The governor\u2019s budget, the Legislature\u2019s dowry, politicians\u2019 pet causes--are all itching for what may be a pot at the end of the carbon rainbow. As the governor guides both the budget and the proceeds from the soon-to-be greenhouse gas market, two bills that detail how state carbon auction revenue should be spent passed legislative committees this week. Another measure advanced with the intention of setting aside 10 percent of utility proceeds under the state carbon market to make schools more energy efficient. The long-term legislation, AB 1532, by Assembly Speaker John Pérez (D-Los Angeles), made it through the Senate Environmental Quality Committee July 2. The short-term legislation, SB 1572, by Sen. Fran Pavley (D-Agoura Hills), garnered Assembly Natural Resources Committee backing the same day. Pérez\u2019s legislation sets up a planning process for spending the proceeds of greenhouse gas emissions rights auctions run by the California Air Resources Board. The first such auction under the state\u2019s global warming law, AB 32, is planned for November. While the state\u2019s fiscal 2012-13 budget--passed last week--specifies the money is subject to legislative appropriation (see story page 6), Pérez\u2019s measure establishes extensive criteria for eligible expenditures of the funds on an ongoing basis. It also outlines a planning process for using the money. Essentially, it specifies that the money must be used only for programs that cut greenhouse gases and should seek to develop job and economic opportunities in California. It says spending of the money also should seek ancillary environmental benefits like reductions in smog-forming pollution. It calls on the Air Board and other state agencies to submit periodic spending plans for the money to the Legislature for consideration when it appropriates the auction proceeds. It passed the Senate panel 5-2. In the short term, SB 1572 by Pavley creates the Greenhouse Gas Reduction Account to funnel half of all auction credit sales from the California Air Resources Board to offset the general fund. It is a short-term, six-month, guideline for channeling funds. \u201cOtherwise the [Air Board] sets priorities. It\u2019s best for the Legislature to set priorities,\u201d Pavley told the Assembly Committee on Natural Resources. Kindergarten-through twelfth-grade schools would get first dibs on the initial $250 million in remaining funds to install efficiency measures. \u201cThese are programs in place that can get money out the door while the [Air Board] looks at broader categories,\u201d Pavley said. Business representatives opposed the school efficiency mandate, calling for tougher review of where auction monies are directed. \u201cThere isn\u2019t any justification that it shouldn\u2019t be held to a higher standard\u201d for dispensation, said Dorothy Rothrock, California Manufacturers & Technology Association, vice president of government relations. The bill passed the committee 6-3. The Senate Environmental Quality Committee July 2 also passed a related bill, AB 1186, by Assemblymember Nancy Skinner (D-Berkeley). Her bill seeks to set aside 10 percent of the money utilities are anticipated to receive from selling greenhouse gas emissions rights they get for free from the state to retrofit schools for energy efficiency. It passed 5-2.