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Report

The 2016-17 Budget: The State's Drought Response

February 5, 2016 - Despite welcome storms early this winter, statewide drought conditions appear far from over. This report (1) describes the current drought and its impacts across the state, (2) summarizes the state's drought response appropriations and activities thus far, (3) assesses the Governor's drought-related budget proposals for 2016-17, and (4) recommends steps the Legislature can take to address drought both in the coming year and the future.

Report

Cap-and-Trade Revenues: Strategies to Promote Legislative Priorities

January 21, 2016 - In this report, we describe and assess the relationship—from both a legal and policy perspective—between the cap–and–trade regulation and the auction revenues that are generated as a result of the program.

Report

The 2015-16 Budget: Major Features of the Adopted Plan (Other Issues)

June 19, 2015 - We have provided information on the major provisions of the budget plan passed by the Legislature on Friday, June 19. (It does not reflect potential gubernatorial vetoes.) We will provide a more comprehensive summary of the budget plan in our annual California Spending Plan later this summer.

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An Analysis of the Beverage Container Recycling Program

April 29, 2015 - The Beverage Container Recycling Program has operated with an annual structural deficit averaging about $90 million since 2008-09 and is currently forecast to run an average deficit of almost $60 million from 2014-15 to 2017-18, absent any changes to reduce expenditures or increase revenues. In this report, we make several recommendations that could eliminate the structural deficit and improve overall program effectiveness. Specifically, we recommend (1) requiring beverage manufacturers to pay for the full cost of recycling their containers, (2) evaluating program activities to determine how cost-effective they are at achieving recycling and litter reduction goals, (3) giving recyclers more flexibility in where they locate and piloting a new recycler payment structure in order to improve convenience for consumers, and (4) adjusting the administrative payments to program participants to reflect their actual costs.

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The 2015-16 Budget: Resources and Environmental Protection

February 19, 2015 - The Governor’s budget for 2015-16 proposes a total of $9.3 billion in expenditures from the General Fund, various special funds, bond funds, and federal funds for resources and environmental protection programs. In this report, we assess many of the Governor’s budget proposals related to these programs and recommend various changes.

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The 2015-16 Budget: Effectively Implementing the 2014 Water Bond

February 11, 2015 - In August 2014, the Legislature approved Chapter 188, Statutes of 2014 (AB 1471, Rendon), which placed before the voters a water bond measure primarily aimed at increasing the supply of clean, safe, and reliable water and restoring habitat. On November 4, 2014, voters approved the water bond measure—Proposition 1. In this report, we (1) describe Proposition 1, (2) review the Governor’s proposals to implement the bond, (3) identify key implementation principles, and (4) recommend steps for the Legislature to ensure that the bond is implemented effectively.

Report

Achieving State Goals for the Sacramento-San Joaquin Delta

January 15, 2015 - The Sacramento-San Joaquin Delta (Delta) is a biodiverse ecosystem that covers about 1,150 square miles and supports over 700 species of fish and wildlife. The Delta is an important source of water for the state and is used to convey water from Northern California to Southern California. The Delta faces several significant problems, including: (1) a decline in key native fish species, (2) reductions in the amount of Delta water available for use elsewhere, (3) water pollutants that cause harm to species and increase treatment costs, and (4) levees at significant risk of failure. The state has engaged in numerous efforts to address these problems and achieve its "coequal goals" for the Delta: water supply reliability and ecosystem restoration. There are many opportunities for the Legislature to improve the success of these efforts. We identified several issues for its consideration, including (1) demands for Delta water, (2) uncertain funding sources and slow implementation of some key activities, (3) limits on the effectiveness of governance in the Delta, and (4) challenges to restoring the Delta ecosystem. By addressing some of these issues, the Legislature can improve the likelihood that its goals and objectives for the Delta will be realized.

Report

The 2014-15 Budget: Cap-and-Trade Auction Revenue Expenditure Plan

February 24, 2014 - In order to minimize the negative economic impact of cap-and-trade, it is important that auction revenues be invested in a way that maximizes GHG emission reductions for a given level of spending. In reviewing the Governor's proposed expenditure plan, we find that there is significant uncertainty regarding the degree to which each investment proposed for funding will achieve GHG reductions. This uncertainty is the result of several factors, including there being only limited data and analysis provided by the administration, as well as the fact that the level of emission reductions achieved would depend on the specific projects funded by departments. Given these concerns, we recommend that the Legislature direct ARB to develop metrics for departments to use in order to prospectively evaluate the potential GHG emission benefits of proposed projects, as well as direct the board to establish a set of guidelines for how departments should incorporate these metrics into their decision making processes.

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The 2014-15 Budget: Resources and Environmental Protection

February 21, 2014 - In this report, we analyze the Governor's 2014-15 budget for the state's resources and environmental protection programs. We review and make recommendations on a number of major policy proposals, including a review of the administration's recently released Water Action Plan as well as the proposal to reduce or eliminate several programs currently funded by the Beverage Container Recycling Fund (commonly referred to as the "bottle bill"). We find that these policy proposals are generally reasonable approaches, though we identify trade-offs in the proposals and offer recommendations for legislative consideration. The report also identifies several issues included in the Governor's budget that merit additional legislative oversight. This includes the proposal to provide the Department of Parks and Recreation and the Department of Forestry and Fire Protection with a total of $43 million from the General Fund to address deferred maintenance backlogs. While we find that it makes fiscal sense to address deferred maintenance, there is uncertainty about what factors have contributed to the large backlogs, as well as how the state can best address maintenance needs on an ongoing basis.

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The 2013-14 Budget: Analysis of Governor’s Proposition 39 Proposal

February 21, 2013 - The Governor’s 2013‑14 budget includes a plan to implement the provisions of Proposition 39, which increases state corporate tax (CT) revenues and requires that half of these revenues for a five-year period be used for energy efficiency and alternative energy projects. The Governor proposes to count all associated revenues toward the Proposition 98 minimum guarantee for schools and community colleges. The Governor also proposes to designate all energy-related Proposition 39 funds to schools ($400.5 million) and community colleges ($49.5 million) in 2013‑14 and for the following four years. The Governor’s proposal to count all Proposition 39 revenues toward the Proposition 98 calculation is a significant departure from our longstanding view that revenues are to be excluded from the Proposition 98 calculation if the Legislature cannot use them for general purposes. In addition, the proposal excludes other eligible projects besides schools and community colleges (such as public hospitals) that potentially could achieve greater energy benefits. Further, the proposal does not coordinate Proposition 39 funding with the state’s existing energy efficiency programs. In view of the above concerns, we recommend the Legislature exclude from the Proposition 98 calculation all Proposition 39 revenues required to be used on energy-related projects and not count spending from these revenues as Proposition 98 expenditures. In addition, we recommend the Legislature direct the California Energy Commission (CEC) to administer a competitive grant process in which all public agencies, including schools and community colleges, could apply and receive funding based on identified facility needs.

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The 2013-14 Budget: Resources and Environmental Protection

February 19, 2013 - In this report, we review the Governor’s 2013-14 budget proposals for various resources and environmental protection departments and programs, including the Department of Water Resources, Department of Forestry and Fire Protection, Department of Parks and Recreation, California Energy Commission, and the Air Resources Board. We identify concerns with several of the proposals and make recommendations for legislative consideration. In some cases, we identify proposals that we think should be rejected or modified. In particular, we point out several budget proposals that would impact state expenditures in future years. We also note that the proposed budget includes several proposals to use certain revenues for different activities that may not be legally allowable given the revenue source. In addition, we identify several issues in the report that we believe merit greater legislative oversight, including a new surcharge on investor-owned utility electricity bills that the California Public Utilities Commission has been collecting since January 2012 without legislative authorization.

Report

Energy Efficiency and Alternative Energy Programs

December 19, 2012 - California currently maintains over a dozen major programs that are intended to support the development of energy efficiency and alternative energy in the state. Over the past 10 to 15 years, the state has spent a combined total of roughly $15 billion on such efforts. In response to the Supplemental Report of the 2012-13 Budget Package, this report provides an overview of these different programs, as well as a preliminary assessment of them in terms of priority, overlap, and redundancy. We find that the state currently lacks a comprehensive framework that fully coordinates the state's energy incentive programs to help ensure that the state’s goals are being achieved in the most cost-effective manner. The absence of such a comprehensive framework (1) results in some level of program duplication, (2) results in some departments making policy choices that may not be aligned to legislative priorities, and (3) makes it difficult to compare effectiveness across programs. As a result, we recommend that the Legislature develop a comprehensive strategy for meeting the state’s energy efficiency and alternative energy objectives. In general, the comprehensive strategy should specify: (1) the state’s energy efficiency and alternative energy goals, (2) how programs should fit together to achieve the state’s goals, and (3) how program effectiveness will be measured.

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The 2012-13 Budget: Strategies to Maintain California's Park System

March 2, 2012 - The 2012-13 Governor’s Budget includes proposals to address some of the funding challenges currently faced by parks, including the continuation of the plan to close up to 70 state parks by July 2012. However, the Legislature and stakeholders have expressed interest in identifying alternative ways to prevent park closures and, more importantly, help ensure that the park system is adequately maintained and operated in the future. In this report, we evaluate various options that could be adopted to reduce costs or increase revenue for the state park system. Based on this analysis, we recommend specific steps to help maintain the park system, such as transferring the ownership of some state parks to local governments, eliminating the use of peace officers for certain park tasks, allowing private companies to operate some state parks, and increasing park user fees.

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The 2012–13 Budget: Cap–and–Trade Auction Revenues

February 16, 2012 - This report examines the Governor's budget proposal regarding the use of revenues expected to be generated from the cap-and-trade auctions that the California Air Resources Board (ARB) will hold in 2012-13. These auctions are part of the state's plan to meet the goals of the Global Warming Solutions Act of 2006 (commonly referred to as AB 32). In this report, we recommend that the Legislature first use the revenues in 2012-13 to offset General Fund costs of existing programs designed to mitigate GHG emissions. Since the Legislature will need to decide which General Fund costs to offset as part of the 2012-13 budget process, such decisions are best made this spring. In addition, the Legislature will need to begin the process of determining how effectively to allocate the remaining auction revenues on new or expanded programs.

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Evaluating the Policy Trade-Offs in ARB's Cap-and-Trade Program

February 9, 2012 - This report analyzes the design of the cap-and-trade program as adopted by the California Air Resources Board (ARB). This new, complex program is part of the state's plan to reduce greenhouse gas emissions statewide to 1990 levels by 2020—a goal set by the Global Warming Solutions Act of 2006 (commonly referred to as AB 32). The report examines in detail the specific policy choices made by the ARB in the design of the program, some specific policy trade-offs inherent in those decisions, and options for program design changes that the Legislature may wish to make depending on its policy priorities.