OAKLAND -- With billions of dollars forecast to flow into state coffers under a landmark clean air act, there is a battle underway over how to allocate the money.

State Senate President Pro Tempore Darrell Steinberg, D-Sacramento, was in Oakland on Thursday promoting his plan that includes setting aside one-fifth of the funds for affordable housing construction near transit hubs.

Steinberg's plan differs from a proposal laid out earlier this year by Gov. Jerry Brown, who suggested spending more on high-speed rail and didn't include money for transit-oriented affordable housing development.

Starting next year, the state's cap-and-trade program for major polluters will be expanded to include gasoline producers. That is expected to increase the price of gas by about 12 cents a gallon. But the requirement for the industry to buy carbon credits from the state is expected to produce more than $1 billion next year for clean air programs. The cap-and-trade law is expected to generate up to $5 billion a year by the end of the decade.

Steinberg, who will be termed out this year, said it was important to specify funding percentages for various programs so politicians and developers can plan projects knowing exactly how much money will be available. "This is the antidote to the feeding frenzy," he said at a rally at the MacArthur BART station, where an affordable housing project is being constructed in the station's parking lot.

The BART project was subsidized with state redevelopment dollars, but with redevelopment eliminated, transportation and affordable housing advocates are backing Steinberg's proposal to set aside 20 percent of the cap-and-trade funds for transit-oriented affordable housing.

"With this proposal, we can begin to have true affordability. That means low-cost transportation right near affordable housing," said Stuart Cohen of transit advocacy group TransForm.

On Thursday, the organization released a study backed by the Ford Foundation that showed poorer people living within a quarter-mile of transit drove about half as often and owned less than half as many cars as wealthier people living the same distance from transit.

While Steinberg is planning to tinker with his plan to address issues faced in rural communities, the key negotiations are expected to be with the governor, who proposed allocating one-third of the funds for the state's high-speed rail program. Steinberg has proposed a 20 percent allocation.

Jim Evans, a spokesman for Brown, wrote that "the administration looks forward to working with the legislature on an overall cap-and-trade funding plan."

Steinberg said of the upcoming negotiations, "There is give and take. I think we'll do fine with the governor."

Contact Matthew Artz at 510-208-6435.