| Last Updated: | 1/21/2011 |
| Budget Issue: | Reimbursement authority to implement the AB 118-funded ethanol producer incentive program |
| Program: | California Alternative Energy and Advanced Transportation Financing Authority |
| Finding or Recommendation: | Deny, without prejudice, the Governor's January budget proposal to provide reimbursement expenditure authority of $9 million to the California Alternative Energy and Advanced Transportation Financing Authority to implement the California Energy Commission’s (CEC's) AB 118-funded Ethanol Producer Incentive Program, until such time as the CEC has submitted for legislative review a draft of its 2011-12 Investment Plan for the AB 118 Alternative and Renewable Fuel and Vehicle Technology Program. |
Governor’s January Budget Proposal. The Governor’s 2011-12 budget has requested reimbursement expenditure authority of $9 million to the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to implement the CEC's California Ethanol Producer Incentive Program under the Alternative and Renewable Fuel and Vehicle Technology Program as authorized by Chapter 750, Statutes of 2007 (AB 118, Nuñez), commonly referred to as AB 118.
What is AB 118? AB 118 authorizes the CEC to provide incentives of up to $100 million annually for the development and deployment of clean, efficient, and low-carbon alternative fuels and technologies. AB 118 also provides up to $50 million per year for the Air Quality Improvement Program administered by the Air Resources Board. The programs funded under AB 118 are supported primarily by various vehicle-related fees.
CAEATFA's Role. CAEATFA’s role in implementing AB 118 is to facilitate and execute disbursement of AB 118 monies through its financing mechanisms to selected facilities that use alternative energy sources and technologies, and/or that develop and commercialize advanced transportation technologies.
The CEC Submits An Annual AB 118 Investment Plan to the Legislature for Oversight Purposes. The Legislature has expressed a great deal of interest in the AB 118 program administered by CEC, and as such has statutorily required that the CEC annually submit an AB 118 Investment Plan to the Legislature. The purpose of the this requirement is to improve the Legislature's oversight of the AB 118 program, for example by giving the Legislature the opportunity to see whether the CEC's plan for the investment of AB 118 monies is consistent with legislative priorities and to provide further policy direction as seen to be required.
Legislative Action on Budget Request Should Await Submittal of Draft Investment Plan in March. The draft of the 2011-12 AB 118 Investment Plan is to be submitted to the Legislature by March. Once the plan has been submitted, it is the intent of the Legislature to have adequate opportunity to review and comment on the plan and to provide its policy direction in this area. Without the plan, the Legislature will not be able to evaluate the proposed $9 million ethanol-related investment that is the subject of this budget request in the context of the complete package of proposed AB 118 investments to see whether the budget request aligns with legislative priorities for AB 118 funding.
LAO Recommendation. Accordingly, until the 2011-12 Investment Plan has been submitted to the Legislature for its review, it is premature to approve the requested reimbursement expenditure authority in CAEATFA. We therefore recommend that the Legislature deny, without prejudice, the budget request, until such time as the draft investment plan has been submitted to the Legislature and the Legislature has had adequate time for its review.