Legislative Analyst's Office

Analysis of the 2000-01 Budget Bill
Air Resources Board (3900)

The Air Resources Board (ARB), along with 35 local air pollution control and air quality management districts, protects the state's air quality. The local air districts regulate stationary sources of pollution and prepare local implementation plans to achieve compliance with federal and state standards. The ARB is responsible primarily for the regulation of mobile sources of pollution and for the review of local district programs and plans. The ARB also establishes air quality standards for certain pollutants, administers air pollution research studies, and identifies and controls toxic air pollutants.

The budget proposes $187.2 million from various funds, primarily the Motor Vehicle Account and the General Fund, for support of ARB in 2000-01. This is an increase of about $46 million, or 33 percent, from estimated 1999-00 expenditures. This increase reflects (1) $50 million for grants to replace old, heavy-polluting school buses; (2) $5 million to demonstrate hydrogen fuel cell transit buses; (3) $4 million to evaluate the impact of toxic air contaminants on community health; and (4) $1.9 million to address various children's health issues. The budget also reflects the elimination of a one-time expenditure in the current year of $19 million for grants for the purchase of new, low-emission technology for heavy-duty engines.

Many Issues Unresolved in School Bus Replacement Proposal

We find that many policy issues connected with the Governor's proposal for the Air Resources Board to administer an Older School Bus Replacement Program are unresolved. Should the Legislature wish to fund this program, we recommend that funding be provided in legislation that establishes clear objectives for the program to guide the allocation of funds. Therefore, we recommend that the funding proposed for this program be deleted from the budget bill. (Reduce Item 3900-001-0001 by $50 million.)

School Buses Are a Major Source of Pollution. Of the approximately 24,000 school buses operating in the state, about 97 percent have diesel engines and about 1,900 are "pre-1977" busesthe year in which major federal safety standards for school buses took effect. Diesel school buses are a major source of "particulate matter" pollution that has been identified by ARB as a toxic air contaminant. A local air district study found that the emissions from an average diesel school bus on the road today are 430 times more toxic than the emissions from a new bus using compressed natural gas. Diesel emission standards for buses were made more stringent around 1990, thereby making post-1990 buses less polluting. Nevertheless, emissions from new diesel buses continue to emit significantly greater toxic pollutants than low-emission alternative fuel buses (for example, natural gas).

Many Unresolved Issues With Proposal. The budget proposes $50 million from the General Fund for ARB to implement a new grant programthe Older School Bus Replacement Program. According to the budget, the intent of the program is to "exchange pre-1977 dirty school buses for safe and clean alternative fuel buses." It is proposed that grant funds would first be apportioned by ARB to local air districts which would then distribute them to school districts.

Our review finds that, in spite of what appears to be a clear statement of the program's intent, there are several policy and implementation issues that remain unresolved. These issues, which we discuss in the following sections, include determining:

Program's Overriding Goal Not Defined: Safe Buses, Clean Buses, or Both? Our review finds that the administration has not determined the overriding goal of the new program. Since the program's goal will determine the criteria to be used to allocate proposed funds, it is important that this goal be clear. Specifically, we find that the administration has not determined whether the program's main goal is to achieve the maximum possible reduction in the amount of diesel particulate, or alternatively to "modernize" the school bus fleet in order to improve safety while achieving pollution reductions. Until the program's overriding goal is determined, there will be no basis for ARB to establish the criteria and guidelines for allocating the grant funds.

Replace, Retrofit, or Both? Setting the primary goal for the program as discussed above would also affect the extent to which the program focuses on bus replacement versus retrofits. According to ARB, the proposed $50 million would fund the full-cost replacement of about 340 older buses. Alternatively, the amount would fund the full cost of retrofitting about 10,000 existing buses. (A retrofit can reduce the toxic diesel emissions from a bus by as much as 90 percent.) If the goal of the program were to achieve the maximum reduction in diesel particulate statewide, it would be more cost-effective to use at least part of the funding for retrofits as opposed to only funding the replacement of buses.

Pre-1977 Versus Post-1977 Buses. While ARB's written proposal calls for funds to be provided only for pre-1977 buses, the administration indicated at a recent public hearing that this issue has not been settled. This issue is relevant because it has direct implications for the emission reduction potential of the proposal. For instance, if the program were limited to pre-1977 buses, school districts such as Los Angeles Unified which have already replaced most of their pre-1977 buses would be largely excluded from the program. This would be the case even though the district (1) has a large diesel bus fleet with high annual vehicle miles driven and (2) is located in a region with some of the state's poorest air quality.

Matching Requirement? Our review also finds that the administration has not determined whether the grants for school districts would require local matching funds. According to ARB, more research needs to be done on the ability of local school districts to provide matching funds for the grants. As with other issues, whether matching requirements should be set would depend on the program's overriding goals. To the extent that a local match is required, the proposed $50 million would go further in terms of statewide pollution reduction because it would result in a large total (state and local) amount to replace or retrofit a larger number of buses. However, a matching requirement could result in poorer school districts, typically those with the oldest and dirtiest buses, not being able to participate in the program. This raises issues of fairness and could run counter to a program goal of school bus fleet modernization.

Policy Issues Should Be Defined in Legislation. We think that it will be important for the Legislature to resolve the many policy issues related to this proposal prior to approving funding for the program. Without prejudice to the merits of this proposal, we recommend that the $50 million for this program be deleted, and that the program and its funding be established in legislation, should the Legislature wish to proceed with the program. This would give the Legislature an opportunity to establish clear objectives for the program in order to guide the allocation of funds consistent with legislative priorities.

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