful in driving investment in Low carbon fuel production. And what that has meant for California is that we are seeing Low carbon fuels like renewable diesel, biodiesel, renewable natural gas, and electricity and other Low carbon fuels that are coming into California. So your specific question about the breakdown among these, I have some numbers for you. So, in terms of credit generation, the single largest credit generator in the state is biomass based diesel.

So that's renewable diesel and biodiesel. And that's 44% of the total credits generated and delivered into the California market. Following that would be the electricity, Low carbon electricity that is delivered to supply electricity to charge vehicles in the state. And that's about 25% of credits generated in the state. And then next in line is renewable natural gas, which is used to supply fueling for compressed natural gas vehicles in the state. And that's about 16% of the total credits generated.

The low carbon fuel pathways for the livestock operations of bio-methane. I'm concerned that we're not capturing the full lifecycle admissions, and I'm concerned about whether we have a program that's sort of moving, just focused on one part of this and actually incentivizing the creation of more admissions so that you get more credits on the other side and get more reimbursements for that. So how about the total lifecycle? How does CARB sort of account for the greenhouse gases generated before and after the manure digestion process? Can you help me with that?

And then finally, ethanol represents about 14% of the credits generated. And then there are smaller levels of credit generation for other fuels. But those are the big ones.

Sure, so as part of implementation of the Low carbon fuel standard, we look at the carbon intensity of any individual fuel that is coming into the California transportation fuel market. And in determining what that carbon intensity of a fuel is, we look at what are the greenhouse gas emissions that are generated in the production of any particular fuel.

And so, for things like electricity, for biomass based diesels, and for renewable natural gas that comes from biomethane, we look at what are the greenhouse gases associated with the production of that fuel. Dairy methane is a little bit different. The production of dairy methane comes from the production of milk and dairy products that we all consume.

And so in looking at how we assign greenhouse gas emissions to the production of dairy biomethane and renewable natural gas that goes into the transportation market, we look at what are the methane emissions coming off of the manure that is produced as a result of the milk production and dairy production that the state has. And so our analysis looks at, from the point at which that manure is produced to the point at which that biomethane is entered into a vehicle and is combusted in a vehicle.

What are the greenhouse gas emissions associated with, from manure to combustion in a vehicle? And we assign a carbon intensity likewise. And it really goes to the idea that a dairy is not producing a fuel, it's producing a milk product, and then a byproduct of that milk production is this dairy methane emissions.

So one of the concerns I have, we are incentivizing larger herds and actually almost incentivizing more manure production with the system that we have. That's how I'm at least seeing it at this point in time. And we want to do the opposite, which is we want to try to decrease the amount of manure methane being produced in California. Can you explain to me how the program is going to be trying to decrease the amount of manure production in California? Are you considering if we have larger and larger herds, we have more and more other air pollution and water quality problems that are created by that?

We really want to decrease both. We want to decrease methane production from manure, and we want to decrease emissions from these vehicles. Do you guys see a connection there that I'm missing that you could explain to me in the public?

Yeah, no, I. I think that's a great comment. So, broadly, methane is responsible for about 50% of the warming that we're experiencing across the globe from a climate change perspective. And in California, methane represents about 40 million metric tons of our carbon dioxide equivalent emissions.

And dairy methane is about 25%. Dairy manure methane is about 25% of it. So to have a really significant impact on reducing immediate warming, we need to reduce methane emissions. The science is clear. It's unequivocal that the strategy is to cut methane emissions. And it's not just dairies. It's from our oil and gas operations, it's from our landfills.

And in order to cut methane emissions from dairies, what we need to be able to do is to make sure that that manure methane isn't going into the atmosphere, that the methane that comes from the kind of interic emissions that are associated with cattle feed are also reduced. And so we actually have laws here in California. We've got SB 1383 with the Legislature passed in 2017, that tells us we have a 40% methane reduction target in the state across all methane sources.

And so we have been moving very quickly at CARB and in partnership with other agencies like CDFA and Calvary cycle to address the core sources of those methane emissions. What we've also been doing, and this is in response to 1383 requirements. We've been watching and analyzing trends in the dairy industry. So just last year, in March, we released a report that looked at what is happening across the dairy industry and how we're making progress on our methane reductions that are so important for the climate.

And what we found is that we have made some pretty significant progress through deployment of dairy digesters and through alternative manure management technologies to reduce methane emissions in the state. We were about halfway to the target that we'd set in statute and that additional projects would be needed to continue to reduce those methane emissions. And we also looked at what's going on in the industry more broadly and found that in California we're seeing a reduction in overall dairy herd over time.

So it's declining, but we are seeing that dairies are consolidating, so they're getting larger in certain areas. But total dairy herd count in the state is going down. So there have been a number.

Total dairy headcount is going down in the state, total livestock?

Is declining in the state year over year. We're actually looking forward to the next round of USDA AG census data that comes out next year, which gives us some more insight into total herd counts. But we've seen these trends.

So what we're doing, we're looking at what are going to be our methane emission projections if we assume that the dairy herd counts will continue to decline in the state. And the deployment of things like dairy digesters and manure management practices, and hopefully things like feed additives that will reduce those tariff emissions will continue to cut into dairy emissions over time here in California. And so that's the strategy that we've been deploying and it has been working thus far to reduce dairy methane emissions.

And we do see, though, that the overall industry trends are going to be one where the total dairy herd sizes in California decline. This ultimately, in terms of the dairy industry presence in California, is being driven by the demand that we all have for dairy products.

And so in looking at this question about what's going on in the dairy industry, we also engaged with experts and held a full day workshop last year across academia, USDA, USCPA, local air and water quality permitting agencies, to ask what's going on in the dairies and what's going on with dairy product demand. And the findings from that workshop were that we're still, as a populace, requesting a lot of dairy products. It's staying pretty consistent.

And so what we heard through that expert panel was that many dairies are consolidating to increase their milk production efficiency to meet that demand. And so that's also something that is happening in the industry more broadly here in California and across the nation.

Trying to look out into the future to the extent that we can incentivize whatever the demand is for dairy, whatever percentage of that demand, we're meeting with California dairy, if those stayed steady so that we're not just exporting the manure problem someplace outside the state. It seems that one way is with digesters to try to make sure that the manure doesn't give off as much methane.

And another is to try to other innovative ways to try to say, how can we have manure that doesn't have as much methane potential in it in the first place? For example, I just want to make sure we don't have inverse incentives here to say, actually the methane is becoming as valuable, the manure is becoming as valuable as the milk that we're not turning that into an incentive and not paying attention to. How do we overall reduce the problem? I think I see somebody else ready to go ahead. No, this is Christian Beltran, Department of Finance. I just kind of want to tack on some comments to your comments, Mr. Chair. We did have about $30 million in last year's budget from GGRF specifically that was investing into dairy digesters and methane reduction. In addition to that, we also had a few $1.0 million, I think also appropriated specifically to work with the UCs on the study of different feed that is provided to cattle as well.

So the Administration is committed to those two specific items that you highlighted in your comments, and we will continue to work with you on that.

And I realize the methane is coming out of both ends of the cow, and we want to make sure we incentivize both ends. But in terms of, that's where feedstock is probably a real important question there. Hey, thank you very much. I appreciate that. And we'll now open this up for public comment.

Really appreciate the assembly members hanging in here for all of this. So thank you. Right, good afternoon. Not quite on yet. Okay. We'll start the public comment on the departments in the agenda. And we want to try to remind people it's for the departments in the agenda. Everyone will have 1 minute to talk. We're going to start with those in the room and then open the phone lines. And again, the number is 877-692-8957 that's 67. I mean, 877-692-8957 the access code is 131-5447 that's access code 131-5447 and we're ready for public comments. Welcome.

We are here again in support of the reauthorization of the AB eight fees. With a bit of a caveat, I'd just like to say we are concerned with the ongoing shift of those funds out of the light duty refueling space and into the medium and heavy duty refueling space. I'd like to associate ourselves with the comments made by the LAO. This is $173,000,000 a year paid by families light duty vehicle owners. 50% of those funds go into the medium and heavy duty space, which are businesses.

Good afternoon, Mr. Chair, members of the committee. John Moffat, on behalf of the Alliance for Automotive Innovation. We're the trade organization for the folks responsible for the vehicles and technology for about 98% of the sales here in the United States. I wanted to speak to issue two on today's agenda. We were there at the beginning. We were there for the reauthorization.

We recognize those investments are needed. I think our view is that those folks should be paying into this program as well. And those funds raised from light duty vehicle owners should stay in the light duty space. I know some other folks are going to talk about the ongoing need in that space for hydrogen. I just like to talk about electric charging infrastructure. CEC's numbers. We think we're going to have about 2.5 million electric vehicles on California roads by the end of next year.

CEC says we need about 140,000 publicly available chargers to meet that number. Right now we've got 30,000. The need is still there. We'd like to see the program continue.

Thank you very much. And for the benefit of everybody out there, when you hear that buzzer, that's the 1 minute buzzer. Thank you very much.

Good afternoon, chair and members. My name is Michael Jarred. I'm here on the sustainable ag item. I'm talking on behalf of the Community Alliance with Family Farmers, CAFF, which represents over 8000 small and mid scale farmers. While CAFF appreciates the maintenance of the essential drought relief funding in the Governor's Budget, we are disappointed by the inequitable cuts to the infrastructure needs of California's small and underserved farmers. The governor's proposed budget proposes to eliminate all funding for the farm to community food hubs program created two years ago by Assembly Member Bloom that would create new food hubs.

In addition, we are opposed to the cut of $5.8 million to the Urban agriculture program and $5 million to the beginning farmer and farm worker training program. Also, we would really appreciate that when looking at the governor's proposed flooding funding that you would consider small farmers as well. They have been dramatically impacted by recent floods and are likely will be impacted by the flooding that is going to occur this weekend when all the snow melts. So please consider their needs when allocating that flooding funding and thank you for your time. Thank you very much.

Good afternoon. Jeanne Merrill, representing the Center for Food Safety, speaking to the sustainable ag budget items. The Governor's Budget would gut funding for the multi benefit climate smart agriculture programs, healthy soils sweep, the Alternative Manure Management Program, the pollinator habitat programs, and while we support a bond measure which has been discussed as one solution, those funds would only become available likely until 2025, abandoning funding and stranding these programs for FY 23-24.

We ask that funding for those programs be restored in FY 23-24 budget so that small, midscale and underserved producers can access the technical assistance and financial incentives that they need in order to transition to climate smart and climate resilient farming. Appreciate discussion on the low carbon fuel standard. We hope there's more.

We ask that you continue to weigh in as CARB is underway with rulemaking and the program continues to prop up digester fuels with questionable climate benefits, significant impacts on adjacent communities, and real distortions for the dairy industry. Thank you.

Thank you very much.

Thank you so much. Chair and Committee, Phoebe Seaton with Leadership Council for Justice and Accountability. First, I want to thank you for holding this item, item 19, open. We look forward to working with you and the committee as you further consider the really important questions raised in the agenda and other questions and concerns we have about the program. Another question raised was regarding kind of GHG double counting, which we're extremely concerned about.

That multiple layers, multiple levels of state funding, taxpayer and ratepayer funding are funding the exact same emissions reductions through the low carbon fuel standard, the DDRDP program, et cetera. So I think that warrants some investigation. There was conversation about whether we're looking at milk production or manure production. You raised the critical point that it seems like we might be transitioning to manure production. And we are seeing and hearing researchers in the dairy industry itself say that they're looking at manure proceeds approach and exceed milk proceeds. Finally, we are extremely concerned about the environmental justice impacts that the low carbon fuel standard is having and question some of the assumptions on milk demand and the reduction in overall herd size. Thanks so much.

Thank you.

Mr. Chair and members, Brendan Twohig, on behalf of the California Air Pollution Control Officers Association, representing the executive officers from all 35 local air districts, very much appreciate Assembly Member Garcia's comments regarding the AB 617 program. I would also add it's a very cost effective program, both on the greenhouse gas side reduction side and also when you combine that with the criteria pollutant reduction, so you can get both your public health benefits and climate benefits that has been reduced.