Assembly Budget Subcommittee No. 4 on Climate Crisis, Resources, Energy, and Transportation

See, I turned that one. I think I got it right now. This one's up. Good morning. Welcome to Assembly Budget Subcommitee four. Just want to announce that today is Denim Day, sort of the beginning of the women's metoo movement around the world. And today we're going to hear from the California Air Resources Board and the Energy Commission regarding zero emission vehicles and the Greenhouse gas Reduction Fund. We have three items that are planned for presentations.

For each presentation, I'll ask each of the witnesses reference in the agenda to introduce themselves before they begin their testimony. At the end of the presentation, Members of the Subcommitee may ask questions to make comments on any of the eight non presentation items. We'll not be taking any votes today. After all the items are heard, we'll take public comment. Each Member of the public will have 1 minute to speak.

There'll be no remote testimony in this Committee today, and with that, we'll begin with issue one CARB, the Energy Commission Zero Emission Vehicle Spending Plan. And when you're ready. Okay, take your time.

Good morning, Chair Bennett my name is Brandon Merritt from the Department of Finance. The Administration remains committed to supporting Californians with access to cleaner transportation options and to protecting critical investments associated with the transition to zero emission vehicles. As part of identifying Zev package solutions, the Administration focused on balancing and maintaining previous investments associated with building out critical infrastructure to further support the state's growing ZEV network while also addressing the projected budget shortfall to maintain California's leadership in transitioning to zero emission vehicles.

The budget maintains $10 billion, now extended over seven years, initially five years, in investments to the state's zev agenda, including targeted investments in disadvantaged and Low income communities by increasing access to the benefits of clean transportation and by continuing to decarbonize California's transportation sector and improve public health. To address the projected shortfall, the budget includes $38.1 million of General Fund reductions, 475.3 million in Fund shifts to the Greenhouse Gas Reduction Fund, and $600 million in delays across various zev programs.

As part of the Fund shifts, the administration's goal is to continue important investments focused on infrastructure and investing in programs that align with GGRF funding goals. Delays are focused on programs that have already received tens or hundreds of millions of dollars that still have available resources that must be liquidated. The Administration focused on reducing resources associated with these programs that were new or had lower than anticipated demand. Furthermore, the Administration considered available federal resources associated with similar purposes that state programs aimed to accomplish.

The early action package adopted earlier this month incorporated the $38 million in reductions including the drayage trucks and infrastructure pilot program, ZEV manufacturing grants and emerging Opportunities program. The early action package also adopted the level of General Fund to GGRF Fund shifts, which assumes the $600 million delay in 24-25 planned ZEV investments to 27-28. Thank you for allowing me to introduce the 2024-25 Governor's Budget zero emission vehicle spending plan.

Thank you. Anybody else from the Administration?

Lao thank you. Sarah Cornett with the Legislative Analyst Office. So as the Administration described, recent budgets included 10 billion over several years for the ZEV package. The Governor proposes to retain almost all of that spending with 38 million of reductions, delays of 600 million, and Fund shifts to GGRF of about 475 million. As part of your work to address the budget problem, the Legislature could ultimately consider alternative or additional reductions in line with its highest priorities.

And while there is significant unspent funding planned for the budget year and out years, most of this is GGRF funding. So consequently making reductions would not automatically generate General Fund savings. But the Legislature could use freed up GGRF to backfill other General Fund priorities. And in our climate budget solutions report, we did identify several programs and areas that we think could be considered for additional reductions, programs that have significant remaining funding left in the balance.

And choosing to maintain ZEV spending at these levels ultimately means accepting reductions elsewhere. Ultimately, it's just a question of your highest priorities.

Thank you very much. Before I turn to Mister Connolly for a question, I just want to make sort of an overall comment. We're all caught in a fairly tricky situation here with budget cuts with unknown GGR revenues in the future because of some potential potential risk of significant changes in those with the 2030 coming up, with the potential changes by CARB in terms of cap and trade funding.

And the point that I'd like to get on the radar screen and with this evolving solutions, not to the budget, but solutions to climate change three years from now, will we say, hey, investing in this kind of Zev technology is better than this kind of Zev technology. So just we're going to have to stay nimble and stay flexible as we go forward. And so we can adjust our long term GGRF spending plan, but we're already allocating it.

You know, this whole package went from five years to six years to seven years. GGRF is now, you know, we're stretching stuff out three years from now. So I just want to go on record as everybody should look at those commitments in the out years as very tenuous commitments, because there are just so many things that could change and that we're on record today is so people don't come and go. Feel really certain that that's going to happen.

But in terms of after making that comment, I'll turn it over to Assembly Member Conolly. You let you ask the first questions here so that you're sure you get yours in, and I'll.

Yeah. Appreciate it. Thank you, chair. Good morning, everyone. If this is the appropriate time to ask some questions on clean cars for all. All right, let's do it. Hoping that the panel can provide clarification on the proposed funding elimination of the clean cars for all program. According to our agenda, the current proposal would eliminate funding for CCFA for the next three years. Does the program have enough unspent funding to make it through the next three years?

Thanks. This is Michelle Buffington. I'm the chief budget policy officer at the California Air Resources Board. Thank you so much for the question. We have the CC4A program. There are two types of programs. There is the statewide CC4A program and the district run CC4A program. We believe that both of those programs have the funding to last up to two to three years.

Okay, great. So my understanding that the Air Resources Board is proposing to redirect funding to the financial assistance program, which does not require the retirement of an older vehicle as eligibility for the program. With the clean CC4A program already replacing old combustion vehicles with ZEVs and applying to low income individuals, can CARB explain why the financing assistance program is needed?

How is CARB able to measure emissions reductions from the financial assistance program if a combustion vehicle is not required as a prerequisite for the program?

Sure. Thank you for the question. So the financing assistance program, we have historically had a financing assistance program. We started a regional one and then moved to a statewide one. We learned some lessons and are now reopening the financing assistance statewide more broadly. So first I wanted to make sure that there was some context as to. It's not, this isn't a new program. This is a continuing program for our Low income consumers.

The reason why we feel that it's important to not only offer clean cars for all, which is, as you mentioned, was a scrap and replace program, but also financing assistance, is that there has been, there is an inequity in the system.

And in order for us to be able to provide to all Californians with the types of transportation that they need, there are some low income individuals who do not own cars that need them, whether it's because they don't live near transit routes or don't have access to public transportation or have long commutes. And so the financing assistance program is really meant to help get low income consumers in California who do not currently have a car into to a vehicle so that they can afford them. Right.

We help them finance and finance the cars themselves. So really what we're trying to do is make sure that those who need vehicles have vehicles. But at the same time, we are also increasing other parts of where we're looking at reducing vehicle miles traveled so that there's access. So we really think that we're trying to, what we're hoping to do is balance the transportation access for low income individuals who haven't traditionally had access to being able to own their own cars.

And can you,

Before you leave that topic, let me know because I have follow up. So if you're going to go on to another question, if you're still on this topic.

I am. Was going to ask kind of a little bit more explanation on CARB's proposed needs based approach, how that will actually work.

I'm sorry, can you repeat the question?

The needs based approach.

So that's a great question. If you give me just one quick second, I want to make sure that I find my notes and cover all the important aspects here. So again, historically, we've had the community, the regional focused financing assistance, which was run on a needs based not first come, first serve, and then the statewide, which we did run on first come, first serve.

And we realized that what we really needed was something to focus on, that we needed to move away from first come, first serve to a need based approach. So our understanding of the needs based approach, and this was developed through a lot of stakeholder comments and feedback, as well as just lessons learned from those previous grants, is that what we're proposing to move forward with is a program where we have three tranches of funding and the most, the application window.

When it's open, those who are in the most need would then be in that first tranche, and as that money gets spent, then they would have access to the second and third. But as we open the second one, the window of who's eligible expands a little bit until the third tranche, when it's expanded broadly and they're based on federal poverty levels as well as whether or not they're receiving other state services.

Okay, great. I have some more, but.

How will people be informed to apply for those programs and the clean cars for all program? I want to contrast those programs is that just somebody brings in the car, they qualify for the program if they also meet and then the financing program, is it just if they find out about the fact that there's a tranche out there and they make application, is it through nonprofits, et cetera, that encourage people to make those applications?

How is it that low income people are going to find out about this and the difference between the clean cars for all and the financing program?

That's a great question. Thank you for that. It's something that we're really excited about. So we've been working closely with community based organizations and community representatives. So there's one way that we plan on advertising. We have a third party administrator that will be operating the program, and a portion of that, not a large, but a portion of our funding will go towards outreach and advertising to make sure that the low income consumers know about the programs.

The other thing that we worked on with these, with both the communities and the stakeholders, was bringing together the clean cars for all statewide program and the financing assistance program. So it is one application. So if you apply for either of those programs programs, you automatically know about both of those programs. And so sometimes those programs can be used hand in hand.

So if you have a car to scrap and you bring it in, but you still need financing support, the financing assistants will be able to help you, but you will be walked through the options. So I think one thing I forgot to mention that I think would be relevant here is that one of the things that we learned with the pilot programs that we ran is that the high touch is important.

Having those residents, those consumers come in and be able to talk to somebody who about their financing and about their options was one of the things that we learned was very, very important. And so that's going to be part of the combined program, statewide programs.

Great. Thank you. I appreciate the sensitivity in doing the pilot program, trying to make sure that you have something that makes sense. I want to emphasize with these kind of programs, they can very easily be captured by the insiders. The insiders know about it. The insiders make sure their friends are the ones that apply. The last thing we need with this program is a headline story about how x amount of this money went to people with inside connections.

And so everybody that touches this program needs to realize it needs to work in the best interest of the public and make sure this is a fair process that everybody, if you meet the income qualifications, you should have an equal shot at in terms of getting there and stuff. So I hope you'll help pass that message back on back to you Assemblymember.

Turning to EV charging stations, can carbon CEC comment on where we are in terms of EV charging stations deployment, what the agencies are doing to ensure the reliability of such stations. Obviously an ongoing issue we've had many discussions about, but an update would be great.

Yeah, this is Hannon Rasool with the California Energy Commission. Thank you for that question. Absolutely. One of the most important things for us to work on right now, and we're very focused on it. So this includes reliability, also interoperability and all the components that go around the driver experience specific to reliability pursuant to AB 2061 and then furthered by AB 261. We're currently going through a regulatory process now. So we issued a first draft back in September of 2023.

Subsequently, AB 126 passed and added some new requirements to it. So we redeveloped that regulation and just issued our second draft. So a staff draft with a second staff draft with draft regulations in there for public comment. So we're gonna have a workshop in April and also take in more public comments and hope to have.

Let me pull up my schedule, publish the final draft in July, send it to the Office of Administrative Law also in July, and hopefully adopt it by the end of the year. And specifically in those regulations, we have a few different components. We have reporting requirements, and I'll note that some of these apply to the broader world of chargers, and some only apply to those that are publicly funded or ratepayer funded pursuant to legislation. Our authority somewhat limited on some of these components.

So on the recordkeeping reporting for anything public or ratepayer funded, we're going to require reporting on those also for all chargers, whether we funded it or not. We're going to collect an inventory to know how many chargers are out there. Historically, it's been a little challenging to capture those for medium duty, heavy duty that are at depots that we didn't Fund, or at workplaces or multi unit dwellings that we didn't Fund. So we can do a charger inventory for all chargers, utilization for all chargers.

And then going even further. This is for publicly or ratepayer funded ones. We're going to say that they must be up 97% of the time. So 97% of time. This conforms with the Nevi federal standards, and we're going even further. This, I believe, is a first of its kind type. We're saying that there must be a successful charge 90% of the time. And really that's meant to capture what's not captured in uptime.

Again, this is things like interoperability or payment standards where there could be a fault somewhere along the system that's not captured in uptime. And that really comes to. I mean, I heard you at the reliability hearing with Commissioner Monahan, and I drive an EV. I've gone through the same experiences. The charger's up, but your vehicle doesn't get to charge, and it is very frustrating. So we need to solve for that as well.

No, appreciate that, and looking forward to continuing to work on that. How do programs that build charging stations differ between CARB and the CEC? Is there a reason that we asked two departments or task two departments with this work? What's the interplay there?

Yeah, I'll speak broadly that. Generally speaking, the Energy Commission is really the lead on this. There's some legacy programs, and I'll let Michelle speak to that, kind of, with the electrify America settlement. So there are some programs over there, but by and large, the Energy Commission's the lead on that. And regardless of who the lead is, we have conversations at staff level all the way up with the Air Resources Board, with Gobiz, Caltrans, Transportation Commission, and we really just have a lot of good communication. Our analysis captures that info, regardless of who's funding it or developing it. I don't know if you want to add anything on the.

No, I think what I would have echoed is just that there's a really strong partnership. So in some cases, there are. There are places where it makes sense to Fund a vehicle and the infrastructure together. But really, over the last few years, we've been building a very strong partnership with the Energy Commission and sharing, and there are opportunities for us to combine pots of funding to be able to Fund us funding the vehicles, the Energy Commission, funding the infrastructure.

And so I think what you're seeing is there's a need for investment in both the vehicles and infrastructure, and we're working in close partnership where we can.

Great. And then final question for now, if the Energy Commission can comment a little bit on the plan for transitioning heavy duty vehicles to cleaner options like hydrogen.

Yeah, this is extremely important for us. Our last investment plan was $1.9 billion, multiple years, and of that, over 1 billion, I think was 1.15. Let me grab. The number is towards medium duty, heavy duty. And that's both electric and hydrogen. We're investing in both. Let me grab that number. Yeah. 1.15 billion of the 1.9 billion for medium duty, heavy duty. And so it's a multi pronged approach. We have our energized block grant, which has multiple funding lanes that does a lot of investments.

We also do ones, we call them grant funding opportunities, or GFO's. We do directly through the Energy Commission. And on the medium duty, heavy duty side, one that I'm really excited about, which is targeted on freight, freight movement, goods movement, medium duty, heavy duty, again, both electric and hydrogen.

We did one on the six primary freight corridors last year, and this actually took the six primary corridors from the California Transportation Commission's analysis and report, and we said that eligible projects must be on those six corridors and again, those, the ones they identified as the most needing and the most intense freight, good movement on those corridors. So we did that solicitation. I intend for that to be in a repeat solicitation.

So we really want to do that in cycles every year, release it and continue to build out those networks. Still, in early days of contemplating the next round of it, but the feds released their national freight strategy. So I think the next solicitation would go on the six CTC corridors, but also expand it to incorporate those federally identified corridors as well. zero, sorry.

One other thing I'll note is on federal funding, we do intend to apply to the next CFI grant, and it's very likely going to be medium duty, heavy duty focused, looking at ports and the I five as well.

Anything else? Great. Could you jump over to the low-income e-bike program, which was funded in 2021? When do you anticipate that we'll open that up for applications?

The e-bike program is going through, is getting ready to do their soft launch, and that should be hopefully next month, May. So soon.

Interesting possibilities for us as we try to come up with alternatives to people needing vehicles, particularly in urban areas. Over in Japan, I saw tremendous heavy use of those as an alternative out there.

And that's an example of just the kind of thing that I mean is that things may change, but if we're talking about trying to get people out of cars, transit is one way, but Americans seem to be so individualistic that other individual modes to get people out of cars, and this certainly could be one. So I hope that we all stay on top of that particular program. Comments that Mister Connolly brought up about reliability. I appreciate the answers.

In terms of that, what I have a concern with, and I know it's a concern of the CEC, is the issue of stranded assets. Are those early charging stations that we maybe gave public funding to? Are we going to just end up finding those being stranded assets because they're not being maintained properly? The companies are no longer in existence. There's, the technology has moved beyond them. Can you help me understand there's always going to be some slop in the process when you're.

That's probably a non scientific term to use, but there's going to be some errors as you try to launch any massive conversion from a carbon economy to a carbonless economy. How significant is that with stranded assets and early charging stations?

Yeah, that is a fantastic question and something we're looking at quite a bit. So it's multiple approaches. So on the one, I guess the threshold way I view it is that these projects are often complex construction and electrical jobs, and oftentimes the bulk of the cost is not the charger itself. It can often be if you need an upgrade to a transformer, it's trenching its conduit, water wire laying.

And so we are seeing instances where the charger needs to replace some of this happening by the private entities, their own. I know Evgo has a program where they are replacing some and moving them to new generation assets. And you're exactly right. You know, certainly growing pains have occurred along that way. The first generation was not as good as the current generation we're in. So there is an opportunity to replace and repair some of the older ones, which can happen.

We have money coming from the Fed. Feds. About $60 million to replace about 1300 chargers. So one approach is we're hoping more money comes from the Feds. We'll continue to replace those existing ones. Again, the conduit and wire is often still functional. It just. You want to replace that end piece. The other thing we're finding, to your point about there may be some companies that go out of business, is really looking for some baseline standards.

So from the vehicle to the charger, things like ISO 15118 which is the communication standard, then from the charger to the backend using OCPP. That should really help the case where if one entity goes under, someone else can come in and operate it, because they're all using the same communication standard. So we're trying to put safeguards in place to protect against that. And then the last piece I'll say, is that we are funding a survey, a study by UC Davis.

It's a three year study, to look at chargers, whether we funded them or not, and really have a large enough sample size to see. See what's happening. And we even want to segment it by vintage. So what is the reliability of something back in 2019 versus 2023? So we're doing a lot on that front. The UC Davis study is still under development.

So some of those details may change, but we're hoping to actually get results from that as early as the end of this summer and we'll continue to get input from that.

So that's a three year study that hopefully you'll start. So it's been in process for three years?

No, I'm sorry. We're just starting it now. The first tranche of data should come out this summer.

Okay. So do we have any data on how many stations we funded are just stranded assets right now? They're not working.

We don't have great data on that. The chargers we funded pre 2021, we didn't have requirements to provide that reliability data. So that is information we will capture going forward.

So. And I appreciate your answer about the sort of the issue of ZEV on the six major freight corridors. How extensive is that plan? Do you have recommendations for how far apart these ZEV stations should be? To what extent are these going to be both electric and hydrogen? ZEV stations, will they be hydrogen heavy duty charging and will they be what can you fill us in on with regard to that?

Yeah, so they will be primarily heavy duty. We really want to capture those drage trucks and long haul vehicles. So support heavy duty. The first funding that we did on that one was about $301.0 million and 3 projects were funded. And when I say projects, there's multiple sites. So we asked them to actually start building out a bit of that network as we do future iterations of it. We're going to be more targeted. If we start seeing one area getting saturated, we'll push people to others.

On this first one, we didn't have that parameter. It was hey, these six quarters were just identified. Let's start building those. And I'm happy to share the map with you if you want to see that as well. We have a map from the CTC.

Percentage battery versus hydrogen.

So let me pull that for you from our NOPA.

So from the first project, for the notes of proposed awards, there were 218 chargers and three hydrogen dispensers. Although I'll note those hydrogen dispensers can fuel more vehicles than a charger. So definitely more uptake on EV's on that first one. But one thing we do is we say there must be at least one hydrogen project, at least one electric project, and then we kind of eliminate those buckets and say the best projects that scored highest after that will get funded. So we certainly have mechanisms to ensure that we're funding hydrogen as well as electric, which we often do.

What is the CEC's sort of analysis at this point in time, in this competition between hydrogen and batteries for heavy duty, particularly heavy duty, long haul semi trucks, leaning towards one or the other is still completely. What do you see happening? What does the technology tell us is likely to be the one that we should be funding more of?

Yeah, I would say we're agnostic at this point. It's a little early to say which one's going to proliferate. I think it'll ultimately be some mix, and whether that's one weighed one way, weighted one way or the other is yet to be determined. But we're still in early days, so I would be hesitant to say that one is going to win over the other.

Do you see one having. What are the advantages of one over the other? Do you have any kind of rough analysis? There is one better at a certain kind of trip and the other better at a different kind of trip.

I'll defer to CARB on the vehicle side of that.

Sure. I think that we have evidence to suggest that both are incredibly valuable and viable options for zero emission future. I feel that. I think one of the things that we need to keep in mind is that if we put battery electric against fuel cell, we're taking the two most likely technologies to get us to the future against one another, when in reality it's going to take zero emission to get us to our transportation goals.

And that means that we need those technologies to work together and to share the responsibility so that we can reduce our petroleum, our dependence on petroleum and combustion vehicles.

I think all of us agree that it's all of the above approach. Just trying to identify what are the attributes of one versus the other is one. Does CARB have any analysis in terms of for long haul trucking as one seem to be ahead? This all can change in five years, as I've mentioned here at the beginning of this, for short repeat trips, does one seem to be ahead. Do you have any analysis, any data on that?

Well, we have a lot. We have a lot of data and a lot of analysis, and I don't know that, again, that there is a clear winner, in particular in the areas that you're talking about, for example, long distance trucks. We have some battery electrics that are competing with some of those hydrogen, the long haul hydrogen trucks, and we're working on keeping the data updated so that we can better understand how they operate in the long term.

I know that whenever we had been working, whenever we moved forward with the innovative clean transit regulation, which was the first place where we really kind of started looking at electrification, part of that regulation required the transits to present plans on how they would electrify. And they've gone, we've seen plenty of examples of where they were going with battery electric, but also examples of where they were going with fuel cells.

And so really, again, very early, it's early days to be picking winners, but we certainly, there's a lot of a wealth of data out there that if you're interested in seeing, we'd be happy to share with you.

I'll leave you with this. I'm very curious about going up grades. I have no idea which one seems to be at this stage performing better in terms of steep grades, getting up over mountains, etcetera. And with that, we have several Members of Burr here. And so this seems to be the item we're having issue one. So we're on issue one. I'm also needed in elections, so I'm going to turn this over to Assembly Member Conley and go on to issue two.

But we'll let you ask whatever questions you have. Appreciate you being here. Assembly Member.

So thank you all. I actually had just one group of questions. I was looking at the, the, basically the ZEV plan, and one of the things that in talking to local governments has been a, one of the messages that they have conveyed is that they are not aware of any funding to allow them to do the kind of planning that they are seeking to do to make sure that we actually have plans for building decarbonization, seeking funding, and actually distributing it to folks in their jurisdictions, but more importantly, build out for electrification for vehicles, both passenger vehicles as well as medium duty truck fleets.

Last year spent a lot of time with the budget looking for whether there's funding available in any of the current allocations to allow local jurisdictions to do sort of the kinds of plans that have been done in Santa Monica and Oakland, where they've actually looked at you know, what kinds of strategies are in place to make sure that, you know, apartment buildings that are being newly built are putting in charging infrastructure that they're thinking about on street charging capacity, all the areas to make sure that everyone in our community is ready for the time when we're only selling electric vehicles in the state.

Can you, I noticed down here on the other, at the end that there's a category that looks, that says community based plans and projects. Is that available, for example, for.

The City of Culver City, for example, to be able to sort of put together an electric, you know, climate action, electrification plan or element to their General plan, you know, to just do the planning work that they need to do.

While I am holding to make sure that that is a yes, I believe that cities are available, but really the planning and capacity grants are meant for communities to be able to build out exactly what you're saying. The plans to electrify or to do decarbonize.

And then they have the, then they get to the next step is that we have other programs available like our sustainable transportation equity project, which step, and our clean mobility options program where they can then as they put the plans together, receive funding, funding to support some of the actions that they will take. And I just want to double check, yes, cities are eligible as well to apply for those planning capacity grants.

I've got a Bill that's moving forward, AB 1176. Would you take a look at that and take a look at whether or not you think this bucket of funding would be available for jurisdictions to access to do the planning that that would require?

I encourage you to reach out to David Garcia through our legislative office.

Thank you.

Okay, great.

Thank you. Assembly Member Petrie Norris. Any questions for panel one? We're just going to wrap up.

Yeah, no questions on panel one.

Excellent. Thank you. So I think that concludes panel one. Thank you, everyone. Very informative. And we'll invite panel two up, which will include representatives from Department of Finance and the LAF. And issue two, of course, is greenhouse gas reduction Fund spending plan. Good morning. Who's kicking us off?

Good morning. Morning. Chair Connally and Members of the Committee, Brandon Merritt with the Department of Finance. I'm here today to present the cap and trade expenditure plan as proposed in the 24-25 Governor's Budget. This plan primarily uses the greenhouse gas Reduction Fund, or GGRF, to protect many previously General funded priority climate investments.

Specifically, the plan shifts a total of 1.8 billion in eligible General Fund climate program spending to the greenhouse Gas Reduction Fund, including $557 million in current year funding via early action and 1.2 billion in 24-25 across various climate programs. In addition to the proposed Fund shifts, the plan incorporates appropriations that were previously agreed to last year with the Legislature, which includes 250 million for AB 617 and 230 million for the zero emission transit capital program.

The Administration can accomplish this spending plan by utilizing updated revenue projections for by higher than anticipated auction proceeds in the current year and delaying 600 million for multiple planned Zip ZEV program investments codes. The delays for ZEV program shifts planned investments from 24-25 to 27-28 to enable other priority climate programs to be shifted onto GGRF and 24-25 the Administration remains committed to supporting Californians access to cleaner transportation options and to protect critical investments associated with the transition to ZEVs-.

As part of identifying ZEV package solutions, the Administration focused on balancing and maintaining previous investments associated with building out critical infrastructure to further support the state's growing ZEV network while also addressing the projected budget shortfall. One of the key tenets of this budget is keeping our commitments to the extent possible, and how we can keep some of our commitments on various climate programs is by shifting them to GGRF.

The Administration looked at what General funded climate programs still have funding available that most align with the administration's priorities, including supporting equity, meeting GGRF goals, and those that have also previously been funded out of GGRF. The mix of programs that are proposed to be shifted to GGRF meet those considerations. The early action package adopted earlier this month approved the $1.8 billion level of Fund shifts, with detail on the specific programs that would be shifted to GGRF to be determined at a later time.

Thank you, and I'm happy to take further questions as we continue this discussion on the 24-25 cap and trade expenditure plan.

Thank you, Sarah Cornett with the Legislative Analyst Office. So, just for some context, as you likely know, most of GGRF, about 65% of those revenues go automatically to a set of continuous appropriations determined in statute. And the Governor is proposing a 2.3 billion discretionary spending plan for the remainder of those funds.

So as the Administration mentioned, the proposal includes the 557 million agreed to for early action, primarily for ZEV activities yet to be determined, and the spending plan largely backfills General Fund reductions to climate and transportation activities, including various climate packages. And there's also this the 250 million for AB 617, the Community Air Protection Program, and the planned investments agreed to in the last budget for transit.

So we recommend that you adopt a GGRF spending plan that really focuses on your highest priorities and maximizes General Fund savings. Because GGRF funds were authorized with a two thirds vote, they can, in theory, be used for broad purposes. So this is just something that we think is worth keeping in mind. We also recommend that you minimize out your GGRF commitments, which would preserve greater flexibility depending on how the budget situation evolves.

And finally, we recommend that you monitor auctions and update spending levels accordingly to reflect evolving revenue trends. The Administration has an updated revenue forecasting methodology. As the Department of Finance mentioned, we believe that this is more accurate than the methodology used in previous years. However, we do think there is more, there will be more available just given the most recent February auction, which came in higher than expectations. There will be more discretionary GGRF funding available than what the Administration included in the in its January budget proposal. Thank you.

Thank you very much. Before we start with Member questions and comments, I'd just like to emphasize one thing as we look at GGRF. If you look back cap and trade, the fundamental concept was we were going to allow more pollution now, but charge people for that and use that funding to decrease our emissions in the future. And that that was the appropriate trade off. The pollution of today will Fund the solutions so that we have less pollution in the future.

And I just want to make sure that we keep emphasizing that's the primary goal, because if we do actually reduce emissions in the future, we solve problems and you get the benefits long term. Some people want to take that money and focus it on the impacts of climate change, and that's not an inappropriate, that's an appropriate use, but it doesn't have the same bang for the buck that it does if you can actually decrease admissions in the future.

And so we, some of our programs are more likely to decrease admissions in the future future than others. And I just hope it was sort of a reminder for all of us to keep our eye on the prize, which is make sure we use GGRF as much as possible to actually get those admissions down in the future, or we will be missing a big opportunity that we sort of planned as our big climate action program as it moves forward.

With that, I'll turn it over to Members. Any Members of have questions or comments they'd like to make about GGRF. Assembly Member Conley

Thank you, and I appreciate your thoughts as well. So, initial question to LAO. Your office has flagged that though cap and trade authorization expires in 2030, revenues are expected to decline due to investor uncertainty about the status of the program.

Additionally, LAO states that volatility related to reauthorization questions is not likely to be a significant risk this year, but could develop over the next several years closer to 2030. So I guess based on the LAO's analysis of the projected revenue decline, when should the Legislature reauthorize cap and trade, and could the Legislature resolve these speculatory issues by reauthorizing the program next year?

Thanks for the question. So I think there are two kind of separate issues here. First is the question that you raise of reauthorization. So our office doesn't necessarily believe that revenues are going to decline due to the close State of reauthorization alone.

The issue that we really want to kind of flag for you is that the longer the Legislature waits to extend the program, the more that investors, outside investors who participate in the Cap and Trade auctions, the more uncertainty there may be in terms of is it worth buying a cap and trade auction allowance when, I don't know if the program is going to be around for, you know, for past 2030. So that's just the issue that we wanted to flag.

We don't believe that revenues are, we don't expect that revenues are going to decline in a, in a serious magnitude anytime soon. However, from, from our understanding, you know, reauthorization as soon as possible. If the Legislature want, wants to continue with the program, it's up to the Legislature ultimately. But doing so as soon as possible would help mitigate those risks of uncertainty. And then the second issue I just wanted to be sure to mention is the Cap and Trade rulemaking process.

So CARB is currently considering making changes to the program. We're expecting to see more details about what those changes will be this year, but that will definitely have an impact on GGRF revenues and terms of how CARB ultimately makes changes to the program. So those are kind of the two factors we really wanted to highlight for you that are contributing to some uncertainty that we want to just make sure you keep that in mind when you're making these out year commitments with GGRF.

Assembly Member Connolly, if I could just follow up with that, and that is that evidence from the last time, as we approach the expiration and didn't have certainty about it continuing, is that revenues did take a significant hit. So I think it would not be prudent for us to think that it's okay to get close to 2030 and not send the appropriate signals.

And so I hope we'll use this Committee and Members of this Committee to try to emphasize the need for early action on making sure we clarify whatever combination of things we're going to do that follows the expiration of cap and trade in 2030. Is it an extension, is it a modification, what we're going to do? Back to you, sir.

Agree with that. So well put. Just so a follow up kind of, in the interim, in terms of trying to ensure predictability, what steps need to be taken to ensure that the next, let's say three cap and trade auctions are predictable in terms of revenue generation?

I think that may be a more appropriate question for the Administration. The Legislature isn't really in a position to kind of intervene in the way in the current structure of cap and trade auctions. Again, the kind of settlement price of those allowances is uncertain. It's determined it's a market based system, so we can't really anticipate for sure what those are going to, what those are going to be.

However, the past few auctions, the price of allowances has been increasing, and the most recent auction, the February 1, did come in at a higher settlement price than what the Administration predicted. So it's possible that that will continue to happen, you know, depending on how investors are kind of taking in these proposed changes from CARB. But I don't know if we can really identify for you steps that you can take at this time to ensure stability there. Yeah.

Thanks. And then final question. It's my understanding that the $200 million annually for wildfire prevention activities ends in 2028-29. Can the Legislature reauthorize and extend this funding? If so, when would the latest the Legislature could do so without jeopardizing projects and prevention work happen?

I think again, that is probably the second part of your question is a better one for the Administration. But the first part in terms of can the Legislature do that again? Yes. That is all of those continuous appropriations, including the wildfire, 200 million off the top, those are all authorized in statute. And if the Legislature wants to continue with those in the future, you could absolutely do that through legislation as has been done previously.

Thank you, Administration. Do you want to opine on Assembly Member Connolly's, how do we ensure we're going to have great auctions the next three auctions? I'm sure you have the expert answer to that right now. Right.

Dragler, Department of Finance. Let me kick it off, and then if one of our carp colleagues wants to add anything on, they can as well. But at this point, we're not anticipating any decrease in revenue over the next reaction. Then, as the Elio colleague mentioned, it's actually been higher revenues than we had actually been projecting. And so no, no central issue there in terms of the wildfire resilience related questions, that's just an annual appropriation.

So as long as the extension happens before the expiration happens, there really shouldn't be any sort of programmatic impact, as long as it happens before the expiration would happen.

Thank you for the question. Assembly Member Connolly and Bennett Matthew Botill. I'm the Division Chief of the Industrial Strategy Division at the California Air Resources Board, and among other things, I oversee the state's cap and trade program. And I think the important thing for us is to remember that the fundamental purpose of the cap and trade program is to reduce emissions and to provide that certainty and declining cap on greenhouse gas emissions for our major sources, emissions in the State of California.

And the purpose is not necessarily to just generate revenue and, or to have a stable revenue stream for the state. So to the extent that we maintain consistency in the design of the program, in the long term trajectory, on the emission reduction side, the market and the actors that are participating in the Can and Trade program see that certainty and that provides stability in the overall secondary market on prices and in the auctions that come forward.

So from us and for our perspective, the important thing to do is to make sure that we have clarity on the market rules and the long term emissions trajectory so that confidence is still baked into the program and we have that consistency in the secondary market.

I really appreciate that. Before I turn to Assembly Member on my left here, it reminds me of serving on the First Five Commission and people lamenting the fact that smoking was going down and so the revenues were dropping.

And we do have to remember, this is not designed, first and foremost, to be a revenue generator. This is designed to be an emissions reduction program. And if we don't properly price carbon emissions, we will never efficiently utilize. And I think it's real clear, as the economist for ..., I hope will agree, proper pricing of everything is one of the ways to most efficiently allocate it.

And one of the things that cap and trade should be doing is putting the proper price on carbon emissions so that we actually only have carbon emissions where it has the best sort of short term value for, for all of us as we move forward. So I hope that's something we will consider as we re-up.

Cap and trade is to try to make sure we are sending the right pricing signals, because the market with the proper pricing signals can do far more than we can do with regulation. If we send the proper pricing signals. Assemblymember.

Thank you, Mister chair. So picking up on the chair's point that it's absolutely critical that we get the biggest bang for our buck in terms of GGRF spending. It's very difficult for me, based on the information that we have before us, to ascertain whether or not that's really happening.

So I guess rather than ask some specific questions about the specific plan before us and some of the fun shifts, I guess, let me take a step back and can you help us understand how you evaluate, because everybody wants a piece of GGRF, right? Particularly in our current budget environment, how do you evaluate what is in fact the biggest bang for our buck, and how did you put together the proposed spending plan?

Well, I'll take a crack at that first, and then I'm going to turn it over to my colleague at BARB. So I would just note that while cost effectiveness is an important factor, it is not the only factor. Focusing solely on cost effectiveness would provide missed opportunities to support programs that focus, that also focus on equity and supporting disadvantaged communities, which is also an important lens and statutory priority for cap and trade funds.

CARB does release an annual cap and trade California climate Investments report, which does include information on cost effectiveness for the various programs that have been previously funded out of GGRF, and we can provide that information for those programs. With that, I'd like to turn over to Matthew for any further comment.

Yeah, thanks. I don't actually have much more to add than just to reiterate the points that finance made with respect to all of the information that's provided on the climate investment side, greenhouse gas reductions, co benefits, status of funding, all of that information.

The CARB team works across the Administration with the other implementing agencies to produce that information twice a year and makes it available on the website for the LAO for the Legislature to consider and the Department of Finance, as you all make decisions on the budget.

Maybe just one thing to add, too. So with cost effectiveness, as the Administration mentioned, that's cost effectiveness in terms of reducing emissions. So we, the way that the Administration develops the spending plan is not designed necessarily with that at the forefront. That's something, that's data that's available, but there is a wide variety in terms of cost effectiveness of emissions reductions with these programs. And in addition, our office and some researchers have kind of raised some issues with the methodology that CARB uses to make those cost effectiveness calculations. So just wanted to kind of put that out there as something to keep in mind when we're talking about this issue.

I think that's really critical. And perhaps this is a conversation for, it certainly is a longer conversation, and I think a conversation for not just another day, but many, many other days, because we've got something that's called the Greenhouse Gas Reduction Fund. I think that if you ask 100 Californians, 99 of them would presume that the primary goal of the Greenhouse Gas Reduction Fund is in indeed to reduce greenhouse gases.

And so I would really challenge the notion that we should be doing anything but evaluating cost effectiveness in terms of making those expenditures, because doing a laundry list of stuff that might sound good and make us feel good but isn't actually pushing us to our goal is not serving any communities in the State of California, and it's also not helping us deliver on our climate goals. We have incredibly ambitious and incredibly challenging targets.

I'm very concerned that we're not actually on track to deliver on those targets. So I think we've got to get really, really serious about evaluating what we're doing now with those funds and thinking about how do we scrutinize those expenditures and ensure that we are optimizing those dollars. And as the chair said, getting the biggest bang for our buck.

So I'll just note that as like a, I think a really, really important piece of follow up and I think a really important conversation for the Legislature to have with the Administration this year. And very quickly, I do have one additional question for CARB. So related to the proposed changes in cap and trade allocations, are we considering the impact to electric and gas rate payers as you're making, as you're considering those proposed changes?

And I guess the reason I ask is that while on the one hand that might not be the primary frame of reference we are, in order for us to actually deliver on our climate goals, we need to have mass electrification. If that becomes completely unaffordable, incentives are so misaligned that we're not going to deliver. So I guess, how are you thinking through how we're aligning all of those incentives?

Thank you for the question, Assemblymember. It's a really good one. And I also want to come back to what you said previously and what Assembly Member Bennett said as well, with respect to the importance of reducing greenhouse gas emissions and the importance of doing that cost effectively. One of the fundamental tenets of having a cap and trade program is that it, by design, looks to find those most cost effective greenhouse gas emission reductions because it does put a price on carbon.

It has an auction mechanism and a secondary market by which the covered energies in California, the major sources of greenhouse gas emissions are able to either purchase an allowance for their compliance or look for opportunities to abate their own emissions through technology changes, through installing renewable electricity and energy projects through greenhouse gas production technologies at their own individual production facility.

And that gives the major emission sources in California the flexibility to find the most cost effective emission reductions in California under the context of the cap and trade program. And so it is one of our main strategies to really put that price on carbon and to do it cost effectively. Now, the question about impacts on utilities and ratepayers, absolutely. This is something that has been a key consideration for the program since day one.

And, in fact, the current design of the cap and trade program accommodates and addresses some concerns about ratepayer impacts by providing significant allowance value to the state's utilities for free, which they then turn around and provide climate credits on bills for Ratepayers as part of implementation of the program. So there's already a revenue return mechanism to help offset costs associated with the program on ratepayer bills. Certainly a big question going forward, something that we're very keen on.

And we've had discussions about how can we make sure that this program is supporting the build out of the electrification and the utility network that is needed for our deep decarbonization objectives and doing it in a way that minimizes any potential impacts on ratepayers. So definitely consideration something that we're continuing to look at as part of updating the program as well.

Okay. That's wonderful to hear because I think it's so important that alongside our climate goals that we're keeping affordability front and center, if for no other reason than I feel like right now we have the vast majority of Californians 100% behind us as we reach to achieve our very ambitious and important climate goals. I think there's no more certain way for us to lose public support than rates and bills that are out of control. So appreciate you keeping that front and center. And I think recognizing that achieving that affordability goal is really also very pivotal in achieving our climate goals. Thanks.

Seeing no other questions, we're going to move on to item three, issue three, whichever one of you is going to go first.

Thank you, chair Bennett and Members, I'm Grant Harris. I'm the Division Chief of the Administrative Services Division.

Can people hear, can people hear him back there?

Is that better?

Get it as close as you can.

All right, so thank you, chair Bennett and Members, I'm Grant Harris. I'm the Division Chief of the Administrative Services Division I'm going to discuss our proposal for the California Air Resources Board Southern California headquarters building operations and maintenance contract CARB is requesting 149,000 for one permanent position and contract funding to renew CARB's current Southern Headquarters Building Management contract in the amount of 6.1 million and 24-25, 9 million, 25-26 and 9.4 million and 26-27 and ongoing.

The one full time permanent position will focus on the building management and maintenance contract oversight in addition to tours and events at the facility. Currently, several analyst level employees within the southern Facilities unit manage various aspects of those tasks. Centralizing those duties will alleviate the additional workload placed on those analysts and allow them to focus on their duties and ensure completed staff work.

CARB is in charge of protecting Californians from harmful effects of air pollutants and developing programs and actions to fight climate change by providing a State of the art modern laboratory that integrates the latest in emissions testing technology equipment and placing employees in a functionally efficient, accessible and code compliant building, employees productivity is enhanced Carbs new southern headquarters building provides a singular, reliable base of operation for carbs activities in Southern California and this facility complies with Executive Order B 1812, ensuring that this project will meet or exceed standards for green building practices.

The building management contractor will manage critical facility systems and ensure equipment warranties remain in effect in the ensure the facility achieves the zero net energy rating. As expected, this role is central to the success of CARb's new southern headquarters building, providing a safe, efficient environment for CARB staff to continue to build on the important work they do. I would like to thank you for your time and at this time I will be happy to field any questions.

We have significant concerns about the the $9.4 million increase in staffing cost, so I'm sure we're going to ask about those unless the Department of Finance has anything you want to add and then we'll go to LAO.

No further to add. Nothing further to add at the moment.

Just briefly, we did review this proposal and we do find it justified. In an ideal world, the Administration would have anticipated these calls costs. However, since DGS has acknowledged that it's not able to staff the building, given its specialization, we were not really able to identify any alternative options.

So I appreciate you talking about the value of the building, but I'm trying to find out from CARB and the building's already built, why didn't we predict these costs? What is so specialized that's going on that it can't be handled by DGS staffing I mean, it's the 9.4 million. And I turn to Department of Finance. That's on top of what was already approved for this building. How did we overlook this 9.4 million?

Well, I'm going to first turn it over to my colleague to talk about why these costs are required to be contracted out, and it's something DGS is not able to handle. So for that question, I'd like to turn it over.

When we first brought the building online early 2022, prior to that, in 2021, we were going through the process with DGS to assess if they could support the building. They did look at the site, and they ultimately determined they didn't have the available staffing or the expertise to support the equipment. At that time, we did submit a BCP to Fund a building maintenance contract, I believe, for approximately 18 months. And at that time, we opened up the building. We did secure a contractor.

And since that time, we've been living in the building and really assessing what it takes to provide all the preventative maintenance, keep all of the equipment up and running in a safe and optimal fashion. And with that, we've developed a more comprehensive scope for the ongoing contract. And with that scope, it has gotten larger. There were certain equipment within the building that weren't included in the original scope as far as maintenance, a lot of overhead cranes, liquid nitrogen systems, systems, things like that.

And those have raised the cost. The other factor that comes into play here is we were able to secure the cost of that contract late 2021 before we've kind of felt the impact of some of the inflation over the last few years. So with going back out to bid, that's going to be an impact as well. So we're projecting some increase there. And with that exercise as well, early this year, we engaged with the Department of General Services again.

They did another assessment of the building, and in February came back again and confirmed that they still do not have the availability to support that facility.

So this is a $9 million increase over what we thought it was going to cost to operate the building.

To my knowledge, I don't believe operating costs for building management were built into the original funds for the construction. So it's not on top of anything that was already granted. It's just the total for the contract.

Department of Finance, would you like to comment on that? Is this $9 million annually over the original estimates for operations in the building? Yes.

Well, as my colleague mentioned, there was a previous contract in place that was kind of an interim, getting things up and running in the amount of, I think, 18 months.

Correct.

And so the costs were already trending in that direction in terms of maintenance and operations of the building. This came in and kind of solidified that amount. And I'd like to also, if we get to that, there's kind of a comparable cost.

When you compare the DGS estimates for what it might take if they were able to actually undertake this work to maintain the facility versus what we're obtaining in costs via a contract, when you kind of look at the comparison between the two, we're actually seeing some cost efficiencies in a contract method versus a DGS oversight method.

Do you have the cost of that 18 month contract? What was that? What was that 18 month contract cost?

I don't have exactly. I believe it was approximately 6 million a year for that contract.

6 million a year. So 18 months, it was 9 million around about, yeah.

So I think in 24-25 you'll see a slight continuation of what it was previously. And then obviously we're jumping up a little bit in 25-26 and then it stabilizes ongoing at that 9 million and change. Roughly ongoing.

What was it last year then? Do you have that cost of the contract for that year?

Cost of the contract last year? I don't have at the moment. I don't have that with me. I could follow up with that. I can certainly follow up on that piece.

Thank you. Other Assembly Members questions? Assembly Member

I have to say I'm very confused by this, just because $9 million a year seems just like an enormous amount of money, and it's possible. I just don't understand. Can you describe for us a little more what is this building that it's requiring a $9 million a year maintenance contract?

This is a unique campus. It's not like your standard office building. It is that, but it also incorporates all of the testing facilities as well as a chemical laboratory space. So when you combine all of those, the easiest way to describe it is kind of like combining a hospital and an office building and an automotive shop all into one. So we have to provide services to all of the equipment that service those various tasks.

There's a lot of health and safety things that have to be implemented as far as the laboratories and monitoring all the various chemicals. There's complex systems within the building. We have an ozone generation system for treating all of our water runoffs that has to be maintained operational or does have potential safety impacts for our staff. If ozone wants to build up in an enclosed space, it's just, it's really hard to describe one thing we are offering to all the Members, if you're interested.

We more than happy to set up tours to take you through the facility and really show you the complexity of all the behind the scenes equipment, the switch gears, and the things it really does take to operate rate. And they're so critical because the work CARB does. We have to be able to verify our testing and ensure it's repeatable. So if we have any dips in power, any changes in the environment within the chambers, the testing is void. So it's very critical those systems maintain operation or the work our programs are doing is moot.

Okay. And yes, I would welcome a tour to sort of understand and see what's actually happening. And I will say, I'm sure that I recognize that $9 million, in the context of your budget is. It doesn't seem like a huge addition. I think it's, to me, kind of the principle of how we need to be approaching budgeting, particularly in our current situation. And I really appreciate staff, and I think you all received it.

This packet, staff identified a couple of areas where there are some discretionary appropriations that have been made in past year's budgets outside of the climate package. And I would really challenge you to take a look at some of those appropriations and ask yourself, is there an opportunity to make up for this study deficit utilizing some of those existing funds? Because I think that's the orientation that we need to have.

There's always going to be a longer list of stuff that we want to do than money we have, and that hasn't been the case. We've had budget surpluses the last few years. And I think, not saying that CARB has gotten into this habit, but in a world of budget surplus, it's really easy to just do everything on your wish list, but, like, we can't do that anymore.

And so I would really challenge us, you know, with this project and with others to think about how do we do more with the resources that we have. And like I said, I would welcome the opportunity to understand what is. Yeah. In real life, what's happening on this campus, so I can make sense of a $9 million maintenance contract. Sure.

We'll be happy to set it up.

Thank you. Appreciate that.

Anything else? All right, we are. Any comments on the non presentation items that said what you had to say? All right, we are ready to take public comment.

Mister chair Members Beth Olhasso, on behalf of the Agricultural Energy Consumers Association, really appreciate your comments and those of some of Pete G. Norris on Bang for the GGRF buck, I want to highlight that dairy methane production, dairy methane reduction programs have been at the top of that list for years. To that end, we strongly support the administration's for $24 million from the General Fund to GGRF for CDFA dairy methane reduction funding. This funding is critical for the Alternative Manure management program.

It'll help us to leverage $85 million from USDA. So 25 gets us 85 and which so it's a two to one match. We support restoration of $23 million General Fund into GGRF for the Enteric Methane Reduction program at CDFA. This program is critical as commercially available feed additives will soon be available and important to add to the major reductions already achieved by dairy methane reduction programs.

Thank you very much, Mister chair and Members Michael Pimentel, Executive Director of the California Transit Association, good to be with you this morning. I just want to start off by acknowledging and thanking the Committee for the Actions last year to provide provide $5.1 billion in emergency funding to California transit agencies this year in the face of budget deficit. We're really appreciative that the early action budget preserves that funding.

But I do want to call it an important note, and that is the early action budget, of course, approved the top line figure for General Fund to GGRF Fund shifts embedded within that Fund shift per the governor's January budget. There's quite a lot of money for maintaining that investment of $5.1 billion. That includes $261 million for the formula based TIRCP, as well as several hundreds of millions of dollars for the zero emission transit capital program.

In addition, the Governor's Budget includes a fundship for maintaining investments in already approved projects for TIRCP cycle six. And so we would just encourage that as you're making your final decisions, that you maintain those commitments in moving the specific line items forward as presented in the Governor's January budget. Thank you.

Thank you, chair Members. My name is Stephen King and I'm the clean energy advocate with Environment California.

So not only do Californians continue to breathe some of the dirtiest air in the nation, but we're also increasingly feeling the impacts of climate change, from extreme weather to wildfires and more. We know that we need strong climate and clean air investments in our state budget if we are to cut pollution and have healthier communities. And we understand that state decision makers have some tough budgeting decisions to make ahead of them.

But we also know that every dollar that we save by cutting climate investments today will only cost us far more in the long run. Instead of cutting clean air programs in the state budget, we must invest in clean cars and healthy homes. We should start by eliminating all subsidies for polluting oil and gas companies that are driving climate change and polluting our communities. We should also divert funding away from wasteful and unnecessary highway expansion projects that go against our clean air and climate goals. So I urge you to protect critical climate investments in the state budget. Thank you very much.

Good morning. Elyse Fondrik on behalf of the Asian Pacific Environmental Network, APEN is urging the Legislature to restore the 160 million for the SGC Community Resilience center program. This is what was previously earmarked for this fiscal year, but zeroed out in last year's budget. It's an extremely popular program and round one of CRC funding was oversubscribed by almost 700% for their existing funding capacity.

The budget request is an environmental justice priority and Apenn is requesting that the the program be funded ambitiously via GGRF dollars alongside other priority programs including transformative climate communities and equitable building decarbonization. APEN also wants to take the opportunity to urge the Legislature to support a robust and equitable climate bond that supports EJ priorities, including CRC's, TCC's, equitable building decarb and community solar and storage. Thank you.

Thank you. Good morning. Bill Magavern with Coalition for Clean Air it's especially important this year that we use our transportation dollars wisely and as you noted chair Bennett, the point of the GGRF is to reduce emissions. Therefore, we recommend that the cuts to the zev mobility and heavy duty programs be restored with GGRF funds. GGRF can be freed up by backfilling TLRCP with state highway account and or federal transportation dollars.

Secondly, on the point raised by Assemblymember Connolly, we do support redirecting funds to make sure that clean cars for all programs in the air districts which are popular and in demand do not run out of funding. We can do that and keep other programs running at the same time. So appreciate your bringing that to the attention, Mister Connolly and in the staff report, we're going to give an award for everybody that beats the ringer. Thank you.

I'm not feeling good. Brendan Tuig on behalf of the California Air Pollution Control Officers Association, that's the air pollution control officers from all 35 local air districts. As the state contends with a significant budget deficit. This year we asked for your continued prioritization of programs that cost effectively reduce emissions, both from greenhouse gases and criteria pollutants, meaning we get both public health benefits and climate benefits.

Two air district programs that do so cost effectively with mobile sources is the Community Air Protection Program, AB 617 program and the Farmer program. They protect public health and also cost effectively reduce ghgs and criteria health pollutants. So that means our investments are going to further by prioritizing these programs. Unfortunately, the Community Air Protection program has now, it's not unfortunate that it has 19 communities. What's unfortunate is it's receiving about the same level of funding as it did with 10 communities when it first started. So I'll stop there. Just one last thing. We support items 6 and 7 on the agenda.

Michael Jarred, on behalf of Climate Resolve, I'm here to speak about OPR's extreme heat and community resilience program. They're currently looking at awarding $20 million in General Fund. They received interest for $160 million. So we're concerned that by zeroing out the rest of their General Fund and shifting the rest of the funds to GGRF, there'll be no funding in the immediate term to Fund projects which we think are vitally important to deal with the most deadly impact of climate change, extreme heat. So we would urge you to preserve as much General Fund for that program as possible. Thank you for your time.

Good morning. Erica Romero on behalf of Valley Clean Air Now just here in strong support of ensuring that clean cars for all programs are kept whole. Just want to note that in the valley, since we've relaunched incentive delivery in October, we've seen a three times increase in application rate and the application rate.

Just want to signal that with all the changes last year, increasing the incentive amount, making the incentives available to all zip codes, not just DAX, and seeing the use of market recovering, we anticipate that this will be the case across the board and when there are any gaps in funding, this kind of can sow distress and the priority communities were trying to transition into clean transportation. So just would like to, you know, thank you Mister Connolly for uplifting that and want to ensure that we keep these programs whole. Thank you.

Thank you.

Thank you Mister Chair Mark Fenstermaker for the California Association of Resource Conservation Districts. I want to highlight that the Administration released earlier this week strategies to ensure that our nature is part of the carbon solution in sequestering carbon. So we support the governor's proposal for wildfire prevention grants at CAL FIRE Regional Forest and fire capacity program at Department of Conservation to ensure that our forests are acting as carbon sinks, not carbon sources, and not emitting high levels of pollution and carbon through extreme wildfire.

I also want to highlight our support for CDFA's state water energy efficiency program. We know that reducing our water needs means that we're moving less water around, which requires energy, which emits carbon, but also helps us in our climate resilience factors when we get into drought years. Thank you so much.

Good morning, chair Members Charles Watson on behalf of BART, the Bay Area Rapid Transit District, echoing some of the previous comments by CTA, I want to thank the Committee for its Actions last year to support transit operations and capital projects throughout the state and also want to support the proposed Fund shifts specifically for TARCP and the zero emission transit capital program. Thank you.

Good morning, Chair, Members Barry Vesser from the Climate Center. A recent report released by next 10 said that California is not on track to meet our 2030 climate goals. In fact, we are going to be 17 years late. So cutting climate investments from the budget will only make this reality worse. As we consider what expenditures should be shifted from the General Fund to GGRF. We need to prioritize those that produce clean air, public health and equity benefits.

And as you confront the difficult decisions before you delaying these vital programs, we must stop subsidizing fossil fuels as a state. Ending oil and gas subsidies, especially through larger programs like the water's edge election and research and development tax credits can potentially redirect hundreds of millions of dollars to climate goals. I also want to support my colleague from the Coalition of Clean Airs request to shift state highway account funds and federal funds to support active transportation and clean energy priorities. Thank you so much.

Good morning. My name is Jane Bender and I'm a volunteer with the climate center and I live in Sonoma county, where we have been devastated by wildfires with thousands of people losing their homes. Not only that, but being stuck now with no fire insurance because of the threat of fire, because of climate change. So I urge you to not cut the funds for climate change.

And indeed, let's cut the funds to subsidizing the fossil fuel industry because they're the ones who have created this disaster with all of us and these people. We don't need any more of this. So we need your help. Thank you.

Committee Members Maya Inigo with communities for a better environment and charge ahead. I'm here to urge you today to protect our ZEV package. These are truly life saving programs. My stepson is one of many Angelenos who uses an inhaler.

And I want to remind you that roughly 7200 Californians die each year due to pm 25 pollution related illnesses. We count on you to protect our ZEV package, including heavy and medium duty programs, clean cars for all. We appreciate carbs expertise, but we also want to see that program continue its momentum. As well as community mobility programs. We want to make sure that we protect the most vulnerable environmental justice communities.

As an Angelino, I can speak to some of the real damage to communities when we see cancer clusters and young kids missing school due to asthma. I want to thank you for your time and we hope that you will prioritize environmental justice communities as you make these challenging budget decisions.

Thank you. And while we have so many people in the room, I do want to make one comment. And I hope that people will look at the State of California's overall efforts in terms of climate funding. The last few years. Because of the budget surplus, far more money went into climate programs and policies. And so unfortunately, and I certainly appreciate all the comments here today, those are the programs because they got the most recent and they got one time funding.

Those are the programs that are being looked at. But I hope we'll all look and say where are we at the end of this year relative to where we were three years ago in terms of the amount of money we're putting into climate. And hopefully that will be still a significant increase in California's commitment to the climate. But we're all frustrated, and I just want to share your frustrations with not being able to hold on to all, all of the gains we made in the last two years with climate funding. Go ahead.

Thank you Mister chair Members. Edson Perez with Advanced Energy United. We represent a broad array of technologies in clean energy and clean transportation which have really been at the tip of the spear in enabling our clean energy transition.

So we've identified the following programs as instrumental in achieving our many goals from now to 2045. And they're the clean the drayage trucks and infrastructure pilot project the clean trucks, buses and off road equipment program the zero emission vehicle fueling infrastructure grants and the zero emission school bus funds. And I just want to quickly emphasize momentous task that lies ahead for our medium and heavy duty vehicle owners and our fleet operators. Now we're in full agreement with our aggressive timelines for them to decarbonize.

It's much needed, as we heard, especially with those close to population centers, but they need extensive support to get there. And I think they also need a strong signal from the state that we intend to enforce our timelines and help them in getting there. And we can do that by prioritizing the programs outlined here. So thank you. Thank you.

Good morning, chair Members of the Subcommitee. My name is Mary Dover. I'm the Government Affairs Officer for the North County Transit District in San Diego. county. We operate bus, rail, paratransit, and microtransit services across a thousand square mile service area. First, I'd like to thank you for the 5.1 billion for TRCP and zero emission capital projects for transit agencies. Our portion of that is approximately 113 million, and our plan for those funds includes critical customer experience and resiliency projects as well as some operating support.

The SB 125 funding, especially year two, will help us increase ridership, expand capacity, and do our part to help the state meet the greenhouse gas reduction goals. So we're here asking you to support the Fund transfers from the General Fund to the Greenhouse Gas Reduction Fund for TRCP. Thank you.

Thank you.

Morning, Mister chair Members. Chris Scroggin, on behalf of Chargepoint, just wanted to voice our support of the Governor's Budget, specifically around maintaining funding in the clean transportation program for the communities in Charge program, Energize and Cal EBIP two. We view these as integral programs to the rollout and further rollout of EV charting infrastructure in the state and appreciate the Governor maintaining that funding and encourage the Legislature to approve it as well. Thank you very much.

Thank you.

Good morning. Melissa Romero with California Environmental Voters. We want to urge you to reject the cuts to further cuts to the climate budget. As someone said before, the latest climate science is showing that we are not on target to reducing pollution, and now is not the time to cut climate funding, especially this drastically. And protecting that funding isn't just about the climate, it's also about all the things that it touches.

So we're talking about protecting equity and lowering energy costs for Low income households and communities, whether that's the clean cards for all program that you heard someone just talk about or building decarbonization, equitable building decarbonization programs or utility financing assistant payment programs. These are programs that directly helped lower income households reduce their transportation and heating and cooling costs at a time where that's really needed. And instead of cutting those funds, we really have to look at eliminating subsidies to the oil and gas industry.

As you already heard a little bit about today, ending oil and gas subsidies like the water's edge election or research and development can potentially free up billions of dollars and fill up that gap that's needed to fill those proposed cuts. Want to urge you to also pass a climate bond. Thank you.

Thank you very much.

Good morning, chair Members Abigail Smet on behalf of the People, Food and Land Foundation with regard to the LAO comments and staff analysis regarding the GGRF continuous appropriations, we agree that it's time for the Legislature to reopen this issue and evaluate the effectiveness and merits of the activities over the past years.

Specifically, we believe it is time to re evaluate the continuous appropriations without caps and without sunset dates that have been allowed to grow and continue in perpetuity without any review. The People, Food and Land Foundation is co sponsoring SB 1135 by Senator Limon, which we believe is a much better use of continuous GGRF funds. This Bill provides a tax credit using GGRF for compost utilization for ranchers, farmers and other landowners on natural and working lands.

Spreading compost is an inexpensive way to reduce GHG emissions, and studies show that one application can continue to reduce emissions for up to 70 years. We respectfully request that when you look at the DGRF, you consider providing 1%, not to exceed $120 million per year for 10 years to Fund SB 1135. Thank you for your consideration.

Danny Offer with the California Association of Port Authority is here just to support our request to include funding for zero emissions ports in this year's GGRF plan rather than delaying it to 26-27. Thanks.

Hi there. Megan Mekelburg here on behalf of Calstart. They are particularly interested in three things related to the ZEV package. The first one is heavy and medium duty fleets. We are seeing that there is probably going to be running out of money around before March of this year, which would mean that a delay into next year would result in no funding for at least few months in the HVIP program in particular. Next item is the infrastructure funding.

Just very supportive of making sure that that can happen because that is what is going to actually be able to get those vehicles on the road. And then the last item is related to innovative mobility. The Clean Mobility Options program is delayed until 2027 to 28 and currently does not have any funding. So that is a really important program to helping our local governments be able to plan for innovative mobility. So thank you so much. Realize you have a great challenge ahead of you, but appreciate your time today.

Thank you.

Good morning. Marissa Wu with the Greenlining Institute. The state surpassed 1.5 million ZEVs on our roads last year and is well underway to meet 5 million by 2035. Yet low income and disadvantaged communities continue to face significant barriers to EV adoption and bear the brunt of air pollution. The state claims to prioritize equity, yet in budget shortfalls, equity programs are the first to go.

We urge the Legislature to align the budget with your values and prioritize investments like clean cars for all to fight emissions and improve public health to Low kukunis of color. We also urge the Legislature to ensure no further cuts or delays to the ZEV package and to avoid clawbacks of unencumbered funds to fill budget gaps which will further set back the state in supporting Low income and dispatch communities.

We request that the Legislature explore the need for reallocation of funds to keep programs up and running and ensure they deliver much needed benefits to our most impacted communities. Thank you.

Good morning Mister chair and Members Ross Buckley. On behalf of the South Coast Air Quality Management District, we very much appreciate the AB 617 funding being provided in the governor's GGRF spending plan for our district's implementation incentives, especially given the budget shortfall. However, request the continued prioritization of the AB 617 funding which provides target support for disadvantaged communities in terms of improving air quality and protecting public currently, the AB 617 program is severely underfunded.

There are not enough resources to support the existing communities throughout the state. In particular, the south coast region includes almost two thirds of the EJ communities. These are the communities that are harmed the most by the reduction of resources. And to help address this restructuring request, ask that the AB 617 funding be restored to last year's levels. Thank you.

Good morning Members. Cody Boyles is on behalf of the Western Agricultural Processor Association, we would like to voice support for the farmer program, which provides assistance to help farmers transition their tractors to clean or burning or zero emission equipment. This program provides immediate health benefits and climate benefits to disadvantaged communities within the Central Valley. I'm also here on behalf of California Dairy zinc. We'd like to align our comments with the first speaker and public comment period and express our support for reinstating funds for CDFA's dairy methane program.

Hello, my name is Peter Hoberg. I'm with the Citizens Climate Lobby. And I'd like to voice my thanks for all the efforts that you've done. And I'd like to voice my support for continuing programs, specifically those that address clean cars and clean homes. And I would like to also just point out that California is a leader in climate and all the efforts that you've done. We can't give up now. We have to continue. I think that we're setting a precedent for what the rest of the country and the rest of the world sees. Thank you.

Good morning. My name is Mariela Ruacho from the American Lung Association. We urge you to continue funding clean air programs and zero emission programs. Today we released our 25th annual State of the Air report, which shows that 98% of Californians continue to live in a community with unhealthy areas air. In fact, six California cities rank in the top 10 for the smoggy cities in the United States, and 12 California cities appear among the top 25 list for the most polluted in the nation.

This is why it is so critical to continue investing in clean air programs. Through our state budget, clean air programs save lives and provide vital health benefits that Californians desperately need. We agree with comments from Coalition for Clean Air, especially on the clean cars for all program. Also, zero emission drainage trucks, mobility options, equitable building, decarbonization and other programs implemented by state and local air districts. Targeted targeting cleanup in our most impacted communities must remain in place.

We urge you to ensure GDRF funds are used to reduce greenhouse gases and other harmful air pollutants instead of delaying cuts and funding for these programs. Sorry. Thank you.

Chair Members Nate Solov, on behalf of the Port of LA, appreciate the supply chain investments you made in the 22 budget. Part of that was several $100.0 million for ports to transition to zero emission. That funding was delayed to 26-27. We're asking that a portion of that be included in this year's GGRF plan. It's critically important timing wise because we're in the process of applying for federal grant funding and it's important to have a state match for that.

Also, the ports have a 2030 deadline to go all ze. So this funding is critically important for ports to meet that transition since historically it's been a high polluting industry. So this money will directly impact bringing those emissions down and helping the ports transition to zero emissions. So if it can be 100 million spread out over the next few years, as opposed to waiting until 2627 it'll have a huge, huge impact to California's community. Appreciate your support. Thank you.

Good morning, Chair and Members Madeline Moore with Los Angeles Metro Government Relations. In the interest of time, I would like to align LA Metro with the comments made by the California Transit Association. It is critical to continue our investment in public transportation. Thank you.

Thank you. Good morning. Chair and Members of the Committee. I'm Chris Thomas. I'm from Sonoa County and have experienced the fire dislocation in the smoke days. I'm a volunteer both with the climate center and with Climate Action California, I want to urge you to eliminate all of the fossil fuel subsidies, to retain all of the climate funding, and actually to Fund the implementation for SB 253 and SB 261. It's not going to get any easier. In fact, fact, it's going to get more difficult each year with these budget issues. And if you don't take these actions now, it will add the intensity in the future. Thanks very much.

Good morning. I'm Janet Cox with Climate Action California. We work in coalition with many groups throughout the state and nationally, all of whom are extremely concerned about funding and earliest possible implementation of disclosure bills SB 261 and SB 253, especially in light of the SEC's kind of chicken hearted decision to exclude scope three from their required reporting. It's just essential that California fill that gap and lead the way.

And the amount of money in the car budget, we think it's overestimated, but it's still a tiny amount of money. It's a very few $1000 and it's just implementing these bills has to happen, has to happen soon. The other thing I want to talk about is the need to reduce the subsidies for oil and gas, both the rather surgical ones that the Governor proposed in his January budget. And also, we don't need water's edge and the money we can save by. Thank you. I'm sure you get it.

Thank you very much.

Good morning, Chair and Members Phoebe Seton with Leadership Council for Justice and Accountability. I join others in saying that we cannot afford to cut funding for programs that are addressing climate pollution and improving our air quality. The innovative and precedent setting equitable building decarbonization program is critical to ensuring that the most vulnerable Californians can be safe and healthy in their homes, even in times of extreme heat. We urge you to protect EBD funding.

Funding cuts and deferred funding will only cost us more in the long term and cost people their health, their well being and even their lives. Similarly, the Community Resilience center program and the Transformative Climate Communities program are necessary to help neighborhoods, communities and towns face the ongoing and worsening climate crisis by both protecting them from the impacts of climate change, addressing the inputs of climate change, and taking advantage of the opportunities that climate change presents.

Thank you so much.

Good afternoon, chair Members Jeanie Ward-Waller, representing Calbike, Transform, and also Leadership Council for Justice and Accountability. I want to line my comments with the speakers that have already talked to you about the active transportation program and backfilling that with state highway account funds. I also want to align my comments with all the speakers that have talked about ending fossil fuel subsidies that are worsening the climate crisis with air and water pollution. Specifically, we encourage you to not use scarce resources for the CDFA's dairy digester research and development program. Thank you.

Thank you.

Hello, my name is Maria. I'm a campus organizer with Maria.

Would you pull the microphone down, please? Thank you.

Is that better?

That's better.

My name is Maria Ayala. I'm a campus organizer with CalPIRG students. And climate change is becoming an increasingly important issue, especially for young people and our future. And instead of cutting critical zero emission transportation, clean air and climate programs, we should eliminate subsidies for polluting industries that are worsening air quality and climate change. Through programs like the waters edge election, the state's biggest polluters are raking in record profits while the state's life saving clean air and climate programs are set to be zeroed out.

Vulnerable communities need these programs programs to equitably build resiliency against climate change. Governor Newsom has proposed 2.9 billion cuts to climate programs. But by ending oil and gas subsidies, we can potentially redirect billions in funding for the state's climate goals. Presents a viable alternative source of revenue and with the worsening effects of climate change and with our climate funding under threat makes no sense. Thank you.

Thank you very much. Thank you.

Hi, my name is Emily Contreras. I'm a first year environmental policy major at UC Davis and a Member of CalPIRG students. I'm hoping to encourage this Committee to carefully avoid budget cuts for clean air and energy projects. Many recent studies have shown how air pollution negatively impacts communities of color, specifically, who are statistically more likely to be exposed to dangerous air quality conditions. For generations, indigenous communities in the United States have suffered from systemic abuses, including substandard housing and inadequate protection from sources of pollution.

This has led to pollutants like nitrous oxides, sulfur oxides, and particulate matter, causing respiratory and cardiovascular problems for countless communities. Despite it being a strained budget year, we need to prioritize public and environmental health over subsidies for the fossil fuel industry or highway expansion program projects. By eliminating the water's edge Dodge, the water's edge tax dodge that benefits oil giants like Chevron, we can redirect up to $4 billion towards equitable clean air. Let's Fund the best version of our future. Thank you.

Thank you.

Hello. My name is Shreya and I'm a first year environmental science and political science student at UC Davis, and I'm also a Member of CalPIRG students. I'd like to encourage this Committee to maintain beneficial budget programs for the environment such as clean air and clean energy programs. Our generation experiences the effects of climate change every day. For example, extreme heat troubles every region in California. Heat related deaths are projected to rise by a factor of two to three.

Many of those deaths will be and have been from impoverished, unhoused and people of color communities. Heat causes school to cancel and agricultural industry to struggle. The backbone of California is at risk. While it may be a strained budget this year, we owe it to Californians who can't help themselves to secure a safe and equitable environment. Our state is a leader in environmental progress, so let's divert subsidies, increasing our carbon footprint and redirect funds to equitable clean air and clean energy programs. Thank you.

Thank you.

Good morning Mister chair and Members. My name is Jenn Engstrom. I'm the state Director of CalPIRG, the public interest advocacy group. And we understand that the state budget is strained, but cutting important programs that will lead to cleaner air and healthier communities is not the answer. The first step should be cutting subsidies and tax expenditures for oil and gas, as well as unnecessary highway expansion which harms our health and environment and doesn't solve congestion.

We appreciate that the governor's draft budget does include some cuts to fossil fuel subsidies, but there are more cuts to be made. As already been highlighted. California should cut the water's edge election tax expenditure that will allow multinational corporations to compute the income attributable to California on the basis of a water's edge rather than the worldwide combined report. Cutting these harmful and unnecessary expenses that actively make climate change worse will allow us to redirect state resources towards programs that protect our communities and our planet. Thank you.

Thank you.

Hi, Samantha Samuelson. On behalf of the Building Decarbonization Code Coalition, we request the state maintain funding for the California Energy Commission's Equitable Building decarbonization program. The EBD program is the first of its kind program that helps Low income Californians access comprehensive home retrofits to improve indoor air quality, health comfort and energy affordability, all while furthering California's climate goals. Thank you.

Thank you Mister chair Members. Michael Pimtel here again, I'm going to be supremely brief as I'm double dipping here on behalf of. We certainly are here on behalf of via transportation, encouraging the maintenance of funding for fiscal year 24-25 for CARBs, various low carbon transportation equity programs. Those are the clean mobility Options Sustainable Transportation Equity program and clean mobility in Schools program. Thank you.

Alan Abbs with the Bay Area Air Quality Management District. I'd like to align my comments with, with my counterparts from CAPCOA, the South Coast, AQMD, the American Lung Association, the Coalition for Clean Air, encouraging continued support of prioritization of cost effective programs to reduce air emissions, including clean cars for all program and the AB 617 program, which supports four communities in the Bay Area and also encourage continued prioritization of the equitable building decarbonization program. Thank you. Thank you.

For you, Mister chair and Members Tricia Geringer with Agricultural Council of California on two programs that have been mentioned previously. First, the farmer program on Farm Ag emissions equipment program. Highly effective. Echoing the comments, in support of funds for that program in our farming communities and also in support of the 24 million, the administration's proposal to move 24 million from General funds over to GGRF for livestock methane reductions at CDFA.

That program and then one new one to flag for you that fits right in line with your bang for the buck. Comments earlier, the Food Production investment program known as FPIP at the California Energy Commission. This is a small but mighty program that's helping local food producers reduce their emissions while they process California grown food. 80% of the funds, over 80% of the funds are going into disadvantaged and Low income communities. So we ask for your commitment there too. Thank you.

Thank you very much. And with no further comments. we adjourn