Summary of LAO Findings and Recommendations on the 2010-11 Budget

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	Program	Budget Issue	LAO Finding Or Recommendation	Last Updated
Go Back	California Alternative Energy and Advanced Transportation Financing Authority	May Revision Budget Request for General Fund Loan for New Program Start-Up Costs	Due to the current fiscal stress on the General Fund, we recommend an alternative funding source--the Renewable Resource Trust Fund--to make the loan for the initial start-up costs to implement Chapter 10, Statutes of 2010 (SB 71, Padilla).	5-18-10

Detailed Narrative
*May Revision Budget Request.* The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) is requesting a General Fund loan in the amount of $2.4 million to fund initial start-up costs ($1.4 million for 2010-11 and $1 million for 2011-12) for the implementation of Chapter 10, Statutes of 2010 (SB 71, Padilla). Chapter 10 authorizes CAEATFA to evaluate and approve applications for state and local sales tax exclusions for tangible personal property used for the design, manufacture, production, or assembly of advanced transportation technologies or alternative energy source products, components or systems. The initial start-up costs to be funded from the loan include costs for consulting services and staffing. The request proposes that CAEATFA fully repay, with interest, the loan through applicant fee revenues. The loan is to be repaid by June 30, 2013. *LAO Recommendation.* Due to the current fiscal stress on the General Fund, we recommend that the loan be made by an alternative funding source - the Renewable Resource Trust Fund (RRTF). The RRTF has a healthy balance and can sustain a loan of this magnitude without adverse programmatic impacts on programs supported by the RRTF. Additionally, we recommend that the repayment terms in the BCP be maintained.

Detailed Narrative

May Revision Budget Request. The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) is requesting a General Fund loan in the amount of $2.4 million to fund initial start-up costs ($1.4 million for 2010-11 and $1 million for 2011-12) for the implementation of Chapter 10, Statutes of 2010 (SB 71, Padilla).

Chapter 10 authorizes CAEATFA to evaluate and approve applications for state and local sales tax exclusions for tangible personal property used for the design, manufacture, production, or assembly of advanced transportation technologies or alternative energy source products, components or systems.

The initial start-up costs to be funded from the loan include costs for consulting services and staffing. The request proposes that CAEATFA fully repay, with interest, the loan through applicant fee revenues. The loan is to be repaid by June 30, 2013.

LAO Recommendation. Due to the current fiscal stress on the General Fund, we recommend that the loan be made by an alternative funding source - the Renewable Resource Trust Fund (RRTF). The RRTF has a healthy balance and can sustain a loan of this magnitude without adverse programmatic impacts on programs supported by the RRTF. Additionally, we recommend that the repayment terms in the BCP be maintained.