Steinberg plan would dedicate California cap-and-trade dollars to housing, transit

In an effort to more closely manage how California spends revenue from its fledgling cap-and-trade program, Senate President Pro Tem Darrell Steinberg, D-Sacramento, on Monday unveiled a plan to dedicate ongoing money to affordable housing, mass transit and high-speed rail.

"National and international experts say that the climate problem grows worse, that we have no time to sit back and wait and think about an investment strategy year-to-year or just short-term. Now is the time to grab the moment and create these permanent sources," Steinberg said, adding that his plan would avoid an annual legislative fight over "who's in the front of the line, where is the need seemingly the greatest."

The proposal differs from Steinberg's previous proposal to change the state's system for curtailing carbon emissions. That plan, which the Democratic leader unveiled in February, would have imposed a gasoline tax rather than have industry purchase allowances for greenhouse gases emitted from "non-stationary fuels," a category that includes gas sold at the pump.

Now Steinberg has abandoned that change, shifting his attention from how California prices greenhouse gases to how the state allows levies on carbon emitters to be used. His new plan focuses on funding affordable housing, public transportation projects and the state's divisive high-speed rail project.

The gas tax plan was hit from the left and right. On Monday, by contrast, Steinberg spoke amid a phalanx of backers, including groups representing local government, (the League of California Cities) labor (the State Building and Construction Trades Council of California) and environmental (the Natural Resources Defense Council.)

"We stoked a debate a couple months ago, and a lot of consternation and controversy, and I understand it. But now many of us stand together," Steinberg said.

Under AB 32, the 2006 law that created California's cap-and-trade program, industry must purchase permits for generating the type of emissions blamed for global climate change. After six auctions, the program has generated $663 million for the state so far, according to the California Air Resources Board. Steinberg's office projects the permits could soon bring in $3 billion to $5 billion a year.
Current law dictates that the revenue will flow into a Greenhouse Gas Reduction Fund. From there, entities like local governments and transit systems can apply for some of the proceeds by explaining how they will use the money to reduce overall emissions. One quarter of the money must go to disadvantaged communities, an acknowledgment that some of California's poorest places are choking on poor air quality.

Housing and public transportation sit at the center of Steinberg's proposal. Forty percent of the cap-and-trade revenue would go to affordable housing, including communities built around transit options; 30 percent would subsidize transit projects and 10 percent would fund basic transportation infrastructure like road and highway maintenance, with all three administered through competitive grants.

"Permanent sources of funding for mass transit and affordable housing are key if we are committed to long-term change," Steinberg said on Monday, noting that the two areas "face a catastrophic funding crisis in California" after years of cutbacks.
In addition to those outlays, $200 million a year would go to water efficiency projects, to fuel-related outlays that include rebates on monthly fuel bills, and to accommodating the use of electric vehicles.
California's proposed bullet train would get 20 percent of the money, channeled through a continuous appropriation that would not require year-to-year approval by the Legislature.

Already, Gov. Jerry Brown's has stirred controversy by proposing in his budget for this year spending $250 million from emissions permit sales to fund his financially precarious high-speed rail project, whose funding plan faces legal uncertainty. Some environmentalists have called high-speed rail an inappropriate use of the carbon auction funds.

But Steinberg's blueprint embraces high-speed rail as a tool for reducing emissions — provided, Steinberg said, it is one element of a larger strategy.

"I understand that high-speed rail is controversial," Steinberg said. "If it were the only thing that we were talking about or the only thing on the table I think that would be problematic. I think this is a better approach."

PHOTO: The union oil company refinery in Rodeo, Tuesday, December 17, 2002. The Sacramento Bee Michael A. Jones.