Negotiations over the California state budget are producing dueling proposals on how best to spend revenue from the state’s cap-and-trade program.

While Governor Jerry Brown continues to call for a third of the cap-and-trade funds to go to CA high-speed rail, Senate President ProTem Darrell Steinberg last week expanded upon his alternative proposal to spend a larger share of the revenue on affordable housing and transit at the local and regional level.

State cap-and-trade funds are collected under the California Global Warming Solutions Act of 2006, A.B. 32. The law provides a way for companies to meet a state-mandated cap on greenhouse gas emissions by buying “pollution credits” produced when others exceed emissions reductions. Estimates vary on how much revenue the program will generate, but it could produce billions each year between now and 2020.

Standing in front of an active construction site for new housing units near Oakland’s MacArthur BART station last Thursday, Steinberg called for permanent sources of funding for affordable housing, mass transit, and sustainable communities development. The Senator argued that  California is facing a “catastrophic funding crisis” as affordable housing bonds run out, and noted that the transportation sector is the state’s biggest contributor to greenhouse gas emissions.

“Californians are logging more vehicle miles annually than ever before,” Steinberg said.

Behind him, a forklift raised a load of lumber high up in the air, with an attached sign reading, “At least 972 lbs of CO2 emissions reduced every day.” That’s the amount by which  the housing project, which will provide 624 housing units next to the BART station, is estimated to reduce greenhouse gas emissions compared to other housing developments. Of those apartments, 108 will be leased at below-market rates.

Stuart Cohen of TransForm emphasized the link between affordable housing at transit-oriented developments and transportation, citing a new report from the Center for Neighborhood Technology that studied greenhouse gas reductions from building affordable homes near transit.

The report [PDF] found that low-income people living within ¼-mile of frequent transit drive half as much as those living where transit service is not as good. It also found that low-income households living near transit drive less and ride transit significantly more often than higher income people living the same distance from transit.

“If we could build 15,000 affordable homes near transit,” said Cohen, “there would be 105 million fewer miles per year traveled on our roads. With three years of funding for affordable housing, we could produce 1.58 million metric tonnes of carbon reduction.”

Steinberg’s cap-and-trade spending plan includes a smaller percentage of revenue — 20 percent — for high-speed rail than the governor’s proposal. Governor Brown’s plan would allocate 30 percent to transit, including capital and operations, and another 10 percent on street and highway repairs, deferred maintenance, and complete streets. “Active transportation,” or walking and biking projects, don’t have dedicated funding in either proposal.