BILL ANALYSIS
Appropriations Committee Fiscal Summary
1468 (Kehoe)
Hearing Date: 8/12/04 Amended: 8/5/04 and
proposed to
be amended
Consultant: Lisa Matocq Policy Vote: E, U & C
5-2
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BILL SUMMARY: AB 1468 establishes the California on the
Move-Petroleum Demand Reduction (PDR) Act, as specified.
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Fiscal Impact (in thousands)
Major Provisions 2004-05 2005-06
2006-07 Fund
Gas tax revenues Potential revenue loss of
$420,216+ Special*
annually by 2020
CEC/ARB/DOF/DOT/ Combined costs are probably under
Various
BOE $150 annually
Petroleum demand Unknown, potentially significant
petro- Various
reduction - state fleet leum cost savings. Cost
savings may be
offset by potentially significant
costs for
alternative fueled vehicles,
hybrids, etc.
Consumer education/ Unknown, potentially significant,
cost Unknown
incentives pressures
*State Highway Account
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STAFF COMMENTS: SUSPENSE FILE. Current law (AB 2076, Ch.
936, St. of 2000) requires the California Energy Commission
(CEC) and the California Air Resources Board (ARB) to
develop recommendations to reduce the state's petroleum
dependence. In their 2003 report to the Legislature, the
CEC and ARB recommended a policy to reduce gasoline and
diesel fuel demand to 15 percent below 2003 demand levels,
by 2020, through a variety of transportation energy
efficiency measures, and expanded use of non-petroleum
fuels and advanced transportation technologies, such as
alternative fueled vehicles and hybrid electric vehicles.
This bill:
1.states legislative intent that on-road petroleum demand
be reduced by 15% below the 2003 levels, by the year
2020;
2.states that the Legislature intends to fully maintain
transportation funding, even if gas tax revenues are
reduced as a result of this bill;
3.requires the CEC and the ARB to, by January 1, 2010, in
the course of their authorized activities, implement
measures to reduce on-road petroleum demand to 2004
levels;
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4.requires the CEC to submit a progress report by January
1, 2008;
5.provides that if the Department of Finance (DOF), in
consultation with the Board of Equalization (BOE),
determines that there is a decline in gas tax revenues as
a direct result of this bill, DOF, in consultation with
the CEC, Department of Transportation (DOT), and ARB,
shall develop alternative revenue recommendations to
compensate for such declines, and submit those
recommendations to the Legislature. Staff notes that
there is no requirement that the recommendations be
implemented;
6.specifies that the measures adopted pursuant to this
section shall not require the imposition of any new or
additional taxes or fees on motor vehicles, petroleum
fuel, or vehicle miles traveled.
Combined increased costs to the CEC, ARB, DOF, DOT, and BOE
are probably under $150,000 annually. In addition, there
could be potentially significant cost pressures to the
extent that consumer education programs or incentives are
necessary in order to achieve the demand reduction goals.
Although the current "Flex Your Power" public education
campaign does not address petroleum demand reduction,
Governor Schwarzenegger recently issued Executive Order
S-7-04 which, among other things, (1) directs certain state
agencies to work with various entities "to plan and build a
network of hydrogen fueling stations along roadways so that
by 2010 Californians will have access to hydrogen fuel",
(2) commits the state to, by 2010, increasing the number of
clean, hydrogen-powered vehicles in the state fleet, "when
possible", and in the normal course of fleet replacement,
and (3) specifies that appropriate incentives shall be
provided to encourage the purchase of hydrogen-powered
vehicles.
In 2002-03, gas tax revenues were $2.8 billion. These
revenues are the primary funding source for transportation
projects statewide. A 15% reduction in the 2003 levels,
would result in a revenue loss of at least $420 million
annually by 2020. (This estimate does not take into
consideration the increasing trend in gas tax revenues, and
could also be affected by changes in gasoline prices and/or
the tax rate.) In addition, there are unknown, potentially
significant, cost pressures for implementation of petroleum
demand reduction measures. Increased costs should be
offset, to some extent, by petroleum cost savings.
PROPOSED AMENDMENTS: The author proposes amendments to
make clarifying changes.