Assembly Budget Subcommittee No 4 Climate Crisis Resources Energy And Transportation

Good morning, folks. Welcome to budget sub 4, the March 11 meeting. We have six presentations planned today, seven other proposals that will only hear presentations if it's requested by a member of this committee. Members are still welcome to ask questions regarding those proposals regardless of a formal presentation. After all the items are heard, we'll take public comments. Public comments will be limited to one minute. I will ask my staff to please call the roll.

Here.

Gallagher.

Here.

Norris. Rogers. Wilson.

Okay.

Thank you, Mr. Chair and Committee members.

A number of refineries, including the one

is today in 2026.

Allowing these leading edge facilities to close

Most importantly, California would lose countless union

And I'm sorry, I must stand by. Everybody gets the same one minute for this. So it's just I'm going to catch.

Thank you.

Thank you very much.

Chair.

Appreciate it.

Good morning, Chair and members? Andrew March with the Department of Finance. So the governor's budget includes a one to two dollar tax credit against the state diesel excise tax for sustainable aviation fuel sold for use in California from 2026 to 2036. The value of the tax credit is 1 to $2 depending on the carbon intensity of the sustainable aviation fuel, which for ease of time, I'll be referring to as SAF throughout the remainder of this item. The reason why this proposal is in the governor's budget is that the aviation sector is one of the hardest to decarbonize sectors. Overall. It's widely regarded as it's difficult to use hydrogen fuel or battery electric planes to meet the that you can get from fossil jet fuel. So the federal government and the state has acknowledged that sustainable aviation fuel is a key to decarbonizing the aviation sector. This proposal will help decarbonize the aviation sector. And with that, that concludes my comments. I'm joined by colleagues from the Air Resources Board, the California Department of Tax and Fee Administration. We're happy to answer any questions or clarify any comments made by the my colleagues to my right.

lao's office, Helen Kirstein with the Legislative Analyst Office. So we're recommending, rejecting the proposal and there are really five main reasons we're recommending this. I'll go through them relatively quickly and then happy to take questions. So the first reason is that according to our analysis, this is a relatively expensive way to decarbonize. And in general, we, we think the state should focus on the more cost effective approaches first and then proceed to the less cost effective approaches. The second point I wanted to make is that we also think that there's a lot of uncertainty related to the environmental benefits of this proposal and of saf. And we think that they could be significantly overstated. And there are two main reasons for that. One is that one of the effects of this proposal could be to shift the type of renewable fuel. So basically shift from renewable diesel to sustainable aviation fuel. To the extent that happens, and it's really just a swapping out of renewable fuels, the net environmental benefit would be smaller. Also, there is a lot of uncertainty in the literature about exactly how beneficial these fuels are. It's very difficult to measure including sort of what the environmental benefits or costs would be of the inputs. And there's enough complexity that there's some disagreement in the literature. Then the third point I wanted to make is that there's a lot of uncertainty related to the potential revenue loss. So basically this is a tax, this is a credit against diesel excise tax revenues. The administration estimates that this tax credit could be in the range of 165 million to 300 million, kind of at the upper range. We think that it could be smaller than that, but we also think it could be substantially larger potential, potentially a billion dollars or more per year. So to the extent that that's the case, certainly that would be a pretty significant hit to diesel excise tax revenues. And then of course, if you have drops in diesel excise tax revenues that significantly impacts transportation. So these dollars would go typically go to a variety of types of projects. They go to local streets and roads. They go to state projects under the state shop program. They also go to program that's called the Trade Corridor Enhancement Program. And so the larger these tax credits are, the less funding would be available for those key transportation programs. And then the final point that I wanted to make is that in our view, this proposal deviates from really the spirit of voter approved restrictions on transportation dollars. So the voters have put into place a number of restrictions over the years in terms of those diesel and gasoline tax revenues, generally restricting them to streets, roads and certain mass transit activities, this would basically divert those funds instead to the aviation sector, which we think is not consistent with the spirit, not the letter, but not. But with the spirit of voter restrictions. So happy to take questions at the appropriate time.

My name's Aaron Smith. I'm a professor at UC Berkeley and I've worked on biofuels for about 20 years. And I thank you for the opportunity to be here to share my thoughts about saf. Air travel, as we've heard, is one of the hardest sectors to decarbonize. Batteries are too heavy to be used in long haul flights. Hydrogen takes up too much space. And so safety has been touted as potentially one of the solutions to decarbonizing aviation. We need something that's a liquid fuel that we can drop into fuel tanks just like we do with current jet fuel. I want to say three things regarding this proposal. The first, I believe the SAF tax credit would lead to substantially more SAF being brought into the state than being projected by the administration. SAF is expensive, and therefore bringing in that SAF would come at high cost both to the state budget and potentially to purchasers of gasoline and diesel at the pump. And number three, the net reduction in carbon emissions would be small and expensive. So to elaborate a little bit, what is saf? SAF is chemically very similar to regular jet fuel, except it's made from vegetable oils or animal fats. So it could be like the vegetable oil you buy at the grocery store that you use for cooking. It could be recycled cooking oil that's been collected from restaurants or food processors. It could be beef tallow or corn oil that might have otherwise been used for livestock feed. It's produced in large facilities that much like oil refineries. In fact, some of the existing SAF facilities used to be oil refineries. So to my first point that the tax credit would lead to high SAF production. There's a lot of potential in this industry for SAF production. There are currently six facilities in the country that are equipped to produce SAF from vegetable oils or animal fats. If these facilities were to produce saf, they would produce six and a half times the amount at capacity. They would produce six and a half times the amount that's been projected by the governor's office. Now, of course, they might not do that, but the potential and the capability is there. Additionally, as an alternative to oils and fats, you can make SAF from ethanol. There's only one facility that I know of in the United States that is using that technology. There's uncertainty about how ready that technology is to scale up, but we have to be thinking about that possibility that that technology could also scale up if appropriate incentives were there. So to project the actual amount of SAF that would be induced by the proposed tax credit, my colleagues And I have developed a model that incorporates this tangled web that we have of federal and state policies. And our model projects SAF production at least double that projected by the administration and up to seven and a half times the administration's projection, depending on how quickly SAF from ethanol would scale up. So that's my first point. A lot more. SAF production is costly for the state budget and for drivers. The SAF tax credit would reduce diesel excise tax receipts by between 20 and 75%. Given that large increase in the amount of SAF produced, these lost taxes represent money, as we've heard, that would not be available for road construction, maintenance and repairs. In addition, drivers would likely pay more at the pump for gasoline and diesel. To understand why, we have to dig into state and federal policies, and I'm happy to expand on that later, but we should expect through the state's low carbon fuel standard to have higher obligations for petroleum diesel, because a large part of what would happen under this tax credit is production that is currently going to renewable diesel, which is a very similar product to saf, except we're using it in trucks in California, which shift that to aviation fuel, thereby essentially raising the costs of compliance under the low carbon fuel standard, potentially raising gas and diesel prices by 10 to 15 cents. My third point is that the net reduction in carbon emissions would be small and expensive. To understand why, remember that this proposed tax credit would cause substantial diversion from renewable diesel, which is currently being produced to saf. SAF is more expensive to produce but has similar emissions. So we'd be introducing a lot more cost, but only getting small emissions reductions. We have only so many resources to spend on climate change mitigation. Choosing expensive policies to reduce emissions means that we are choosing to reduce emissions less than we otherwise could with more efficient policies. So, in summary, SAF is expensive to produce and would generate few benefits for the climate. Promoting it only makes sense if it creates a clear path to future cost reductions, future emissions reductions, and if we carefully manage the unintended consequences. Okay, thank you.

So the answer is no. So it applies to staff sold into the state. And the reason is that in 1988, the U.S. supreme Court heard a very similar sort of tax credit structure for ethanol produced in the state of Ohio. The U.S. supreme Court ruled that that tax credit was not was in violation of the Commerce clause and that states could not in effect discriminate against out of state production. So that's why the tax credit structured as it is because of a decision by the U.S. supreme Court.

people's concerns that this will be leading to importation of SAF fuel rather than the fuel being purchased here?

Thank you. So that answer both deals with whether they can. And then the second question that we have here about leakage, basically it's the same answer that you're not going to get much leakage because you don't think we'll get much in the way of imports. Right. All right. Any response to that?

Response I would just note, so there are other state diesel or state SAF tax credits. So in the state of Washington, they have a SAF credit staff tax credit. In the state of Illinois, we haven't seen that that happen in those states. For example, in the state of Washington, there's actually a trigger on where a company would need to be able to produce 20 million gallons of SAF in the state. In order to trigger that tax credit to be on. There are renewable diesel facilities that produce renewable diesel in the state of Washington that haven't shifted over to saf. So we haven't seen this happen in these other states. So certainly one can speculate that these firms would change their behavior. But we haven't seen that happen in these other states that do have, in some cases, more generous tax credits like the state of Illinois.

I'm going to go on the

something that was just said, assembly members?

I love it.

Thank you. To the comment that you made about other states doing this already and even more generous. How does our what you all. What the governor is proposing, how is it different than what other states are doing? Are you modeled after any particular one saying that you were saying you didn't see that happen in other states? So how closely aligned are we with other states in this policy?

And I think just one point of context there. Oh, sorry.

I was just going to say state of Illinois does not have a low carbon fuel standard. So what we have to do is think of all the policies and you can stack up subsidies from all of these policies in order to cover the excess cost of producing saf. So Illinois does not have a low carbon fuel standard. Washington state has a clean fuel program that's relatively new. And so maybe we'll see evolution there. But I mean, as I said, almost all the renewable diesel that's used in the country is used in the state of California. And many of those facilities are ready to be able to switch over to.

So to clarify what I just heard. So the governor's proposition is that other People are doing this in other states and we're not seeing any gaming of the system. But I think what I hear you saying is our ecosystem is different in the sense that we also have additional program lcfs which combined with this program could allow for some of the changing of the behaviors of companies to maximize.

Okay, thank you.

Yeah.

Go ahead.

Yeah, that's certainly one option you can use general fund, the greenhouse gas reduction fund. Those are all options that the legislature could choose to backfill the lost revenue.

Exactly. So if a Firm only has $100 million of diesel excise tax liability, yet they produced a sustainable aviation fuel above and beyond that they wouldn't be able to claim it in that calendar year. There's no refund. So it only be they would be able to carry that forward and be able to claim that credit against future diesel excise tax liability. But they can never go negative on their diesel excise tax liability.

So right now at this moment there are four companies that have certified pathways through the low carbon fuel standard that would meet the criteria. However, we don't know those firms diesel exercise tax liabilities. So we wouldn't know whether they would be able to do take advantage of this tax credit or not.

Yeah, we've heard from some of those firms that they do not have diesel excise tax liability. We don't necessarily have a way to verify that because because it is private information. But at least two of those firms have confirmed that they do not have diesel excise tax liability. Which would leave only two left only two potential.

Yeah, you know we, we haven't sort of assumed that understanding that certain stakeholders that you know, that could be a valid argument that if there's a firm that views this tax credit as being sort of make or break and that they would then leave the state then that production would similarly leave. However, I think maybe the LEO would note that diesel demand may is not as would necessarily go away overnight. So some of that diesel excise tax may be made up by other firms.

I would note though that there are other taxes that refineries pay. So although you may not see a diesel excise tax revenue, you may see impacts both locally and to other taxes that a refinery would pay. So it's not sort of this zero sum game that the diesel excise tax revenue would be made whole and the state would be fine.

So I think number one is to help the aviation sector decarbonize. Sustainable aviation fuel is two to three times more expensive to produce than fossil jet fuel. And as you heard from my colleagues at the table, sustainable aviation fuel is largely considered the only way to decarbonize the aviation sector right now. Additionally, as we've heard from stakeholders in previous hearings, is that this could help certain firms stay in the state and lead to continuation of jobs of prevailing wage union jobs.

here over the last few years we've

I was just going to say you

Of course, demand and supply are inextricably linked. What the economics suggest would be that this would just result in more fossil fuel to meet that demand and so it's cheaper to produce, you know, trying to, to meet that demand with fossil production. Obviously as those price dynamics change, the economics change. But the history here bears out that without equilibrium on the pricing, you're going to see more fossil fuel into the system over time in a fossil jet fuel, which is counter to our broader decarbonization rules.

think that the Point that the assembly member was making was that if there's a shortage, you're not going to see that being able to make up that difference, which would then change the price point for folks in the private market that are producing this.

too, so possibly, but hard to predict what's going to happen anytime.

Yeah. Oh, go ahead. Yeah, yeah.

Yeah, so maybe I'll take the last question first.

So our understanding is that Phillips 66 does have diesel excise tax liability. They're one of the firms that have code confirmed. So there are two firms that said that they do not. And then this firm has said that they do.

So. Yeah. So Phillips 66 has confirmed that they do have diesel excise tax liability. So they would be able to benefit from this proposal.

Regarding. I think there are two other questions. One about the general cost as this, as Elio mentioned, compared to other strategies, when we're looking at some of our other strategies that we have in the state that are funded by the Greenhouse Gas Reduction Fund, the cost of about $170 per ton of GHG emission reduction is not necessarily out of the ordinary for Example, one program that this committee has heard before is the Low Carbon Transit Operations Program, which is funded by the Greenhouse Gas Reduction fund. That's around $165 a tonne. Overall, our GGRF investments average around $110 a tonne. So there's quite a, there's quite a variety of sort of how, how we're looking at that as far as a cost perspective.

And then as far as the point, about 1% of aviation fuel or 1% of greenhouse gas emissions. I think I'll tee it up for my, for my colleague from the Air Resources Board. But as we see greenhouse gas emissions shift over time, we would expect to see that dynamic change.

You could respond one second. I will express my frustration that this wasn't part of the discussion around the Greenhouse Gas Reduction Fund. Last year. We had a working group that worked on it for an entire year. And I think throwing around averages of how much it costs per ton in GGRF is misleading. When you have programs that are in it like the High Speed Rail that takes up a fourth of the greenhouse gas production Fund, but it has not yet produced a single greenhouse gas production, that's part of that calculation. And then you also have programs like Sustainable land Management and Sustainable farming Practices that reduce a significant amount of greenhouse gas productions much more than this program per ton at a much smaller dollar figure. We were able to look at all of those in their totality and determine a package of things that we thought made sense for California. So I'm a little bit wary of taking a one off from, away from that discussion. I understand you've identified a different funding source and I, and I can appreciate that. But when we talk about how we structured the Capita Invest program, it was looking at it in its totality. I'll go ahead and come over here.

Yeah.

So much. Just a couple comments. I think one thing is, I think just fundamentally, just because we're doing other things that may be not the most cost effective, I think it's perhaps not the strongest argument for doubling down on that approach. And many of those other programs have a lot of potential co benefits too, which have to be considered. And so we certainly want to think about the co benefits of this as well as those other programs, but also just on the numbers, that $170 number assumes that this program actually has all of the assumed benefits that really we're measuring them Correctly, we're not having this switch of the fuels and it assumes all of that and it assumes that they all come just from this program, not from any of the other programs that we're using both at the state and federal level to subsidize this fuel. So we've got the low carbon fuel standard, we've got the renewable fuel standard at the federal level, we've got all of these programs that are stacking. And when you think about all of those program stacking, number one, probably the cost effectiveness is significantly less. And then if you think about those other issues about potential overstatement because of the shuffling, And I think Dr. Smith did some work on this as well, so he can speak perhaps to that. But the cost effectiveness would be much, much less potentially under that kind of scenario. So we could be talking, you know, very, very ineffective from a cost effective Dr. Smith.

Yeah, so as we heard, you have to think about how this would stack on top of all of the other programs that we have. And so, you know, the sort of the easy way to think about it is that jet fuel is three times as expensive to produce as SAF is three times as expensive produce as jet fuel. So it's going to cost a lot for us to use that instead of jet fuel. Our modeling indicated that the incremental carbon emissions you get from adding this tax credit on top of everything else, one to $2,000 a ton, depending on what kind of production comes in.

I'm going to intercede before we. It's the number one focus here is try to get the information about the administration's proposal and counter arguments about that. To the extent that you can answer the question that was asked, feel free. But it's perfectly fine for you to say you weren't involved in that part of it. We have people from the Department of Finance that are just specifically focused on this tax credit. So do you have information in response that's responsive to Mr. Gallagher's question?

Thank you. And I just want to emphasize we have. This is going to take a little bit of time today, and the next item is going to take a little bit of time also.

for everybody, we have A number of you that have come in since then. At the beginning of this, I said the emphasis here. We're not making a decision today. We're trying to get the information that we need about this as we try to create budget priorities. So if we could try to stay as focused as possible on pulling out questions that they can be responsive to that they have information about that will help us clarify. This is what I'd like to do. So I'm going to jump to the.

Right.

of how we got here.

Fine request to make that request today. But there are tens of thousands of people that work for the governor and they all can't answer all those questions about what happened then. But that's a, that's, that's a fine request as we do that. So I want to go back and try to make sure we're, we're getting to these questions. And this is a healthy, robust. Real quickly, you talked about life cycle analysis. That's true. On the low carbon fuel standards, but is this tax credit going to have a life cycle analysis also?

All right. So I just want to get that on the record in terms of whether that was going to be the case for this. Want to frame this question in the big picture. I think there's strong support amongst the legislature that we don't. We want to try to make sure refineries don't close prematurely. So we're interested in trying to do that. There's strong support for. We want to try to decarbonize all the hard to decarbonize areas. The questions being raised here today are is this the most efficient way to do this? Does this have unintended consequences doing this this way? What's going to be the impact? So I want to come back. I appreciate you saying it doesn't have to be this way, but right now it is coming from the diesel tax and it will have an impact on that. And the administration right now with this proposed proposal is comfortable with the impact, the decreasing of the funding for transit transportation. They feel like this is an appropriate trade off.

Great, thank you. And then there's been some, some statements and arguments made by Lao and Dr. Smith that this can potentially increase diesel prices. And at a time when we're focused on the product, I mean, the cost of living issue, how can, does the administration have strategies to make sure this doesn't increase, having it have a negative impact on diesel prices and gasoline prices, because there can be a shift in refinery capacity.

So, I mean, I wouldn't characterize it as an assumption. I mean, we were modeling the cost curves for these different fuels. And so the argument there is to say we're producing in the nation a certain amount of renewable diesel. If we incentivize saf, we're going to produce it on top of what we're already doing using these waste fats and oil. So my question is, are those waste fats and oils just sitting there not being used right now? Because if they are, why aren't these companies using them to make renewable diesel right now? They could be. So that suggests to me that those fats and oils are not just sitting there waiting to be used. And so in order to be able to use them to make saf, you're going to have to bid up the prices. And you bid up the prices, and that's going to be going to be raising costs. And so I'm not, you know, and that's what we sort of have out of our modeling, that if you want to use more of these fats and oils to make biofuel, you're going to have to drive up the price in order to do that because someone else is going to have to give up their use of it. And so it's not so much. We're assuming that there'd be substitution. But that barrier of if you expand, you're going to be raising costs means that you'd be more likely just to see a switch from what's currently be used to make renewable diesel instead used to make SAF.

Yeah, just. Just a couple of additional points. You know, it does appear that there is a fair bit of additional capacity in the existing biofuels refineries to, to increase the amount of renewable diesel and SAF production as well.

Total announced capacity versus the amount of volumes that are coming to California. And I will say, kind of going back to my earlier points, that some of the changes in the federal tax code did inject a lot of chaos into this situation. And one of those things that one of those changes was limitations on the amount of imported feedstocks and how those get credited under the tax credit program at the federal level, which has kind of created a situation where some of those imported waste oils now, you know, may have a. May have a harder time finding a home. And so, you know, there may be additional ability to import waste oils to be able to increase the overall total capacity.

I heard from a similar Gallagher about thinking about the history of this. I mean, we have seen over the last 10 years the total production capacity of renewable fuels go from almost zero to now what's, you know, around 4 to 5 billion gallons nationally. So they're. There was a lot of predictions when we first rolled out our programs about the inability for fuels to be able to be produced, renewable fuels to be able to produce that haven't come to pass. And so, you know, this is something that, you know, we could see potentially continue in the future as production grows.

I was going to say there's two things here. Do you have the excess capacity in your refinery to produce more? But in order to actually take advantage of that capacity, you've got to buy the feedstock, you got to buy the waste oils and fats to put in there. And so that's.

Why limit our understanding is that many of these firms are not profitable and don't have a large corporate tax liability unless there was a sort of a refundable tax credit made. So that's certainly an option. It would introduce some additional complexity to the system versus what we've proposed.

Actually, I want to ask a question about kind of the flip side of this proposal, which is the loss of revenue in programs. Three specific programs, the SHOP program, the local streets and roads, and the Trade Corridor Enhancement programs. When I was on a city council, we utilized those programs, and I seem to remember SHOP in particular being very over prescribed, that the amount of projects that come in for that funding far exceeded the amount that we had in the account. So if those are the three main programs that are going to be impacted by the cost, the potential shift of this funding away, can you tell me what the status of those programs are, have? What level of requests are you getting in those programs? I know we've got the League of Cities in CSAC who have weighed in on this proposal. As a result of that, how will it impact our cities and our county's ability to access those programs?

Great. Time for the big switch. All right, so we have somebody from LAO that can also help answer that question. And so you can. No, first, first, we want the administration to be able to answer the question. Right. There you go. You're on.

they switch the shift switch.

Good morning, Ted. Dylan from BPAR Finance.

Oh, you got to pull that microphone really right up to your mouth there for a break. We have fans on here that we could barely hear over.

Can you repeat your question so I can.

So for the, for those three, the three identified, and I know that there's probably more than that, but the SHOP program, the State Highways Operation and Protection Program, the local streets and roads, and the Traffic Corridor Enhancement programs that could potentially see a reduction in funding if this was approved. Can you talk about how many proposals are coming in from local jurisdictions for money from those pots? How much less would be available to them to do projects? Can you help us to quantify what the impact on local government operations could be if that funding is not available to them?

And then the remaining 88 million would

So that includes Shop.

Did you say Caltrain was one of them?

Yeah.

Yeah, yeah. So for each of these programs, you know how many in the last funding cycle, how many applications came in and how many were funded.

So when funding is made available specifically for local government, when funding is made available, available and local governments put together their RFPs and they apply for the funding, how many proposals did you get versus how many were you able to fund?

Is it safe to say every dollar was used?

Yes.

Yeah.

Right.

Okay, great.

Assemblymember Petrie Norris.

I'm going to kick it to Department of Finance first or anybody from the administration to answer first. And then I'm going to go to Dr. Smith to answer an LAO.

As Matt Botulica with the California Resources Board, happy to take a first shot at this. And so I think you've heard from a number of our panelists about the challenges in decarbonizing the aviation sector. When we did our 2022 scoping plan, we looked at what are the technology options for decarbonizing aviation. We identified three main strategies. Sustainable aviation fuel, battery electric aviation and hydrogen combustion. Aviation, the hydrogen and battery electric side, very nascent industries. There's a lot of technical challenges and engineering challenges to overcome there. So because of those potential challenges and the availability the availability of sustainable aviation fuel, the production pathways that exist, we put in place in the scope and plan a target that we would have 80% of our aviation fuel demand be met with sustainable aviation fuel by 2045 as the primary strategy for that sector, knowing that battery and hydrogen can combustion was going to be a big challenge. That is not true for some of the other fuel demand sectors like the heavy duty space or the light duty space, where they have a much clearer path on innovation on battery electric and hydrogen fuel cell electric vehicles. So if we're going to get to those 2045 objectives of carbon neutrality, we need to make investments in the types of long term approaches that are necessary to get there. Sustainable aviation fuel is one of those. As I mentioned earlier, there seems to be a mismatch in the incentives to get us to that 2045 objective. And this would be one way to kind of equal the playing field.

Yeah, you're. You're asking exactly the right question. And, and so, as we've heard, sustainable aviation fuel produce using current technology with, with oils and fats three times as expensive as jet fuel, it needs a lot of subsidy support to be produced. It's also a relatively mature technology. So I don't see a pathway for potentially lower costs over time for this kind of fuel. In terms of scalability, I mean, we're talking a pretty small fraction of California jet fuel use. If you expand that out to the rest of the country, we'd pretty soon run out of waste fees and oils and we'd have to plant the entire United States with soybeans in order to produce enough fuel to be able to replace whole jet fuel in the United States. So I'm pessimistic that it's sustainable, economically sustainable there. And so I'm optimistic that 20 years from now we might have E fuels where we have super cheap electricity, where we can manufacture hydrocarbon liquid fuels. But I don't see a huge learning curve for this particular technology.

All right, can I add just one piece? And I think Dr. Smith made a couple of points here that I just want to also.

Yes.

Chairman members,

Yeah, I just echo some of the comments that Dr. Smith made. So in our assessment, it seems likely that this would probably basically fund the existing technologies and the existing sort of relative. Even though in general SAF is not as cost effective, it would probably be the more cost effective of the saf, which is the sort of using those tried and true approaches rather than the innovation. And so I think another way to think about this, because we do think that that is exactly one of the times we might want to do something that's not cost effective, is if we can really change the sort of structure and get innovation so that we can build what we need for the future. And we just don't see that built into this structure also, because this is basically just subsidizing likely in our minds existing technology. Again, we don't feel like you need to do it right now. You could do the more cost effective approaches and then later on when this is really your last thing that you need to do, you could do this kind of approach. But again, if you want, you could structure it differently and maybe really try to focus on that innovation curve. But we don't feel like as directly this way.

I guess I would just say I'm gonna definitely listen to the Chair's guidance and stay focused on this topic. But I think that there, you know, some of the conversation we're having does speak to a larger and more important truth that we have goals. We need to align investments to support those goals. If we look at those goals and say, oh, that's literally impossible, then we need to have a bigger conversation. But my understanding is that this is kind of an existential moment for SAF in California. So I don't know that we have optionality to say, oh, if we don't do this today, we're going to do it in five years. So I think that's also important for us to acknowledge because I do think that if we don't make this investment now, we're never bringing SAF back to California.

I'm going to let you be the last.

So I think because there's two questions. That's the first one.

I'll let you do that question. Let me let him respond and then you can do that. Next question. Yeah.

Had some interesting conversations about that in my office, but I will keep those myself for right now and go on.

got kind of two key questions before us. The first being, is this a good

What's the roi? The second and equally important, are there unintended consequences and are we somehow going to unwittingly drive up the, you know, the cost of diesel and gas? It seems like you all are working off of very, very different assumptions regarding the scarcity of the, I guess, necessary ingredients in the market. I guess that one that feels like that should be knowable for the committee, that we should be able to get to one version of the facts and one version of the understanding of the market scale. So I guess just as a follow up, can you send to our offices kind of the, you know, the market data that supports your perspective? So the Berkeley study is predicated on an assumption that there's a scarcity of ingredients in the market. If I understand, whereas CARB's perspective. It has, or DOF's perspective is that there's actually a lot of market capacity and therefore won't drive up the price.

Just to clarify my point, I think the, the question about, like, how much fuel production capacity exists is, is relatively knowable because that's, you know, based off a refinery size and refinery throughput. The question about how much Feedstock, how much inputs into those refineries is available is a much more challenging question to actually, you know, hone in on and say it's noble. There's definitely ranges. There's been lots of studies that have been done. And it does rely on kind of what your approach is to understanding the market dynamics of the availability of that feedstock. How much could you produce based on certain pricing? So happy to share information with you all, but I just will say that that is one of those areas where there's going to be quite a bit of a diversity of views on it.

And a document was just delivered to your. Right there. All right, thank you so much. And I think that Assemblymember Wilson has a question. I think that this was an invitation from assembly member Petrie Norris. If you're going to send us your assumptions about this feedstock question in particular and capacity questions, but if you'll send that to the committee so that all the committee members have that. Assemblymember Wilson. And we're going to start to narrow this down. Right. Okay. This can.

Oh, you don't have a question any longer.

Well, let me, let me, let me. All right, I'll wrap this up then. And that is, I mentioned earlier, but I would mention again, I think there's strong interest in the legislature to keep our refineries that are operating here in California operating. That we need that, certainly, and we're trying to be supportive of that happening. We're also trying to keep jobs here in California. We also want to try to decarbonize hard, decarbonized sectors. Assemblymember was asking those questions. Is this the moment, is this the moment where this investment is going to help jump us to new technology that is, is going to do that? So we want to accomplish all of those things. And that is the one place where I think we have pretty strong agreement is that is if we can make technological improvements, those are good investments to make, if we can do that. The question that is being raised by the LEO and by the Berkeley study, et cetera, is not just is this a good investment, et cetera, but are there unintended consequences or are there consequences that are out there? So a real concern for me is I want to keep the jobs in California. And I'm not, I need to be convinced that these jobs are not going to go to production facilities outside of the state who are going to say, hey, we can, we can collect this tax credit in California. Will we be incentivizing? Because in my mind, the real what we're really trying to do is we have one refinery that is probably the focus of this effort that we're trying to try to get some help to. I'd like to get help to that refinery without necessarily creating a program that may end up having the benefits spill outside of the state. I'd like to be more creative. I'm not opposed to getting the money to that refinery, but let's get the money to that refinery if that's what we want to do. We simply are trying to subsidize that without necessarily, again, getting it out of the state. The second thing is I'd like to do that in a way that doesn't cost jobs in the other sector that is going to be receive less funding. So just as we're making arguments, these are refinery jobs that are being protected. If we decrease the funding for SHOP and all of these other programs, that is, that creates fewer jobs in those industries that are out there. So for me, the jury is still out in terms of these unintended consequences. I think we had a very healthy and robust conversation here today. This is an invitation to continue the conversation. This obviously has lots of interest and so again, no decisions going to be made, but let's continue the conversation. Everybody is invited to keep funneling it to committee staff and committee staff. We'll make sure the other committee members get this as we go forward. And if we have to have another conversation about this, we will have another conversation about this here if we have to. Right. Because it's important to get these kind of things correct.

And with that, I really want to thank the panelists and I want to thank everybody. This was a very,

say, appropriate and professional conversation that everybody had. And a lot of times political conversations aren't real professional nowadays and stuff. So it was very healthy for us. So thank you all. Thank you very much. And I appreciate staff for making sure everybody knew in advance we what the big questions were so that we could have such a healthy debate. We're going to go on to issue number two, Zero emission vehicle incentive trailer bill. You got questions on this one too, huh? How about you? You got big stuff?

You want to go first?

We'll start you off right.

Ready to do this?

Thank you so much, Mr. Chair for the flexibility. I have the opportunity to speak to some students and they came all this way to the Capitol. I want to make sure I get a chance to honor that request. And so I think, you know, this need to inject 200 million into our zero emission vehicle progress is extremely important given the fact that what happened at the federal level in terms of withdrawing funds. So I'm very supportive of it. I am very supportive of it being towards light duty as that's where I think the injection needs to be and can be deployed quickly within this next year. I recognize that there has been desire from those and I'm looking in the room because I see them who want to see some of these funds go to medium and heavy duty. Although I primarily would like to see the injection into light duty. I recognize the need for that and I look forward to the conversations surrounding that. And I would say that when looking at medium and heavy duty, I think we should lean towards towards the medium duty space versus the heavy duty space and look for other ways to ensure that we're able to fund HVIP and things like that because that's extremely important. But as it relates to this 200 million, I think it's better suited to that direct injection. And I think there should be three things that I'll add that for our new vehicles having that split between the OEM and this type of incentive I think is beneficial. I think our cap, our MSRP cap should be raised on the price of a vehicle and it including just like the base model. I think if you upgrade your stereo it shouldn't matter when it comes to these types of incentives. So I think there's a difference between what's eligible as it relates to the cap versus not. I don't think we should do income caps at this stage. In terms of the used vehicles. I do think we should have a portion to our used vehicles. There is a lot of used vehicles and that is an opportunity for someone of low income or lower income to be able to get into the EV market versus buying a new vehicle. And we've had a lot of those come into the market because of the lease requirement. So that's extremely important. And then last but not least, we're going to stay on subject because I see to the chair. Thank you. For flexibility that we still have to address this issue as it relates to multifamily homes. 40% of our folks live in across the state live in multifamily home. And so we really want to advance on this zero emission progress. We're going to have to work on infrastructure and multifamily. This money is not to be deployed to that, but it's in the greater context we need to be considering that. And I look forward to continuing to discuss and thank you for the flexibility.

Chair.

Brandon Merritt, Department of Finance and actually I'm going to turn it over to my colleague from CARB to present this item.

How's that? Excellent. Well, good morning Chair members. Courtney Smith, California Air Resources Board as you know, earlier this year the governor proposed a one time $200 million appropriation to the California Air Resources Board and this is to establish a new incentive program for zero emission vehicles. And it's focused on helping keep California's ZEV transition moving forward, especially in the wake of the federal administration's cancellation of the federal tax credit. This proposed program is very much focused on helping more residents become first time buyers by providing incentives that are at the point of sale focused for first time purchases or leases of new and used light duty zero emission vehicles. And the reason we're focusing on first time buyers is because research shows that once you go electric, you don't go back. For someone that once owned a zero emission vehicle, the chance that their second vehicle is electric is 82%. So by limiting it to the first time buyers, this program will really help focus on expanding the ZEV market in California. Importantly, the proposed program would require for one to one funding match with original engine manufacturers that participate. So this effectively doubles California's investment. With the expiration of the federal tax credit, we are seeing that consumer demand, demand for light duty zero emission vehicles has slowed and so this is creating a critical moment and a need for us to take action so that way we can maintain momentum of that transition. And I think most folks know that addressing pollution from mobile sources remains critical as they are still the largest contributor to ozone and particulate matter pollution in this state. So this program would help fill in a very important gap that exists in our current ecosystem of clean transportation investments. So with that I'm happy, I think we're all happy to answer any questions you have and look forward to the discussion.

Helen, Christine again with the Legislative Analyst Office. So we're recommending rejection of this proposal and there are three reasons I want to highlight for that. The first is that in our view this proposal doesn't meet the really high bar that we're recommending the legislature apply to new proposals this year. And that's really as I think my colleague last week spoke to the committee about this. That's in light of the significant budget challenges that we think that the state is facing, not just this year, but really on an ongoing basis. Given the structural deficit facing the state. We think certainly that GHG reduction is important, but the state does have other programs that are aimed at that. And so we think that funding this new program in light of that is less of an urgent and critical health and safety need. Secondly, we would note that it's hard to evaluate this program because there's not a lot of details at this point. A lot of those will be worked out through the regulatory process that CARB is expecting to undertake. So it's very difficult to assess. But just given the amount of money available, we think it's unlikely this is going to make a big difference in ZEV sales. So 200 million one time, that's not probably going to move the marketplace in a huge way just because even if you assume about half of the vehicles qualify, we're still talking about maybe $1,000 rebate per vehicle. So in context of the cost of vehicles, still relatively modest. And then third, we would note that this could result in duplication. The state has supported other programs and currently has some other programs in place place related to zero emission vehicles. Some of those are running out of money. And so thinking about how does this interact with those I think would be important. We don't have those details yet because they're still to be worked out. But really understanding like does it make sense to add a new program? How does that does that affect administrative costs? How does that affect how we can analyze which program is having which effect? Those types of things would be really important. So happy to take questions at the appropriate time.

Thank you so much. And I think that that's one of the fundamental questions I did have is can you walk us through what current support networks or incentives there are in the light, the medium and the heavy duty space?

And I appreciate just to dive into the data a little bit, you've got a great chart in the analysis about zero emission vehicle sales. How is that relative to all auto sales? Is the loss of the incentive at the federal level? Do you see that in the data or is there an overall decrease in folks purchasing vehicles?

That was really helpful.

And then I think my last question for now. One of the criticisms of many of these types of programs is that it tends to subsidize folks who have a higher income. I appreciated your explanation on how this was geared towards first time electric vehicle purchasers. I think that that's a really good thing to highlight and I'm supportive of that. But are there any additional metrics that are mechanisms that you can put in place to make sure that this is incentivizing folks who otherwise would not be able to afford electric vehicle to get into an electric vehicle as opposed to just helping pay down part of the cost for folks who already can afford it?

Right.

Yeah, I think not much to add. I mean, I do think how you structure this program is going to be really important. Right. Because we don't want to just encourage folks who would have already gotten zero emission vehicles. We don't want to just pay them for what they would have done otherwise. And I think there is some other, some other work that's been done that suggests in some cases our past programs have done that, including a state audit. And talk about how it was difficult to piece that out. I think really thinking about how that's done is important and thinking about how again this stacks with other programs because there are these other programs that are in place and then also sometimes utilities are providing programs that are funded by LCFS as well. And how that all comes together I think will be really critical as you think about if you want to do this, how do you want to do this and what bang for your buck are you going to get. But again, you know, I think our perspective is also that, you know, there are many, many calls on your limited budget and so you're going to, so trying to make sure you're really targeted could make a lot of sense.

Yeah, this is kind of an in the weeds question, but I'm hoping that you might be able to give me some kind of answers. Department of Finance as part of the 2025 budget. The motor vehicle account is very important to me for a number of reasons. And it's my understanding that almost all the money that was slated to go to the motor vehicle count 166 million and it's been described as headed towards insolvency. And I don't know if you know that, but I'm sure you do and that worries me. But almost all that money, GGRF funds, 150, 115,000 from GGRF funds. Now that was going to go to that motor vehicle account is no longer going to go there. So I'm wondering if you can answer or either validate my concern on that front.

Thank you.

the motor vehicle account.

this governor's budget, it was determined that the fund had

Okay, that scares me anyways, but thank you for the information.

to that total number. It's not a large percentage, basically. So the forecast, you know, moves up

to where the, we did not believe that the transfer was needed.

So I think fundamentally, yeah, there was just maybe the forecast was off a little bit and it is difficult to forecast these things. But fundamentally, I think the structure, the issue in MBA has not gone away. That's a long term issue of sort of a structural imbalance that has faced that fund for many, many years. And so, you know, there is, the administration's determined that we don't need to do this, that approved transfer this year. But I think there is a high likelihood that we will be back to talking about the fund condition of the MVA in pretty short order because the issues that have been driving the challenges with that fund are still there.

This doesn't help it.

I'm sorry, I didn't hear the last

us the rationale for why are we backfilling this federal cut when we have tremendous. This budget committee is not designed necessarily to advocate for health and human services, but it is the question that I'm going to get asked by my sub chairs and by my fellow colleagues saying why are we putting this money, you know, putting money into this when we could be helping with health and human services? Right.

So the second question is, you know, the devil's in the details as the Laos has pointed out. The challenge, there's two challenges, as my colleague pointed out. You know, wants to try to make sure this is really going to people that really need it and not just having high income people. The identification, the dealer is not going to know whether you're a first time buyer or not. So it seems that there are many ways and the dealer's going to have an incentive to make it easy for somebody to identify as a first time buyer. What do you anticipate being the procedures that you're going to follow? Is it just going to be that they have to sign some affidavit of it saying they're a first time buyer?

So

Yeah. So as I mentioned, we are planning a workshop on March 24th. And just for context, because we, you know, presuming that the legislature agrees with the governor's proposal, we want to be prepared to roll out this program, you know, a month after the ledge session ends. So, so we are doing the work now to be in that position, including having conversations with manufacturers and going through a public process that we anticipate will be wrapped by that time. And so many of these things are things that we plan to discuss through that process. But what I can share with you is that in terms of incentive amount, we are envisioning the incentive amount to likely be within a range of 1500 all in to 7500 all in. So the California portion of that would be 750 or 1750. And through that public process we'll be able to narrow in. We do have research that suggests that 3500 might be a sweet spot in terms of being able to really change behavior while also balancing with that with making sure that the money translates into as many rebates as possible. And then in terms of what that means for like, well, how many rebates are there? If the incentive were 1500 all in, that's with the OEM match, we could expect around 260,000 rebates. And those would be again for first time buyers. So there's still folks who will be purchasing zero emission vehicles because we know once you go electric you don't go back, but those will be focused on those first time buyers. If we ended up in the higher end of the range, 7,500 as a max. Let's say you're looking at closer to 52,000 rebates. So we look forward to getting public input on what that sweet spot is in terms of your question chair around manufacturers and who will benefit. As I mentioned, we're in conversation with manufacturers. One idea that we will discuss further in a couple of weeks is manufacturers who are interested and eligible that we divide that money up among them. So that way there's an equal opportunity for them to be able to offer the choices that we know California consumers

Yeah, that's a. That's a great suggestion. Definitely take it back to the team.

Oh, Senator Member CONLEY no, appreciate the conversation. And coming from a district where there was relatively high adoption and I, I can say that from everything I've heard, I think the subsidies and credits do make a difference in those levels. That having been said, we have been talking about, you know, as we increase funding in this direction, how that's impacting, impacting existing programs like Clean Cars for all. You mentioned that as another program clean. But the fact is, according to the analysis, funding will run out of that program this fiscal year. So if you can talk a little bit more about why the decision to go this direction versus supporting that kind of program, let alone increasing funding for

medium and heavy duty incentives as well. So the those trade offs.

And then on medium and heavy.

So in terms of medium and heavy duty, as I mentioned, we have a lot of programs right now and money right now through aqip, through hvip. How many more acronyms can I do? Clean Fuels Reward, which is going to be coming on this summer. And so it is not to say that continued investment is not needed in those areas, but we appreciate, you know, it is a, it is a challenging budget year. So really being able to be strategic in how we're filling the gap we see at the moment.

Well, I think as I mentioned earlier, there's a lot of needs that we have in order to support our clean transportation transition. Ultimately, when you're thinking about California breathers, we have to get to 100% here. And so to see such a significant and unprecedented backslide in demand for these vehicles as a result of the federal actions is alarming.

Aaron Carson, Department of Finance Just reiterate that the 2025 Budget act in the

So that funding is in the 2025 Budget Act. And then over the last seven or

But you said that 40 million was in the 25 budget since 2019. Yeah, but 40 million in the 2025 budget. Ask. But this is the 2026 budget. Ask.

You know what? Yeah, why? No, why? Why? No, why? Why not funding again for medium and heavy duty in 2026?

from CARB, we've invested 132 million HVIP in the last budget, additional funding for medium heavy duty charging at CEC 25

the administration is still prioritizing being heavy

federal tax credit in the fall, this

I appreciate that. I guess we're trying to keep momentum moving everywhere in spite of inappropriate federal government cuts. And that's all I'm really trying to focus on is making sure that we keep momentum going in both areas. And so that's why I question should we do 200 million here or should we do some. Something. Some. Some portion of 200 million going to medium and heavy duty? Because they're both. And I Think from a technology standpoint, the medium and heavy duty feels like it's closer to an inflection point in terms of adoption. Whereas a zev. We've moved past that initial inflection point, we've got it out there now. It's sort of like trying to keep the momentum going. So that's why I think I still have questions in my mind as to why we shouldn't make sure we have something in between 2026 budget specifically designed for the, for the medium and heavy duty as we go forward. But with that, thank you very much.

Sure.

Do we know what the average cost is for electric vehicle?

Right.

I appreciate you sharing that figure. Thank you.

So last year 42 million was provided to Clean Cars for All. Just get the menu. Last year 4042 million was given to Clean Cars for All and money is still flowing through that.

That's correct. It's administered through air districts. Obviously demand is different and how they administer their program is different. And so that is the case. There is also the statewide program that has money available that can be also a backslide to those regional programs. I think here what we're seeing is a program that absolutely continues to support low income and disadvantaged communities.

Right. Opening it up to more folks.

Oh, I'm sorry, this proposal.

Yeah. I appreciate your perspective and the points that you're making. As I mentioned earlier, one of the things, you know we have trade offs when you make program design. Right. The more requirements that you put on it like income verification, the more onerous.

off of that a little bit, can you talk a little bit about the difference in how long it would take to deploy the money if it was put into the Clean Cars for all program as opposed to creating a new program?

Okay, thank you very Much. We're going to move on to items item number three. We need we, we don't anticipate those being long items, items three and four, but we know that staff has prepared some. Mostly we're going to do questions from members and, or comments from members about items 3 and 4. Are you guys same. The same folks here. All right, good. Item three, want to give us the quick, the very quick rationale for the change?

Great. Thanks so much, Brandon. So with this item, the California Air Resources board is requesting $1.1 million in fiscal years 26, 27 and 2728 from the Air Pollution Control Fund. And this is to be able to support four positions that will help us implement the initial requirements of proposed amendments to Senate Bill 59. So this would make CARB the lead agency for making a determination on beneficial use cases, for bidirectional charging and adopting any vehicle requirements that may be appropriate based on that evaluation.

Helen Kirstein with the Legislative Analyst Office. So we haven't raised any specific concerns with the proposal, but we would highlight, as your agenda notes, that this proposal would undo a change that was made during the proposal, the course of the policy process on the assembly side. And so to the extent that's a concern for the committee, we wanted to

And that's what I wanted to point out is that is, I think we take serious that the Appropriations Committee actually pushed us to be with the CEC and you're undoing that. So it's not something we're going to, I think, take lightly. It's something we're going to look into. Your rationale here is that it avoids duplication of regulation. But. Give us a 60 second answer as to.

So my question is, why did the administration sign the bill last year if they thought it should be in CARB instead of a cec?

But what.

Good morning. Brandon Merritt at the Department of Finance. And I'll be presenting the overview of the Greenhouse Gas Reduction Fund budget as detailed in issue 4. The governor's budget assumed revenues of 3.77 billion in 2026 27. The governor's budget proposal for the 2627 cap and invest expenditure plan reflects the updated structure as reauthorized in 2025 by SBA 40. The new structure includes three tiers of expenditures with tier one fully funded first, followed by tiers two and three. Tier one includes the manufacturing Tax Credit, the State Responsibility Area Fee backfill and the Legislative Cap Council Climate Bureau. Tier 2 includes $1 billion for the High Speed Rail Authority and $1 billion for other discretionary items. Of the $1 billion in discretionary funding, 250 million is reserved for various investments identified in SB 840. The remaining 750 million from the 1 billion in discretionary funding supports the Cal Fire General fund backfill. Tier 3 funds, previously percentage based continuous appropriations will now be capped dollar amounts beginning in 2627 with proportionally related allocations that adjust downwards as necessary to ensure tiers one and two are fully funded. In addition to state operations appropriated in the Budget act. At the Governor's budget, there is 1.4 billion estimated for tier three. The governor's budget maintains the 2025 budget act agreement to support Cal Fire operation costs with 1.25 billion GGRF in 2627, 500 million in 2728 and 500 million in 2829. Finally, as discussed in issue 2, the budget includes 115 million one time GDRF to support the 200 million zero emission vehicle Incentive proposal. That concludes my presentation. Happy to answer any questions.

Helen? Christina, again, I just, I want to start with just a couple very quick points there to give a little bit of context and then I'll provide some brief remarks. So the additional context I wanted to make sure that everyone had was that the Legislature has committed some of this GGRF in past budgets. So particularly in the 202425 budget, as I think many members on this committee maybe may recall, the legislature actually adopted a multi year expenditure plan for GGRF and that included a whole variety of programs. They're nicely detailed in your agenda. I won't go through all of them. I wanted to highlight two specifically because they were related to legislation. One was the Clean Energy Reliability Investment Plan program that was related to the Diablo Canyon deal that the legislature made with the governor. And there was also funding that was provided for transit and that was related to to SB 125. And there was money slated out in the out years for transit. Also last year, as the Department of Finance mentioned, there were two kind of intent language pieces that were included. One was in SB840, that was $250 million for a variety of programs. And then there was money in the budget bill. There was intent language about this Cal Fire backfill, which is a general fund basically to offset general fund costs. So in terms of our comments, we note that we think the proposal in general is consistent with legislative intent. It includes that Cal Fire backfill. It includes that 250 million from SB840. But we think one way it's perhaps less consistent with intent is that the administration no longer plans to fund that GGRF expenditure plan from 2425. So it no longer plans to fund that transit money with the SARAP money or any of the other programs that you see outlined in your agenda there. Instead, the administration is now proposing to use some of that money to partially fund that zev, the new ZEV program we just talked about. So some of how they're funding, that is the fund is funding here. So that's a policy choice. We also just think generally, given the general fund condition, the legislature is going to want to use GGRF for its highest priorities across the budget. This is a flexible source. It's available to you. Given the state's condition, you could look back and think are those previous commitments still your high prior highest priorities or not? And really evaluate this as a helpful tool in your budgeting.

Thank you members. Questions or comments? Take a moment.

what is state operations?

And if I may just clarify, this is the administration's interpretation of state operations. SB840 identifies state operations as appropriated in the Budget act, which could, which is a very broad term which could include much more than just this 118 million. And I think we're going to discuss that in the next issue as far as what that interpretation is and best use of that.

I'm sorry, can the.

the point that you made regarding the fact that this proposal shifts some of our spending commitments, what we understood to be our spending commitments from the. You said the 2526 period.

One point of additional context is that this isn't new to this proposal. So as part of the May revision last year and in relation to the Cal Fire fund shift, the administration proposed to 0 out that 2425 proposal that was discussed in subcommittee. It was approved as part of the budget. So it's not new to this proposal, as the LAO may be indicating. As far as the administration making a new policy decision in the governor's budget to not fund these proposals, it was a decision that was agreed to last year.

Exactly. Although the 2425 budget did lay out a multi year plan. The decision to not fund that was last year. This is not a new decision that we are asking the legislature to make. We're continuing the agreement that was agreed to last year.

Thank you. That's helpful.

So as part of the May revision and it was discussed in subcommittee if we I'm happy to have further conversations with staff but in the committee agendas last year, it specifically noted that the administration is proposing to zero out the 2425 discretionary plan. And that was part of the discussions that we had last year.

Yes.

Yes, it was discussed in the agenda and we discussed it in the committee

The our understanding of the action was that it approved that as part of the Cal Fire general fund shift. So in order to to make room for the Cal Fire general fund shift, that, that there had to be that room to be made.

Okay. Well I want to make clear, you know, Steph pointed it out in the report, but I just want to read this into the record again and express concern about it. But the administration's proposing changing the structure to prioritize your funding proposals. First when I thought we had sort of a legislative, you know, an agreement there. And I think that that's the legislature's intent was to direct SB 840 in the 2025 Budget act, include setting the interest proceeds apart from the revenue so it can be spent separately and shifting the state operations staffing cost to tier one instead of tier three. And that results in the 1.25 billion cal fire operations fund shift being fully funded regardless of ggrf. And we very clearly, I believe the intent was that the 750 million was going to be funded and the 500 million was going to be. If there are additional, you know, funds that are out there. Bottom line is as potential revenues are coming in better, I think we should definitely consider reconsider that 500 million should be funded by general fund. Because the intent, and at least my understanding from the legislative intent, was that that would only be if there were, you know, the extra revenue and only because we were having a budget crisis. But we have significant income in revenue. It's been coming in the last few months. The contention was we don't have the general fund to do that. We had enough general fund money to fund the 500 million before. If the auction revenues were not excessive, we ought to stick with that because as I look at many of these programs that we're not going to have because we theoretically have 1.25 billion in there for Cal Fire. That's not the intent, I think, any longer of the legislature to have the GGRF funding so much of it going to a general fund activity like Cal Fire. And Cal Fire should be and should return as a general fund activity. It is a basic, fundamental service that needs to go on in perpetuity. GGR funding is by its nature designed to end as soon as we get to a more carbon free economy. You should not tie a ongoing revenue, an ongoing expense with a not an ongoing revenue source. And the, I think the intention for most people, when they thought of cap and invest, cap and trade at the time, was that that would be essentially getting revenue from people who were putting extra carbon out into the atmosphere to try to decrease carbon going out into the atmosphere. And these, these general fund activities, like the motor vehicle account, et cetera, have very, very tenuous ties to this by comparison to investments, specific investments in greenhouse gas reductions, particularly investments that could be made in new technologies that could dramatically increase our ability to do that. So I just want you to know that there's, I think, pretty strong interest on the legislative side of this to try to deal with that, at least at 500 million in terms of in terms of the CAL FIRE funding. You've been sitting there patiently. But. But I'm going to ask the assembly member go to chair.

Thank you. Appreciate that perspective. Just understanding that general fund revenues have been coming in higher the last few months. This is from the governor's budget and based on the governor's budget proposal where there is a general fund deficit in budget year. And then just to highlight. So in the budget bill last year there was intent language that noted the intent of the legislature and the governor to fund 1.25 billion from General fund or from GGRF for cal fire in 2627, 500 million, 2728, 500 million and 2829. So just clarifying that that was the way it's written is it's the intent of the legislature and the governor to do this. But if, if the general fund is not in a deficit, then only 500 million in 2627 would be used. So there would be potentially $750 million additional GGRF that could be available if the general fund is not in a deficit, at least in budget year based on the agreement last year.

Almost last chance to say good morning. But Andrew March with the Department of Finance. So this issue is for what the administration is characterizing as ggrf, Cleanup trailer bill, based on our understanding of sort of the agreement last year with SB840 and some additional technical clarifying changes. Additionally, there is a change related to housing, which is by my colleague Megan Tokonoga. Block is here to address some of the changes regarding the allocations for affordable housing and sustainable communities in Tier three. So I'll turn it over to Megan to provide some context.

Thank you.

Thank you, Chair. Appreciate that. Two notes. So historically interest in the beginning fund balance haven't been included in sort of how the contin appropriations are structured. So we are proposing to continue that practice. There is some ambiguity in the language of SB840 where it refers to monies in the fund, but then for the Tier 3 calculations it refers to the proceeds. I would Note contrary to what the LAO is saying about the state operations potentially crowding out tier three under the administration's proposal, that's actually how SB840 is written where what's left over after tier one and tier two funds tier three minus state operations. So it is already envisioned in SB840 to be taken away from tier three appropriations.

All right, that sounds great.

All right, Chair, good morning. Courtney Smith, California Air Resources Board. I'm here to give a quick overview of CARB. CARB's statutory mission is to promote and protect public health warfare and ecological resources through the effective reduction of air pollutants while recognizing and considering effects on our economy. We have unique authority to set emission standards for a range of statewide pollution sources, including vehicles, fuels and consumer products that are stricter than that of federal government due to our extraordinary air quality challenges our state faces. Additionally, AB32, signed by Governor Schwarzenegger, charged carb with the role of monitoring and reducing greenhouse gas emissions that cause climate change. From requirements for clean cars and fuels to adopting innovative solutions to reducing greenhouse gas emissions, we have pioneered a range of effective approaches that have set standards for effective clean air programs for the nation and for the world. Importantly, while most of people associate our work with climate, really over 80% of the work that we do actually deals with tackling air pollution and protecting California breathers. In doing that, we work closely with the 35 local air districts which regulate emissions from businesses and stationary facilities ranging from oil refineries to auto body shops to dry and cleaners. Our work cutting air pollution over the past half century now serves as the state's foundation for the next 50 years to be able to continue our legacy protecting public health, ensuring all Californians benefit, benefit from these efforts. Thank you. And that concludes my overview.

Nothing from us.

Comments.

Oh, yes,

Folks, if you're gonna make a comment when you guys leave and you're finished, just go through that front door right there. So you have to kind of fight the traffic.

Okay, we're back in session. Let the games begin.

All right, here we go.

Oh, thank you Chair.

with the California Climate and Agriculture Network.

protecting the purpose of GGRF to reduce greenhouse gases.

25% last week in response to the

the state are beginning to plant for their spring crops. Meanwhile, dairies in California have excess manure

way to transport off site to comply

But they don't have the capital to

The Alternative Manure Management Program or amp,

their reliance on fossil based fertilizer and realize our collective right to clean water.

GGRF program and we're going to need

Ask you to fund the program.

Thank you Chair Mark Neuberger, California State association of Counties registering our opposition to this the SAF trailer bill language. Just want to just point out some quick things. Cities and counties are responsible for 85% of the state's road and half the state state's bridges. SB1 provides critical state funding through the local streets and roads program. Any reduction that would be problematic, especially considering that county road projects and cities

cost for the cost of construction. So any reduction is significant. So we urge the committee to reject the trailer bill language and stay in line with the voters wishes which they've reiterated time and again that fuel excise taxes should go to maintaining roads.

Hi member Bennett, Ryan Kenny with Clean Energy. Appreciate the discussion this morning.

that it was mentioned this morning that there are zero emission funds available in the heavy duty space, especially over at carb.

LA Times article back in February that mentioned that while there's 165 million dedicated to Tesla for their heavy duty semi, those funds have not been spent. So just because they've been allocated with VOUCHERS doesn't mean that they've been spent and used. And I think that highlights a problem that in the near term, Lonox trucks actually are available and ready now. And we do support zero emission trucks, but more in the longer term. So we have a short term plan and a longer term plan. We would encourage the subcommittee to look at allocations for both zero emission and near zero as well. Thank you.

Good afternoon.

clients, AC Transit, Foothill Transit, the Golden Gate Bridge District, Napa Valley Transportation Authority and the California association for Coordinated Transportation. We really want to encourage you to maintain the commitment made in SB125 for the transit zero emission transit capital program that was previously made in prior, prior budgets and prior years several times. And also to fully fund tier 3 of the SB840 expenditure plan. We also urge your consideration to extend the COVID 19 relief provisions that have been in place for transit operators for another few years to 2029 fiscal year. You know, the first two items can be fully funded with the interest income and the carryover funds that are currently in the GDRF fund, unless instead of siphoning them off for other programs, we need to put those monies back to where those priorities were originally intended.

Brendan Tuig, on behalf of the California Air Pollution Control Officers association, we appreciate that money is tight this year and it's in that context that we make some recommendations. We know we need to make dollars, go as far as we can. And so there's a couple things I wanted to point out. There's the farmer program, AG diesel replacements. That's one of the most cost effective mobile source incentive programs, both for greenhouse gas reductions and public health benefits because of criteria pollutants. The other thing about that is because emissions are real, quantifiable and permanent, you get credit for state implementation plans for meeting both state and federal standards. And especially now with federal actions, that's even more important that we can get some towards that as well. And then the other thing we'd say is that if you're looking at heavy duty, which we think is a good idea, you should make sure that projects fulfill Karl Moyer guidelines. Because then again, like the farmer program, you will get sip. It's SIP creditable. So thank you for your time.

Good afternoon. Chair Bennett. Paul Mason with Pacific Forest Trust. With regards to the trailer bill cleanup for the GGRF trailer bill cleanup, we object to eliminating any subcategories from, from the $200 million to Cal Fire in particular, when SB901 was passed and created that $200 million annual allocation, the identification of $35 million to prescribed fire crews and implementation of beneficial fire was a really landmark move for the legislature. And it has only become more clear since then that for landscape resilience, for dealing with the enormous liabilities we have across California in the fire adapted ecosystems, we absolutely need to maintain that sort of commitment if there are going to be changes. I would point to the bill that Connolly has that maintains a smaller but more flexible commitment to prescribed fire. On a related note, I find it hard to understand historically the GGRF to Cal Fire for fire wildfire mitigation has come off the top of GGRF and as part of the 840 changes it went to the lowest, the third tier. And that's just is hard to reconcile with our fire challenges.

Hello, Good afternoon, I'm Anna Larson with here on behalf of Calcan commenting on the affordable housing Sustainable communities item. And so the Sustainable Agricultural Lands Conservation program has received 2% of GGRF funding

of the affordable housing sustainable communities 20% continuous allocation to meet ASIC's statutory goal of protecting agricultural land to support infill development. And so the program's continuous appropriation has enabled land Trust farmers and program staff to plan around consistent program timelines and availability which is critical for developing viable projects. And demand has increased over the years to 167 million in the latest round. And so for these reasons we urge the legislature to maintain Salk's continuous cap and invest funding and request 90 million continuously to meet the ongoing and increasing

Thank you.

Good afternoon. Jamie Fanuz with the Community alliance with family farmers representing 8,000 family scale farms across the state of California. Here to comment on item number four with tgrf. The California Underserved and Small Producer Program, better known as cusp, provides direct relief to farmers impacted by climate disaster. It has demonstrated remarkable responsiveness, allocating over $24.5 million in emergency relief to over 2,000 small scale farmers across the state of California. Most of those farmers have no other safety net when they are impacted by by climate disaster. These dollars have kept them afloat and kept them in business. Small farmers are climate solutions but they bear the brunt of climate change. The state has a responsibility to support them in times of need and desperation. We're requesting this year that $15 million is allocated from GGRF to CDFA's CUSP program for the fiscal year of 2627.

Thank you.

My name is Yadari Phillips and I'm a farm owner.

Sorry. I'm a farm owner and I'm also

which is a nonprofit that works one on one with small under resourced farmers throughout Northern California. Right now, over half of my clients

I already have a list of farmers

south of Elk Grove.

Everyone there farms.

Sorry.

Hello, my name is Kellen Belcher and I'm commenting. On behalf of Earth justice, we urge you to reject the proposed tax credit for sustainable aviation fuel. Expert analyses show that the greenhouse gas emissions reductions from these fuels are meager at best. This tax credit would benefit out of state fuel producers at the direct expense of urgently needed state and local transportation funding. Instead, California should cut pollution from the dirtiest vehicles on our roads, heavy duty diesel trucks. We support an investment of at least 350 million in zero emission trucks through the Clean Truck and bus voucher incentive project known as HBIP and at least 75 million for truck charging infrastructure. These investments will protect public health while supporting California's growing zero emission manufacturing economy.

Thank you.

Thank you.

Chair Nick Chappie with the California Trucking

So the state is already facing a transportation cliff funding cliff with transportation projects heavily funded by diesel excise tax paid largely by trucking.

analysis, the proposal could cut diesel excise

to 75% within the next few years. Diverting these funds could reduce investment in

and reliability for the millions of Californians

For these reasons, we urge the committee to reject the proposal.

Thank you.

Thank you.

Thank you. Thank you.

Chair Kayla Robinson with California's Against Waste commenting on item number four. I first want to start by thanking you for highlighting the importance of using GGRF for its intended purposes.

GGRF is going to be in high demand this year. So I wanted to highlight a few of our priorities. First being the Edible Food Recovery Grant program and the Community Cost Composting for Green Spaces which have proven highly effective. They fund small under resourced community based nonprofits like food recovery organizations and community compost facilities that have no other funding source right now. And our third priority is the broader Organics Grant program which has been instrumental in minimizing ratepayer impacts trying to meet 1383 targets. And I also just wanted to highlight that all three of these programs have proven more cost effective than the incentives to discussed today. So I think it's really important to consider funding these programs. Thank you.

Good afternoon Chair Bennett, Megan Cleveland with the Nature Conservancy here to provide comments on item 4. TNC appreciates the legislature and administration for recognizing the importance of nature based solutions and in reaching our climate goals in the Cap and invest reauthorization legislation, particularly adding NBS as a priority for GGRF funding. As such, we respectfully request the legislature appropriate $250 million in GGRF Tier 2 discretionary funding to the California Natural Resources Agency to support the achievement of the nature based solutions climate targets. Additionally, we really appreciate your comments this morning regarding the Cal Fire Operations funding. TNC urges the Legislature to restore and protect the 200 million in GGRF funding that has been traditionally invested in wildfire resilience. We believe that GGF should be prioritized for critical climate resilience investments while the General Fund is a more appropriate source of funding for critical public services such as Cal Fire Operations. We recommend reducing the backfill of Cal Fire operations to the extent additional revenues allow to support the critical climate resilience investments. Thank you Mr. Chair members. Beverly on behalf of Hyundai, we are in strong support of the ZEV incentive trailer bill language and appreciate the discussion today. We would also like to thank leadership for the administration for their leadership bring this proposal forward. Particularly given the federal rollback of EV tax incentives and vehicle emissions standards, we're already seeing an impact on the market. California sales earlier this year dropped 45% compared to this time last year and research shows that for every thousand dollars incentives it can increase battery electric vehicle sales by about 8%. Programs like these, especially with the OEM match, can move the needle to getting more first time buyers into EV vehicles and help California meet our climate goals. We look forward to continuing our work with you and Mr.

We are looking to do the right thing by hanging on strong just like you are right now.

Thank you.

emissions and ensuring all Californians can breathe clean air.

help California from falling behind the rest of the world.

to support zero emission heavy duty vehicles.

Thank you.

Good afternoon. Juanita Martinez. On behalf of World Energy and gevo, we strongly support the Governor's climate goals

However, we respectfully urge that the committee consider amendments that would allow for transferability in order for in the current proposal to ensure that all market participants are able to compete on an equal footing. As currently drafted, the proposal risks limiting participation in the market. When policies unintentionally exclude producers, the result can reduce and be a reduction in competition, constrained supply and market signals that encourage companies to direct the production to other states where credit structures allow for broader participation. If that occurs, California could actually see less SAF consumed in the state which would work against the very emission reduction goals the policy is set to protect. California should be creating a framework that encourages investment, expand supplies and welcomes all qualified market entrants. A more inclusive structure will ensure the market, increase SAF availability and ultimately deliver greater emissions reductions in the state. For these reasons, we respectfully ask for the committee to consider amendments that would allow for transferability. Thank you.

Good afternoon. My name is Abigail Ramsden. I'm Senior Director of Policy for rivian. I'm speaking in support of the proposed incentive for light duty zero emission vehicles with manufacturers matching the state's investment one to one. This is a $400 million program that will boost electric vehicle sales. RIVIAN is an all electric, all American vehicle manufactured headquartered in IRVINE. We employ 4,000 Californians with dozens of service and sales locations across the state and over 30,000 vehicles registered to California residents. This crucial funding will accelerate electric vehicle adoption for first time buyers, reduce air pollution and keep California on track to meet its climate goals. It sends a clear market signal nationally and globally that California remains committed to climate leadership. Our new vehicle, the R2 will be announced tomorrow. It will start at $45,000. This is a turning point for our company. We are looking to our home state to support us and our California customers as we strive toward a clean transportation future. We respectfully urge your support.

Thank you.

Brown, co founder of the California alliance for Community Composting. Here to comment on agenda item number four. We have been collaborating with CalRecycle since 2020 to implement what is effectually known as community composting for green spaces. Although the amount of our awards is tiny in comparison to the other California Climate Investments, the $4.5 million that we have received have been quite impactful. We have launched and expanded 217 community compost hubs across the state. So at schools, community gardens and even eight of California state prisons. The collective effort has diverted 12.5 million pounds of organics from landfills. And they recover this as a valuable resource for low income and historically disadvantaged communities to improve their food sovereignty. These hubs are also centers where we host public education so that we can offer tangible opportunities for residents of California to learn how to compost and the benefits of compost. The program supported 225 part time jobs, 5,225 cubic yards of high quality compost.

Am.

Thank you,

happy to work with you on that.

Thank you.

Chair.

produce more staff in California.

reach our industry's goal of net zero by 2050.

Thank you, Mr.

We're here to support the emission reduction goals of investing in sustainable aviation fuels. But most importantly for the economy.

first before we make investments outside of

Thank you.

Good afternoon. My name is Chelsea Gazillo and I'm the Senior California Policy Manager with American Farmland Trust. I'm also speaking on behalf of California Farmland Trust and California Council of Land Trust in support of funding for the Sustainable AGS Land Conservation Program, one of the state's most effective climate investments. Historically funded through the Affordable Housing and Sustainable Communities account, Salk also is a critical ag viability tool. When farmers sell development rights, the funds are often reinvested back into their operation, helping keep farms productive and resilient. SALT projects leverage significant local federal and private conservation funding, stretching the state's investment even further. So protecting our agricultural land base supports climate goals. It supports California's agricultural economy and long term food security. Just as importantly, it prevents costly sprawl development.

Appreciate it.

Thank you.

Thank you.

Good afternoon. Chair Natalie Spivak with Housing California commenting on item five, the affordable housing institution Sustainable Communities Program. The administration's proposal to split the housing and sustainable communities components of ASIC is promising. Moving housing dollars to the new California Housing and Homelessness Agency is a key ingredient in streamlining the application and award process for housing funding programs so developers no longer face costly delays while waiting for multiple awards from multiple agencies. Additionally, while ASIC's track record of producing integrated affordable housing and transportation infrastructure is impressive, this integration has led to lengthy delays and additional costs as affordable housing developers meet complex requirements to provide transportation improvements in partnership with local governments. However, it's critical that the ASIC housing allocation retain its focus on climate and equity. All affordable housing reduces GHGS because residents use transit more. But ASIC should continue prioritizing the projects that most reduce GHGs. It should also continue to utilize regional set asides so all parts of the

Thank you very much.

Aligning our concerns and opposition to item number one with all of the previous

attention to that of the lead California

What the voters have instructed the legislature

repealed an effort to rather oppose the

So for those issues, we want you

Thank you.

Morning. I'm Kurt Augustine, I'm Senior Director of State affairs for the alliance for Automotive Innovation. I'm here in support of the administration's proposal for zero emission vehicle purchase rebates. I would also like to echo the Chair's mars on how important it is to maintain the momentum of these sales. Unfortunately, we're going to be in the second quarter of declining sales after the stoppage of the federal rebate program. So we really think this proposal is critical to maintaining that. And it's important to note this would be the only program for middle income purchasers of zero emission vehicles vehicles. And we think that's critical to really ultimately achieve the goal we're all here for to try to increase zero emission vehicle sales. So we ask for your support. I also am here in support of item number three too. Thank you.

Hello Chair and staff. Ryan McCarthy on behalf of Lucid Motors in support of Item 2. Lucid is a California based EV automaker with headquarters in the Bay Area. Employing about 3,000 people in the state. They produce the Lucid Air Sedan and the seven seat Lucid Gravity suv, both of which have the longest range and leading efficiency in their class. These are exactly the types of vehicles that we need to get on the road to increase access to EVs and meet the state's goals. The best way to do that is through an incentive for new EVs that supports leases that can help to seed the market with the fully functional EVs that we all need. Indeed, if you go to Lucid's website today, you can find lightly used 2024 airs that have over 400 miles of range for under $40,000. This is probably the only place in America that you can go to find an EV with 400 miles of range for less than $40,000. So we strongly support the program. We want something that's easy to implement, available on the hood. Do want to appreciate the MSRP cap item in the analysis?

Thank you.

And we appreciate the Chair's comments to that effect today.

Thank you.

zero emission transit capital funding be a

remaining funding for sustainable communities on catalytic

greenhouse gas reduction goals from housing, from land use and from transportation. We'd actually like to strengthen that relationship

think it's a very good starting point and appreciative of it.

Thank you.

We're supportive of the proposal to modernize

This will help support curriculum restriction affordable

with their Green Means Go program.

Thank you. Mr. Chair Matt Roman on behalf of Ag Council here today in support of four programs for the GGRF discussions including Sustainable Ag Waste Management, Farmer and the Livestock Reduction Methane Livestock Reduction Program been incredibly

But most importantly the Food and Production Improvement Program or FFIP which has really allowed their membership to improve their technology and bring on more sustainable technology if

Chair Damon Conklin with League California Cities. We are opposed to the proposal of the Sustainable Aviation Tax Credit as it is proposed to be routed from SB $1 which our members use to maintain our local streets and roads. Separately, the Item related to $100 million from GGRF funds to maintain medium to heavy duty, zero emission and low NOX vehicles as well as $100 million for protecting our critical infrastructure from the effects of climate change. And and then just lastly $29 million from GGRF funds for organic waste diversion. Thank you.

I'm Tom Knox of Valley Cleaner. Now commenting on item two. We appreciate the legislature's ongoing support for clean cars for all. As the staff report notes, this has been a proven solution for both ZEV Equity as well as moving the increasing inventory of used EVs for 10 years now. We, we hope there's a solution here that would enable the Governor's proposed new EV incentive as well as the medium and heavy duty needs as well as continuing the operation of clean cars for all. Absent additional funding, we expect to see clean cars for all start to wind down in the foreseeable future, as was noted in the staff report.

Thank you.

Thank you.

only one particular item, but all of

had on the diocese that are interested

economics in this area here.

And having those conversations with the workforce and with the industry I think is very important. I appreciate you for that. Thank you.

Good morning. Chairman Mark Watts representing San Diego Metropolitan Transit System as well as the Riverside County Transportation Commission. We urge you as you go forward with your deliberations to appropriate the planned amount of $230 million in JGRF for the zero emission transit program as well as establish funding certainty for both or for all the TRCP LCT OP programs in the ggrf. And that'll be it. Thank you.

you.

Thank you.

Thank you.

Good afternoon. Kirk Blackburn here on behalf of the San Diego association of Governments, or sandag, which offers the following comments on several GGRF funding items. First, SANDAG supports efforts to modernize the Affordable Housing and Sustainable Communities program, including dedicated flexible funds to support infrastructure investments aligned with regional priorities. Cogs like SANDAG are well positioned to use this funding to help the state deliver on its ambitious climate, housing and transportation infrastructure goals. Next, SANDAG supports SB840's proposed $125 million allocation for transit passes and encourages the Legislature to distribute the funds through a formula based on population so that the money can get quickly to the riders that need it without creating unnecessary bureaucratic processes. SANDAG has seen great success with its Youth Opportunity Pass program which provides free transit rides for those 18 and under, which has provided more than 32 million rides since its launch in 2022. And finally, SANDAG supports a restoration of 75 million for the Highways to Boulevard's Reconnecting Communities pilot program which would allow our region to follow through on our commitments to the Reconnecting Southeastern San Diego and national city projects. Thank you.

Good afternoon. Chair Bennett I'm going for that gold star.

Melissa Kozlichuk with Western Growers. I'm so happy to hear all the outpouring and appreciation for the farmer program. So I'm here to also appreciate that and request funding for that. But essentially Western Growers we support and advocate on behalf of California's agricultural industry. They're farmers, shippers, processors. And there are two programs that we feel are really important farmer and then second to that is the organic Waste management program as well. So there's various programs that support that. But essentially historically there's been GGR funding allocated for these programs. There's not right now. We'd love to see that back in there. So thank you.

Mr. Chairman and members, been a long hearing. Congratulations on a very thorough staff report to accompany the conversation today. Very good job framing the issues. Andrew Antwe here today on a number of items for a number of clients. Item 4 for the Los Angeles County Metropolitan Transportation Authority. As discussed today, we would encourage the subcommittee to make room for a decision that keeps faith with the zero mission transit capital appropriations that have been planned and TIRCP and LC top as well. We are part of the state's strategy towards emission reduction and congestion relief. And it's an investment that brings very concrete returns as far as public transportation and emissions in the state. Also for the Port of Los Angeles, investments that have been committed in prior budget years relative to zero emission heavy duty trucks and zero mission port handling equipment. We encourage that to continue to be part of the consideration. And lastly, for the office of Cat Taylor for the SA lc, we ask for predictable ongoing funding. Thank you.

Thank you.

Thank you.

Thank you.

If I could be clear, you were saying yes to heavy duty and light duty?

it is proposed

Thank you.

Chair.

You can pull that mic.

On behalf of Via Transportation, we partner with more than 80 communities across California to expand equitable and clean mobility options.

expenditure plan, we urge the Legislature to

These programs were previously scheduled to receive

were cut last year. These are programs making an impact in disadvantaged communities across our state.

Thank you.

Mr.

Good to be with you this afternoon. Michael Pimtel here on behalf of the California Transit association representing 220 member organizations. We've submitted a detailed budget letter so I'm just going to give you the highlights today and calling for the legislature to appropriate the plan $230 million for the 0 Emission Transit Capital Program program.

is many of the agencies are using these monies to get to self help measures on the 2026 and 2028 ballot.

without the ability to get to long term support. We are asking for some certainty on the TRCP and LC top funding recognizing we've been placed into tier three.

reinstitution the partial sales and use tax exemption for zero emission buses.

I want to just punctuate the same challenges exist at the medium and heavy duty level. We are seeing funds rescinded from the federal government for zero emission bus purchases. You're seeing grants that were awarded pulled from the agencies and the state unfortunately has found itself in a similar regard also pulling money and resources from the agencies.

Thank you

Chair.

We strongly support the Governor's proposal on

Thank you. Thank you.

Southern California association of Governments, we appreciate the governor starting a conversation on the the ASIC program.

We look forward to continuing that conversation.

Thank you.

urge the legislature to maintain its discretion over the greenhouse gas reduction fund as

affordable and better managed clean energy transition

Thank you.

Chair Darrell Little here on behalf of Calstar here today to urge the legislature to protect California's climate investments. The legislature recently extended the Cap and Invest program and establish a clear framework

California's long term climate and commitments.

of clean transportation programs that are already delivering results such as HVIP Core Energized

The discretionary funds properly allocated, these programs can immediately support California businesses, improve air quality and reduce costs.

the integrity of GDRF and restore discretionary dollars for proven programs.

Mr.

Rob Johnson. I live in Martinez, California. I'm here in support of the Saffin

Incentivizing the production of any sustainable energy

long way to reaching the state's environmental goals as well as keeping industry and the jobs it brings in the state.

Thank you. Good afternoon, Chair. My name is Fernando Blanco. I'm with the United Steelworkers Local 326.

good union jobs in California. It also supports the development of cleaner fuels by utilizing the infrastructure and skilled workforce we already have. Thank you. Thank you. You can pull that down? Yeah.

My name is Joseph Humbal and

support the use of sustainable aviation field As a member of Local 326. SAF represent an important step towards reducing

I believe supporting Saab has built a cleaner and stronger future for our industry and our members.

Thank you.

And I'm in support of the Governor's Incentive of Staff.

Thank you. Thank you.

Good afternoon Chair, Members, my name is Margaret Salas and I live in Vacaville. I'm here today in support of the Governor's staff incentive. This program helps support good jobs and California's clean fuel future. I respectfully ask for your support. Thank you.

Chair Bennett and members. Sorry, my name is Teresa Lang representing A New Climate as well as verra, the Verified Emission Reductions association and cfcc, the California Forest Carbon Coalition. I'm commenting in strong support of item number eight and urge you to fully fund CARB's budget request to implement the provisions of last year's AB 1207 and SB 840, particularly as it relates to the offset program. We are strong supporters of the program overall, and we're very pleased to see IT reauthorized through 2045 with these bills last year. We're also pleased that these bills recognize the important role of carbon offsets in the program through 2045 and the importance of regular updates and reassessment of the existing compliance offset protocols currently included in the program, as well as consideration of new protocols, project types, and additional studies. That said, these additional requirements for regular protocol updates, et cetera, are going to take a significant amount of staff time and effort, and it's imperative that the budget request for CARB is granted in full so that they can meet the legislative direction. Thank you,

Good afternoon, Chair and members. My name is Ingrid Otto and I'm A resident of Walnut Creek here today to support Governor's staff incentive included in the budget. This program helps support good livable wage jobs and upholds to California's clean future goals of respectfully asking for your support.

Good afternoon, Chair, members. My name is Zena Thomas and I'm a resident of Martinez. I'm here today in support of the Governor's sustainable aviation fuel incentive included in the budget. SAF is the only scalable path to decarbonizing aviation. This program helps support good jobs in California's clean fuel future. I respectfully ask for your support as well. Thank you.

Hello, Chair and members. I'm Kathryn Tate and I live in Pleasant Hill. I'm here in support of the SAP incentive included in the budget. I believe it will help reduce emissions and keep jobs in California. I kindly ask that you support it too. Thank you.

Good afternoon, Chair and members. My name is Grace Gregg and I live in Walnut Creek. I'm here today in support of the Governor's sustainable aviation fuel incentive that's included in the budget. This program helps support good jobs and California's clean fuel future. And I'd like to mention that this transition is exactly what the state asked our industry to do. It also keeps jobs and investments in California. I respectfully ask for your support as well. Thank you.

Good afternoon, Chair. My name is Amy Henry and I live in Fairfield, which is part of Solano County. I'm here today in support of item number one, Governor, Sustainable Aviation Fuel Tax Credit. I'm going to tell you why. Because sustainable aviation fuel is one of the most immediate and effective ways we can reduce emissions from aviation. The technology exists and our facility is making it right now today. With these real emissions happening right now, the incentive will help ensure California continues leading the transition to lower carbon fuels while supporting good jobs and energy reliability. I respectfully ask for your support and I thank you for your time.

Good afternoon, Chair Bennett Tiffany Fan, on behalf of the California Efficiency and Demand Management Council, or sedmec, regarding issue two, the ZEV trailer bill, we agree with many of the points and questions staff raised in the age, particularly the comment that CARB should hold a workshop building out the proposal before the legislature approves the funding. And we're glad to hear that CARB is now planning to do so. That workshop can work through many of the questions you raised that other committee members raised and also an opportunity for stakeholders to have input as well. So thank you.

Good afternoon, Chair Bennett. Marissa Hagerman with Tratton Price Consulting. On behalf of Environmental Defense Fund. We wanted to express our strong Support for the 200 million light duty Zev incentive proposal. In addition to all of the health, climate and affordability benefits of ZEVs, we see this as an important down payment on new partnerships with auto manufacturers so we can develop the next generation of durable clean car standards. We also want to highlight the need for more investments in heavy duty ZEVs as well. For example, HVIP has been a successful program and is oversubscribed. We'd like to express a need to continue progress cleaning up heavy duty transportation for climate and local air quality benefits. Thank you.

Chair members, Christina Scaringe with the center for Biological Diversity. We oppose the SAF credit. The Legislature should first max out funding cost effective GHD reduction programs and that must include fully funding and accelerating equitable clean transportation. The state's been struggling with how to deal with its mid transition, how to stabilize an increasingly volatile transportation fuels market. And CEC made clear that demand reductions are a critical stabilization strategy. ZEVs reduce pollution for everyone. ZEVs also reduce utility costs for everyone, whether or not you own a zev. So we definitely support the ZEV incentives and bidirectional charging. But yes, also we need to look at clean trucks in transit, VMT reductions and equity focused programs like clean cars for all. So thank you.

Good afternoon Chair members. My name is Lindsey Epperly and I'm here in support of agenda item number one. I live in Martinez in Contra Costa county, but I've been a lifelong California resident. I went to K through 12 schools and I proudly graduated from UC Davis. I have long been proud too of this state and the fact that we're looked at as a leader on so many different fronts. And today I'm here to support the union of two of those fronts, our domestic California fuels production with our ambitious California climate goals so we can have clean air, clean skies and sustainable green jobs that can go on for generations. And with everything going on right now in this nation, I think it's more important now than ever that we support these jobs and we hold them up as a success. So I hope you support the staff initiative Bill.

Good afternoon Chair and members. My name is Liotte Carlisle and I'm here representing the Cascadia Sustainable Aviation Accelerator, a regional nonprofit based in Seattle, Washington. I traveled here today to give comments in strong support of agenda item one, because SAF is really the only way to abate emissions in the aviation sector. SAF can reduce lifecycle carbon intensity by up to 80% while also reducing sulfur oxides and critical particulate matter for our most vulnerable, vulnerable communities. As an example, 150 million gallons of SAF at SFO would abate jet fuel emissions by about 13%. And that does not even begin to capture the state's production capacity that would abate the equivalent of 3.2 billion vehicle miles traveled. I urge you to join Washington state in adopting this tax credit so that our two states can continue to lead the region and the world in climate action as we begin to look at linking our carbon markets together.

Good afternoon, Chair member staff Griselda Chavez here on behalf of the Conservation Fund, Save the Redwoods League and 26 other organizations spanning conservation, waste, decarbonization and more, all including the letter submitted to this committee. We urge the legislature to maintain its $750 million in discretionary GGRF dollars for budget year 2026 to 2027. This was the understood intent of SBA 40 last year and should be preserved. Thank you.