Prop 39 Sets Up Fight for Green Energy Dollars

Clean energy projects to get almost $3B over five years

by Brian Leubitz

UPDATE: Senator Kevin de León, who is sponsoring legislation  that would implement the school green retrofitting plan, is working with Tom Steyer, Prop 39’s main backer. They launched a website that offers more information on the plan. With the support of the governor and a strong group of legislators, the school plan seems to be the likeliest outcome. However, the LAO criticism may make other options or a compromise possible. SB 39, and a similar bill in the Assembly (AB 39), will likely get some priority towards a quick passage that would make implementation as smooth as possible as the money starts coming in.

They had a press conference and made a 20 minute video of it. Enjoy!

Last November’s Prop 39 has two major aspects, one of which helped it rack up 61% of the vote. But let’s start a few years back, 2009 to be exact. In that year’s GOP budget hostage situation, the Republicans extracted a new tax loophole, allowing corporations to choose one of two tax treatments. It allowed those large multistate operations to save over a billion dollars annually, and thus, to shortchange our general fund a billion dollars annually.

In 2010, a labor backed measure, Proposition 24 attempted to close this newly created loophole. However, relatively few resources were directed at the measure, and it couldn’t overcome the anti-tax groups attacks.  That brings us to Tom Steyer and Prop 39. Steyer, a very wealthy venture capitalist, saw an opportunity to create good green jobs in California while closing this loophole. The measure permanently closes the so-called “single-sales factor” loophole, and dedicates about half of those revenues to green energy projects.  However, the measure wasn’t exactly clear as to where that money would go. The specifics were left to the people who are supposed to appropriate money, you know, those people that we hire to run our government, the legislature and the governor.

But, now there is this post of about $500 million (or more) annually to be directed to energy projects, and disbursing that was never going to be easy. Jerry Brown has a plan, however. Basically, noting his belief that the money should be counted under Prop 98’s educational funding requirements, he is calling for the money to be spent entirely on retrofitting schools for energy efficiency. He gets to count it for Prop 98, and everybody’s happy. Right?

Well, being that this is still California governance, nothing is ever so easy. The goal of retrofitting schools is certainly laudable, and will help redirect energy savings to the classroom (hopefully). However, in pure energy savings alone, there are other state institutions that could gain more from the efficiency upgrades, such as public hospitals and other buildings open 24 hours a day. But the Prop 98 impacts are difficult for somebody putting together a budget to ignore.

The LAO, however, has a different take.

Legally, the analyst’s office says the governor’s plan invites manipulation of the state constitutional guarantee by counting the funds toward school operating budgets. The analyst’s office says that approach marks “a serious departure” from how it interprets the state constitution, a view that the office says it “developed over many years with guidance from Legislative Counsel.” Additionally, the analyst’s office says it departs from what voters were told last year.

Brown’s Department of Finance disagrees. It says that because the money is paid by corporations into the state general fund, schools have a claim on it. … “Our proposal reflects the fact that education continues to be the top priority of the governor’s budget,” Director of Finance H.D.] Palmer said. He added that past budget cuts “took their toll not only on classroom instruction dollars but physical upkeep as well.” ([SacBee)

The LAO advocates putting the money through the California Energy Commission, in some sort of competitive process between public agencies.

This conversation is really just getting started, but tossing school finance in the process means that we’ll likely get some greener schools with a side of legislative controversy.

2 thoughts on “Prop 39 Sets Up Fight for Green Energy Dollars”

  1. Beyond the fact that the law states otherwise (see PRC Section 26205) it is not good policy to give all the Prop 39 energy dollars to schools. The Prop’s energy fund is intended to stimulate jobs as well as make buildings more energy efficient. In essence, it is a crash program which will need to find “shovel-ready” projects.

    It is unlikely the School Districts of California are capable of spending $500M/yr quickly (jobs) and effectively (buildings rehab projects that save a lot of energy). It is easier to imagine a future Dan Walters column bloviating about schools sitting on the cash, projects being delayed, waste/fraud/abuse, etc.

    Even if school districts have their act together and can respond at the scale demanded by the law, the earliest they could do any projects is two summers from now. They won’t know their fund status for next year until this summer. And you can’t work on ceilings when kids are around (think asbestos) so most projects will need to wait until next summer. Sure, some school districts will be able to respond in time, and a few will have major projects, but to think all of the funds can be spent quickly on job-creating, shovel-ready school building rehab projects defies credibility.

    “But it’s for the kids” say the proponents of giving all the money to schools. Well, kids use plenty of other public facilities, e.g. libraries, community centers, swimming pools, parks, etc. Why not make some of those facilities more energy efficient, too? But the law doesn’t say, “it’s for the kids.” What’s really going on is a cynical attempt by the Governor to make it look like he solved the Prop 98 school-funding problem by diverting money intended for other purposes.

  2. I spoke on it at local Democratic clubs and I persuaded my county’s central committee to endorse it. I wouldn’t have done that if I thought it would be simply another Prop 98 budget gimmick.

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