Governor’s April Finance Letter. The Governor has submitted an April Finance Letter which requests a shift in funding source for four positions working on AB 32 activities relating to energy. (AB 32 is the state's major climate change legislation.) Funding is proposed to be shifted from the Energy Resources Programs Account (ERPA), which is funded by a statewide surcharge on energy ratepayers, to the Air Pollution Control Fund (APCF), which receives some of its funding from the AB 32 Implementation Fee. The AB 32 fee is assessed on large carbon-intensive industries in order to support the administrative costs of multiple state agencies to implement AB 32.
LAO Initial Recommendation. When this April Finance Letter was first submitted, the Administration had failed to submit the statutorily required AB 32 Zero-Based Budget (ZBB) which was intended to provide information to the Legislature to justify the level of AB 32 expenditures across state government. We initially recommended that the Legislature deny the request until such time as the Administration had complied with the statutory requirement , thereby providing the Legislature the opportunity to review the Finance Letter in the context of the entire AB 32 ZBB.
LAO Updated Recommendation. The Administration has since submitted the AB 32 ZBB. We find that the proposed funding shift to the AB 32 fee is justified. We therefore recommend that the Legislature approve the Governor's April Finance letter.